The green energy tariff regulators approved for the $250 million Facebook data center being built in Los Lunas could trigger a “sea change” for renewable energy in the state, according to public utilities attorney Bruce Throne.
Throne made the comments Wednesday evening at an event hosted by the Santa Fe Solar Energy Association and the Santa Fe Sustainable Everything Advocates. Throne was retained by Facebook to guide the social media giant through negotiations with Public Service Company of New Mexico and the state’s regulatory process, though he told his audience at the Santa Fe Public Library’s Southside branch that he was making his presentation as a private attorney and not on Facebook’s behalf.
At the event, Throne expanded on the argument made by environmental advocates when Facebook’s contract with PNM was facing regulatory approval: that the green energy tariff, also known as the green rider, could act as a template for other organizations to secure special rates with utilities for renewable resources. Those special rates could in turn attract new businesses to the state and add new solar and wind facilities to the power grid.
“This is an incredibly important tool for economic development,” said Throne, who referred to statistics showing the solar energy industry employed 1,899 people in New Mexico as of November 2015.
As approved by the New Mexico Public Regulation Commission, the tariff creates a legal mechanism for PNM to acquire renewable energy on Facebook’s behalf and then to be compensated by Facebook for those resources. The data center’s energy would come primarily from three solar facilities built by PNM and funded by Facebook.
When the facilities produce more energy than the data center uses, PNM would credit Facebook. Should the solar facilities produce less energy than the data center requires, PNM would power the site with its existing infrastructure at a rate that includes a fee that is fixed for 10 years, according to a different part of the contract.
Public records show Facebook could pay PNM up to $31 million a year for electricity.
Throne said the tariff creates several requirements for an entity to be considered a “qualified customer” eligible for the program. Among other things, customers must be “new” (they can’t have taken service from PNM in the past), they have to enter into a special services contract with PNM, the customer has to use a minimum of 10 megawatts of energy and the customer must create 10 megawatts or more of renewable energy.
“The (PRC) would have to approve each deal under the tariff, but a precedent has been set here for any large customer to come in and do something similar, even with another utility,” said Throne.
One member of the audience pointed out that a New Mexico-based organization that had historically been a PNM customer could likely work around the first requirement by creating a new company, which Throne agreed was a possibility. He also said the tariff could be a way to fund utility infrastructure improvements without using state or even utility money, because under the tariff, all system improvements resulting from the added facilities are the financial responsibility of the qualified customer.
Throne, who over four decades in the legal profession has represented utilities, regulators, and businesses, said the green energy tariff is unlike anything he’s ever encountered in his career.
“This is one of the few things I’ve ever seen that is actually win-win-win,” he said.