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PRC Governs PNM In People’s Interest

Last month, the PRC voted unanimously to reject PNM’s proposal to partly meet its 2011 renewable-energy requirement by buying $5 million worth of 4-year-old paper certificates. Both Democrats and Republicans on the PRC disliked PNM’s idea of wasting ratepayer money on paper compliance that was not going to result in any actual additional renewable energy being produced or consumed in New Mexico.

Despite knowing for years that it was going to need additional wind energy supplies to meet its renewable portfolio standards requirements, PNM has not sponsored a new wind project since 2003.

The last three wind projects built in New Mexico were all developed under agreements with Arizona utilities; I’ve lost track of the number of times I’ve been contacted by wind developers wondering why PNM repeatedly goes through the motions of soliciting bids but never finalizes a contract.

PNM will likely say this is because the PRC made it focus on adding solar energy to its portfolio. The PRC has required PNM to engage in solar procurements; however, this was through a rule that requires diversified portfolios.

New Mexico is blessed with some of the best wind and solar resources in the country, each bringing its own benefits and challenges. Developing both resources is in our long-term public interest. The PRC’s diversity rule anticipates that a utility will blend relatively high-cost solar with a much greater amount of cheaper wind-based renewable energy. It doesn’t say focus exclusively on solar and ignore the other resources.

Instead of bringing a contract for a new wind farm to the PRC, PNM chose to put together a purchase of paper certificates from wind power generated in 2007. Under state law, this is one permissible approach to compliance. However, commissioners were convinced by evidence in the case that purchasing certificates that were about to expire and become worthless would not further the Renewable Energy Act’s goal of increasing the amount of renewable energy produced and used in New Mexico.

Contrary to the Journal’s assertion of added costs in its July 17 editorial, if the PRC order stands, the most likely outcome is that ratepayers will avoid $5 million in expense. PNM’s overall renewable procurement for the next few years is already constrained by budget caps known as the “reasonable cost threshold.” Thus, the renewable energy represented by the rejected paper certificates is not likely to ever be made up with a more expensive substitute.

While it is unfortunate to have missed our renewable energy target for 2011 for the state’s largest electric utility — our other two investor-owned electric utilities have done a better job of meeting the requirements at reasonable costs — there’s no sense making customers pay $5  million simply to show paper compliance.

Beyond the questions of how we best develop our state’s renewable energy resources and use ratepayer dollars wisely, the Journal misses wildly on the proper role of elected officials when it writes “Marks … should start his own utility or perhaps consider moving to another country where government calls all the shots.” As Curly from the Three Stooges said, I resemble that remark!

Over 130 years ago the U.S. Supreme Court recognized that government regulation was appropriate for certain industries “affected with the public interest.” In New Mexico, as in most U.S. states, electric utilities are required to seek regulatory commission approval before building conventional generating plants.

The PRC has the authority under New Mexico law to accept, reject or modify a utility’s renewable energy procurements. I don’t think my constituents want me to defer to PNM or the other companies we regulate. I’ll keep deciding cases based on the facts, the law and the public interest.

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