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State OKs energy contract for possible Facebook data center

ALBUQUERQUE, N.M. — State regulators on Wednesday approved a special services contract between Facebook and Public Service Company of New Mexico, bringing a proposed Los Lunas data center one step closer to fruition.

In a unanimous vote, the New Mexico Public Regulation Commission approved the application from PNM, which outlines how the state’s largest utility would supply power to the data center.

“There are a lot of people who worked on this from the governor’s office right down to the council of the village of Los Lunas,” said Commissioner Sandy Jones, who represents the district that includes Los Lunas. “We’re being asked to do our small part in this case. I wish we could bring in more projects like this.”

Facebook and PNM both declined to comment.

The social media giant is considering Los Lunas and West Jordan, Utah, for the site of a data center. Utah lawmakers hope to lure Facebook with $240 million in tax breaks, but the strategy hit a snag Tuesday when the Salt Lake County Council decided to vote against the tax breaks when they come up for consideration in a crucial meeting next week.

The Los Lunas Village Council already has approved up to $30 billion in industrial revenue bonds for the project.

Los Lunas has offered an incentive of 100 percent property tax abatement over 30 years in exchange for a payment-in-lieu-of-taxes plan that begins with $50,000 a year with the construction of the first building up to $100,000 per year with the construction of the sixth building.

PNM’s special services contract describes a mechanism for providing renewable energy to the proposed data center, which would include the construction of three solar facilities as well as a high-voltage electric line.

Under the contract, PNM would provide electricity to Facebook using a calculation that includes a fixed rate for 10 years, with a formula to determine costs after that. Facebook could pay PNM around $31 million per year, according to PRC filings.

The contract also contains a “green energy rider,” which allows the utility to procure renewable energy for just one large customer. If the Los Lunas data center becomes a reality, it would be one of the largest electricity consumers in the state.

At the meeting, an attorney for the PRC said staff recommended approval of the contract with a minor modification clarifying that while some costs might remain fixed for Facebook, it is up to regulators to determine how much of the costs PNM is allowed to recover in rate cases.

PNM has said the utility’s 530,000 customers would not absorb any of the costs of the Facebook project if it moved forward because it would be entirely funded by the technology giant.

Staff originally requested that PNM provide an annual report to the PRC disclosing the revenue the utility receives from Facebook, but retracted the suggestion when PNM said such a report could disclose Facebook’s sensitive information.

The project is estimated to bring in up to 300 construction jobs over seven years, and up to 50 full-time jobs at the data center in its initial phases.

“We thank the PRC for its decisive vote and contribution to our ongoing efforts to bring more jobs to our state,” state Economic Development Department Secretary Jon Barela said in a statement to the Journal. “This action paves the way to potentially create large-scale economic growth and strengthens our efforts to diversify New Mexico’s economy.”

Utah’s utility regulator is expected to complete its review by Aug. 31. Facebook is likely to make a decision in early September.