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Wind loses out to solar and biomass -- Hitch to New Mexico mandate

The Public Regulation Commission (PRC) in New Mexico has approved a renewables portfolio standard (RPS) that requires investor-owned utilities to buy 10% of energy from renewables by January 2011, with an interim step of 5% by January 2006. The ruling, however, is being challenged by several utilities.

The RPS gives greater weight to developing solar and biomass energy over wind as a way to encourage diversity in utility supply portfolios. It also requires all utilities, including those that are publicly owned, to provide green pricing programs for retail customers. Utilities with such programs are being allowed to charge customers a premium for green power to cover above market costs.

The PRC has been working on an RPS for nearly two years and last year it released draft rules outlining standards for the proportion of each renewable energy in retailers' electricity portfolios. (Windpower Monthly, May 2002). Some utilities asked for a ruling that gives more credit for developing geothermal, biomass and solar energy, while giving less credit for wind and hydropower, which the PRC approved. Solar developers say they need the credit to offset the advantage wind has with the federal production tax credit.

The decision to give more weight to other technologies penalises utilities, such as the Public Service Company of New Mexico (PNM), which in September signed an agreement with FPL Energy to buy the output of FPL's 204 MW New Mexico Wind Energy Center (Windpower Monthly, October 2002). If all sources of renewable energy were weighted equally, says PNM, it would need to build just 100 MW more wind capacity to comply with the RPS requirements.

PNM, along with two other utilities and some industrial users that oppose the ruling, have asked the PRC to reconsider, but not because of the weighting rule. They say regulators failed to consider the additional cost of the RPS on ratepayers and suggest a voluntary renewables program driven purely by customer demand and not a minimum standard.

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