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PRC orders PNM to acquire more wind energy

SANTA FE – Can the state Public Regulation Commission tell an electric company how to run its business if the firm is obeying the law?

The commission, in a 5-0 vote, ordered Public Service Company of New Mexico to buy more wind power and use it to supply electricity. The company, typically called PNM, is challenging the directive as excessive and expensive government interference.

With about 500,000 customers, PNM is the state’s largest electricity supplier. Like all utility companies in New Mexico, it is bound by state law to diversify its energy portfolio by providing solar, wind and other alternatives to coal and natural gas.

But the law allows utilities to meet the renewable energy requirement in two ways: It can buy the power, or it can purchase renewable energy certificates from another company that generated more than its share of alternative energy in New Mexico during the last four years.

PNM wanted to buy the certificates for wind, thereby controlling its costs and putting money in another utility’s account.

But the commission, led by Democrat Jason Marks, said it would not accept more paper certificates from PNM. It wanted wind power.

“Paper compliance does not achieve the goal of generating more renewable energy,” Marks said.

A company spokeswoman initially said PNM would spend $5 million or $6 million annually to meet the commission’s order by purchasing wind power from a New Mexico plant. But the company last week altered
its stand and said it would fight the commission’s order.

PNM executives say they were following the law, and should not be ordered to change course to suit the commissioners’ desires.

The company wants Marks and the other commissioners to reconsider the order. Even the staff of the Public Regulation Commission says the company’s original energy plan complied with the law.

If the commission holds firm, the company could appeal to the New Mexico Supreme Court. Such legal battles typically take more than a year for a ruling.

On a related topic, the commission is split over the best approach for mandating renewable energy.

Republicans Ben Hall and Patrick Lyons say companies should be free to supply the cheapest form of renewable energy, which now is wind.

What is best for the companies’ bottom line is also least expensive to ratepayers, said Lyons, the commission chairman from Cuervo.

Marks’ stand is that solar power cannot be ignored by utilities simply because wind is cheaper for the moment.

The cost of solar will continue to drop as the technology expands, Marks said.

Another reason that solar probably must remain as an alternative energy source is that is more reliable than wind, said Roy Stephenson, director the Public Regulation Commission’s Utility Division.

New Mexico is a solid second nationally for sunlight that can produce electricity, trailing only Arizona, Stephenson said. Wind is not as constant and therefore not as easy for utilities to bank on, he said.

A spokesman for the state Energy, Minerals and Natural Resources Department said New Mexico now has seven wind-power plants and should add three more by 2015.

These wind plants produce 700 megawatts of electricity. One megawatt equates to 1 million watts.

New Mexico also has four large-scale solar plants and should add three more in the next four years. They produce 33 megawatts of electricity, the energy department said.

NM’s decision to challenge the commission’s order that it buy wind power is different from other legal skirmishes between utilities and the state, Stephenson said.

In this case, both sides agree that the company is in compliance with state law. Marks said the question becomes whether an elected commission, trying to diversify the state’s energy supply, has the discretion to order a utility to revise its business practices.