Ruling on New Mexico solar plan draws criticism

A final ruling by the New Mexico Public Regulation Commission on Public Service Co. of New Mexico’s renewable energy procurement plan is drawing mixed reactions.

On Aug. 31, the PRC significantly scaled back PNM’s plans to incorporate about 80 megawatts of new solar photovoltaic generation onto its system. Instead, the PRC approved about 46 megawatts, to keep rate hikes below a commission target of 2 percent, said Commissioner Jason Marks. At 80 megawatts, electric bills would have increased 4 percent.

"PNM’s original plan came in way too expensive," Marks said. "Commissioners reached a compromise rather than throw the whole plan out and start from scratch. I think it’s a win-win solution, because it moves us forward while keeping it under our reasonable cost threshold."

PNM submitted its plan to comply with the state’s renewable portfolio standard (RPS), which requires utilities to derive at least 10 percent of their power from renewable sources by 2011, and 20 percent by 2020.

PNM wanted to install 45 megawatts of utility-scale PV at targeted sites, plus 10 megawatts on public and nonprofit buildings.

The PRC, however, approved 22 megawatts of utility-scale PV and rejected the rooftop systems.

PNM’s proposal also called for 24 megawatts of customer-owned systems. It included a fixed incentive payment to customers of up to 26 cents per kilowatt hour generated by rooftop systems, decreasing over time to 16 cents.

That would have replaced the previous incentive program, which included two separate payments of up to 15 cents per kWh for helping PNM meet its RPS obligations, plus 7.5 cents for unused electricity that customers send back to the grid – a process known as “net metering.”

The PRC did approve 24 megawatts of customer-owned systems. But it opted to keep the old incentive structure in place to preserve net metering, which provides customers with a hedge against rising electric rates, Marks said.

The Commission also ordered a gradual decrease in RPS payments as rooftop systems come on line. It set a five-tiered cap, based on system size, that cuts incentives off, once ceilings are reached. The caps range from 3.15 megawatts for small systems of below 10 kilowatts, to 9 megawatts for the biggest systems.

Read the full story in the New Mexico Business Weekly.