PNM Solarization: Coming to Your City Soon. Be Very Aware

This can happen in any city in PNM’s service area. PNM offers to produce a solar installation to power your City facilities and pay for the cost through customer rate increases over time. Sounds reasonable until you read the fine print. Very clear analysis explains why..

Guest blogs may be a routine feature of Retake. We’ve had blogs published by Roxanne, Bruce Berlin and now Ron Flax-Davidson. The process provides a different voice and perspective and also distributes the Retake voice more equitably. PNM has a way of making most all of its proposals obscure and polishes each with a veneer that appears alluring until you scratch beneath that veneer. Ron Flax-Davidson has done the scratching for us and provides a crystal clear summary of all that is wrong with the PNM plan and also questions why it has taken the City so long to implement the far better proposal for solarizing City institutions about a year ago. It would appear that the City doesn’t just ignore charter ordinances (e.g. RCV: Thank you Supreme Court for your UNANIMOUS decision), they also ignore well-grounded commission recommendations. After reading, at the bottom of this page, locate your City Councilor and Mayor contact information and let the Council and Mayor know that you want solar, but you want local installers and local residents to do the work. For more on why, read on. Thank you, Ron.

As you know, over a year ago, the Sustainable Santa Fe Commission recommended that the City undertake an analysis of City properties that might be available to support the installation of multiple behind the meter distributed generation (DG) photo-voltaic (PV) solar facilities that could provide solar electricity for City use [Paul: DG – PV oversimplified = rooftop solar]. This recommendation included the expectation that following such an analysis, the City would issue a request for proposals to acquire such behind the meter DG PV solar facilities for use on compliant City properties (either via outright purchase or via Power Purchase Agreement). PPA’s essentially allow a private company to install the solar, receive tax credits for the installation and then sell the equipment back to the purchaser over time with monthly charges generally far less than prior energy rates. For more on PPA’s click here.

I have not seen the results of such an analysis, nor am I aware that the City issued any such RFP to obtain proposals for the supply of such solar power, nor am I aware that the City has acquired any such solar power facilities since issuance of this recommendation over a year ago. This approach has the benefit of being already authorized under New Mexico law and regulation, would be fully compliant with City regulations, and could be implemented very quickly. This approach would also favor local businesses that currently provide such products and services, generating significant numbers of local jobs and income. Additionally, I would expect that such a local approach would result in a lower cost of energy for the City, compared with current and likely future electric costs (Paul: meaning PNM’s proposal).

The alternative approach, seeking a proposal for a single large solar array from PNM is fraught with issues.

  • First, why is the PNM approach being contemplated now, given that the City has not exhausted opportunities under the path recommended by the Sustainable Santa Fe Commission to acquire behind the meter DG PV solar power?
  • Second, the alternative PNM approach is not currently authorized under New Mexico law and regulation. Instead, such an approach would require a specific approval by the PRC to authorize PNM to provide a generation station for the City’s exclusive use and cost, outside the applicable PNM general tariff. Additionally, any such customer specific facility and tariff is not likely to be approved by the PRC for several reasons:
    • Under New Mexico law and regulation PNM has been granted monopoly power to benefit the general public, but under restrictions to ensure such monopoly power is not abused.
    • New Mexico law and regulation have restricted the rights of PNM to use its monopoly power to provide special benefits to any particular party (like the City), instead PNM is expected to use its monopoly power to provide electricity to all ratepayers on an equally priced basis. PNM is granted limited monopoly power to create a pool of generation, transmission, and distribution assets and then provide electricity at lowest cost to all ratepayers.  The regulatory compact for providing PNM with monopoly power is that no individual ratepayer should be provided a better rate than other ratepayers, e.g., due to provision of such power from selected facilities, or otherwise. Any proposal to change this regulatory compact would likely require legislative approval or be tied up in legal actions for several years.

While PNM points to the Facebook installation as a model for Santa Fe, Facebook is an example of a unique case, where a new party was considering coming to New Mexico, and the PRC made an exception to the general rule to allow PNM to develop renewable energy facilities to serve Facebook at a rate related to the cost of such facilities. The City is not a new customer, and such a proposal raises issues as to why PNM should be allowed to develop a facility for the City that cannot be used to serve the ratepayers generally. Taken to its extreme, if authorized, such an approach would encourage large energy users to opt for their own facilities and small customers would likely have to pay more when such load is taken out of the general system. [Paul: put simply, big cities, corporations and other big entities get sweetheart deals with lower rates and renewable energy, removing them from the grid entirely and leaving us small guys with higher rates and coal-fueled energy. No wonder PNM likes this. But it is hard to see why our City would.]

Additionally, the proposal for PNM provision of PV solar services to the City at a special rate, would allow the benefits of monopoly power authorized by the legislature to PNM to be used to compete unfairly with non-monopoly companies. How can smaller DG PV installers compete with the monopoly power of PNM? The legislature and PRC have determined that PNM should not be allowed to provide services outside their monopoly. To allow PNM to compete against local DG PV installers would likely result in the destruction of this local industry, with no concomitant benefit.

Any approval of PNM’s encroachment outside their currently authorized regulated monopoly rights might be authorized by the PRC (and legislature) with an agreement by PNM to give up some of their monopoly power, e.g., by allowance of Community Solar, where an unaffiliated provider of large scale PV solar can use the regulated monopolies’ (PNMs) transmission and distribution system to “wheel” power to the end-user (the City).  This type of solution has been used successfully in many states, including in California and Colorado. This would allow for another alternative approach by the City to obtain large-scale (and likely cheaper PV electricity).

In any case, the reality is that the City’s plan to go solar is a good one, and one that has been endorsed by the Sustainable Santa Fe Commission and many residents for many years, particularly since PNM has continued to rely on old, dirty, polluting and more costly conventional power generation systems (85% of PNM’s system is from coal and nuclear facilities and only 3% comes from solar, and under 15% from renewables).

Additionally, we have seen PNM’s constant rate increases, due to the increasing costs of its conventional power generation systems (i.e., coal and nuclear generation facilities), including the escalation of fuel costs for conventional power generation systems (natural gas, coal, and nuclear), while solar costs remain fixed, as such facilities have no fuel cost, little maintenance costs, and the amount of solar power provided by such systems does not change. Finally, the costs of such behind the meter DG PV solar systems have dramatically declined and are now below the cost of conventional power generation systems (natural gas, coal and nuclear).

The current Resolution (and revised version) provide for an unlikely path to a solar Santa Fe, one outside the currently legally authorized mechanisms for energy supply, one that is unlikely to be approved or will likely take years to complete, and will be beset with controversy, regulatory issues, and legal battles. The better approach is to immediately review how currently authorized, local, behind the meter, DG PV solar systems can be installed on City property in accordance with current law and regulation to reduce City costs, and provide clean energy, while considering a longer-term approach to authorization of Community Solar projects. [Paul: The other reason PNM’s plan is a bad idea is that in the end PNM would own our solar and charge us for its use forever whereas in either of the other options, the City owns the solar installation(s) and once paid off would receive its solar power virtually free. Forever. Not so with PNM. Of course.

Thank you, Ron for this excellent analysis. To our readers, please write and call your Mayor and City Councilor and let them know that while you want solar for City facilities:

  • You do not want the City’s renewable future to be grounded in a partnership with PNM;
  • You do not want to wait for years for renewable while the City and PNM battle with the PRC for a special ruling that is likely never going to be forthcoming;
  • You would far prefer the City implement the Sustainability Commission recommendations that are over a year old and were actually the result of painstaking deliberation among people who were put on the Commission precisely to help the City avoid scams like this;
  • You want local businesses hiring local people to install the solar facilities, thereby benefiting the local economy, not lining the pockets of PNM shareholders and executives.
MAYOR JAVIER GONZALES (505) 955-6590, jmgonzales@santafenm.gov

Kelley Brennan, City Attorney: (505) 955-6511.   kabrennan@santafenm.gov  

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