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PNM seeks rehearing on transmission line ruling

ALBUQUERQUE, N.M. — Public Service Company of New Mexico wants another chance to convince state regulators that a new transmission line it’s planning will benefit all utility customers, not just Facebook.

The company expects to file for a rehearing today with the Public Regulation Commission, which ordered PNM on April 16 to not charge ratepayers for any of the project costs, only Facebook and wholesale customers. That’s because a PNM executive testified in hearings in February that the line, which would run from Clines Corners to a new substation in Sandoval County, would only serve Facebook and wholesale customers, not retail consumers.

The company later rectified that testimony in writing to the PRC. Even so, commissioners ordered PNM to bill Facebook $39 million, or nearly half the cost of the $85 million line, and charge wholesale customers the rest.

The New Mexico Public Regulation Commission in this file photo unanimously approved as service contract between PNM and Facebook for construction of a data center in Valencia County, photographed on Wednesday August 17, 2016. (Dean Hanson/Albuquerque Journal)

In its request for a rehearing, PNM said it recognizes that its “initial description” during the hearing was “confusing, leading the commission to the incorrect belief the line would only serve Facebook.”

The company says the project, which will carry 166 megawatts of electricity from a wind farm under construction near Estancia to Facebook’s data center in Los Lunas, will have capacity to transmit an additional 199 MW of electricity, benefitting all customers. The line is considered a “network upgrade” under Federal Energy Regulatory Commission guidelines, something the utility “did not clearly explain” in the hearings, PNM says.

It’s needed to not only bring electricity from the new wind farm onto PNM’s grid, but to provide more capacity for renewable generation in general, since the utility’s current transmission line in eastern New Mexico has reached its limit.

PNM contends that forcing Facebook to pay $39 million upfront for construction constitutes unfair double billing on the company, since Facebook must still pay transmission charges once the line is operational.

If Facebook is only required to pay transmission charges like other retail customers, the company would still end up contributing $64.5 million over the 30-plus years it will take for PNM to recover all construction and operating costs for the line. That compares with $43.9 million that other customers would pay, representing a net savings of $21.5 million for ratepayers over time, according to PNM.

The commission’s order to directly bill Facebook generated critical backlash from public officials, economic development professionals, and Gov. Michelle Lujan Grisham. They say it’s unfair to Facebook, and it sets a “chilling” precedent that could discourage other companies from investing in New Mexico. That’s because the PRC previously agreed to only directly charge Facebook for projects that benefit that company alone, not for infrastructure development that benefits everyone.

Now, however, PNM said it takes full responsibility for confusion at the PRC.

“The PRC has recently taken flak for their decision on the … transmission line, but we must admit their decision was based on confusing information provided by PNM, and for that, we take full responsibility,” said PNM Senior Vice President of Public Policy Ron Darnell in an op ed in the Journal on Sunday. “When we presented our case to the PRC, we didn’t do a good job presenting the full story or describing how the transmission line benefits our customers throughout the state, not solely Facebook.”

By “squarely admitting” its mistake, the company hopes to persuade commissioners to reconsider the case to avoid harming Facebook or other customers, Darnell added.

Other organizations intervening in the case either support PNM’s request for a rehearing, or don’t oppose it, including the Coalition for Clean Affordable Energy, New Mexico Industrial Energy Consumers, and the PRC’s utility division staff.

“We’re filing our own request for the commission to reconsider its decision,” said CCAE attorney Chuck Noble. “Requiring Facebook to pay $39 million makes them overpay for the transmission line. Under regulatory law and precedent, the costs should be allocated to all users of the system based on their usage, not just Facebook.”

It’s unclear how or when commissioners will respond, but PNM has requested an expedited decision on the rehearing.


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