By Chuck Noble, Coalition for Clean, Affordable Energy
In the renewable-energy plan PNM is required to produce every year, New Mexico’s largest electric utility has proposed to build 50 megawatts of solar, upgrade and add energy output to the New Mexico Wind Energy Center contract and upgrade and add energy to the geothermal facility near Deming to meet its 2020 legal requirement for 20% renewable energy.
The Sierra Club belongs to the Coalition for Clean Affordable Energy. CCAE is supporting the renewables proposals in PNM’s plan and is also arguing for changes that would increase renewable growth and make large customers pay their fair share of costs.
Public Regulation Commission staff opposes the 50MW solar project, saying it’s not needed for 2018 or 2019 and so is premature. CCAE has argued that it is important to move ahead so that it is in place by 2020.
PRC staff also opposed the extended contract with the Wind Energy Center. They argue that PNM might be better off keeping the old contract, and not upgrade the facilities. Then when the contract expires in 2028, the latest technology at the time can be added. CCAE supports PNM’s plan to have the Wind Energy Center upgraded and extend the contract. The center supplies very inexpensive wind power (2.7 cents per kWh).
CCAE also supports refurbishment of the Dale Burgett geothermal facility near Deming. PNM would enter into a contract with the facility that keeps all risks on the provider.
While New Mexico’s Renewable Energy Act required the three major utilities to provide 15% renewable energy by 2015, only Southwestern Public Service actually provides 15% (actuallly 21%).
That’s because utilities don’t have to comply if renewable costs exceed certain caps — for residential ratepayers, 3% of monthly bills, and for large industrial customers, 2% or $100,000, whichever is less.
But the PRC’s required method for calculating costs unfairly inflates renewable energy’s price by excluding some savings it provides.
CCAE proposes to adjust the method for calculating costs to reflect those savings. Two of New Mexico’s three large utilities exceed the cost cap, so they won’t be adding renewables any time soon. While PNM’s costs are under the cap, the PRC could use this case to set precedent for all utilities’ calculations.
Another damper on renewable growth in New Mexico is that, while large customers have a lower cost cap than residents, suppressing the amount of renewable energy a utility is required to provide, a loophole allows those large customers to receive a windfall in fuel savings from renewables.
Adjusting that loophole would make large customers pay their fair share.
We got a partial victory on this issue in the 2015-16 rate case, but there are still remaining issues that can further close this loophole that favors large customers over residential ratepayers.
Featured image from Photo from Wendell at Flickr.