ALBUQUERQUE, N.M. (AP) — New Mexico regulators have again revamped a proposal that clears the way for a rate increase for customers of the state's largest electric utility.

The Public Regulation Commission voted 3-2 Wednesday in Santa Fe in favor of the latest proposal, which calls for spreading out a roughly 1 percent increase over two years.

Public Service Co. of New Mexico estimates show the average increase will likely be closer to 1.4 percent when other adjustments are factored in.

The utility had initially sought a 14 percent rate hike when it first approached the commission last year.

The commission's latest revision was prompted by a request from the utility to recalculate the amount of revenue it would be allowed to earn. The dispute centered mostly on profit that it would have to forego related to investments in a coal-fired power plant in northwestern New Mexico.

Commissioner Valerie Espinoza, who voted against the proposal, suggested it was the utility that misrepresented figures used to craft the proposal. She also argued that the commission's previous order should have been non-negotiable.

"This is not like buying a house," she said. "You can't just accept counteroffers from a utility."

Commissioners who voted in favor of the latest proposal voiced concerns about the time it has taken for the case to be decided. Some said it was in the public interest to move ahead and avoid costly litigation.

The commission was unanimous in its opposition of language the utility had proposed that would have allowed for an appeal if the order were to be challenged by another party. Commission staff called it "an escape hatch" for the utility that threatened to expose regulators to even more legal wrangling.

The attorney general's office, consumer advocates and other parties involved in the initial negotiations must still sign off on the latest order.

Utility officials said they were reviewing the latest order.

The utility's parent company, PNM Resources, also expressed concerns about a negative outlook announced this week by the credit rating agency Standard & Poor's.

The credit rating agency cited a challenging regulatory environment and pointed to the financial effects of the Public Regulation Commission's previous decision to order a lower rate increase for customers.

The commission had also put off a decision on whether the utility's coal-related investments were prudent.

The S&P report stated continued investments in the coal-fired Four Corners Power Plant results in "potential regulatory headwinds for the company."

PNM Resources chief financial officer Chuck Eldred said credit ratings have a direct effect on the utility and ultimately customers' bills. The ratings are used to determine credit worthiness and the interest rates at which money is borrowed to pay for infrastructure and other equipment used to generate and transmit electricity to customers.

"PNM is currently at an investment grade credit rating. However, this change in outlook could have a long-term impact on our financial health, cost-effective funding of capital investments and our ability to support programs for new customers," he said in a statement.