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United States

Commission holds firm on mandate -- New Mexico industry appeal

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A request to the New Mexico Public Regulation Commission to reopen discussions on the recently approved state renewables portfolio standard (RPS) has been denied. The three utilities and large industrial customer that appealed the decision must now consider whether they will take their case to the state supreme court. At the same time, the New Mexico legislature is weighing in on the conflict, but it seems even the state's lawmakers are split on whether renewable energy development should be mandated or left to market forces.

In March, the state senate passed a joint memorial calling on the regulation commission to suspend the RPS, but that has been answered by at least two other memorials (none of which carry the weight of law) and several pieces of legislation, some in support and some in opposition to the RPS. By closing this spring, legislators could float as many as eight separate pieces of legislation dealing with renewable energy, says the commission's John Curl.

Legislators supporting repeal of the RPS may not be listening to the people, according to the Coalition for Clean Affordable Energy. It says New Mexicans overwhelmingly support renewable energy and that 85% specifically support the RPS rule. Only 12% oppose the rule.

Driving much of RPS opposition is the Public Service Company of New Mexico (PNM), which joined in appealing the RPS decision before the commission in late January. Although the utility does not know if it will take the issue to the state supreme court, it continues to say that any RPS has serious flaws. "We're not sure we would support the RPS even if it was structured differently," says Don Brown of PNM. "Our belief is that the state hasn't allowed enough time to see if incentives work."

Brown is referring to a production tax credit that amounts to about $0.01/kWh, approved in 2002 by the state's legislature. He says the state credit, combined with wind's federal production tax credit, figured strongly in PNM's decision late last year to buy the entire 204 MW output of FPL Energy's New Mexico Wind Energy Center, which is to go online this year (Windpower Monthly, October 2002). "The right incentives were in place and it made business sense to us," Brown says of the purchase, pointing out that PNM was committed to the project before passage of the RPS.


The regulation commission considered various forms of an RPS for two years before approving the 10% standard that requires investor-owned utilities to buy 10% of energy from renewables sources by January 2011, with an interim step of 5% by January 2006. PNM says the 204 MW purchase from FPL will bring it within two-thirds compliance of the mandate requirement.

But Brown points to other flaws in the RPS. He says the commission failed to consider the impact of the RPS on ratepayers when it did not set a price cap requirement on the purchase of renewable energy and when it approved a provision that will allow it to reconsider the RPS every two years. That, Brown says, takes certainty out of renewables purchases. In addition, PNM opposed a last minute addition to the statute that imposed an unusual weighting system to the RPS that gives credit to different technologies. Solar gets three credits for each kWh, while wind is awarded just one credit.

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