New Mexico has taken a great stride forward in the passage of the Energy Transition Act by adopting a requirement (the Renewable Portfolio Standard, RPS) for electricity sold in New Mexico to be 80% renewable-sourced by 2040 and 100% clean energy by 2045. PNM has announced that it can meet the 100% goal by 2040, 21 years from now. The PRC’s task now is to ensure that the energy procurements made are the least cost, from the cleanest source of energy available, and sufficiently in advance that the utilities can fully comply with the law on time.
Key to success in this task is close scrutiny of the utilities’ entire energy procurement process from the issuance of Requests for Proposals to signing a contract with the project developer. I am currently working on developing rules to require that this energy is procured by the utilities through a transparent and competitive procurement process.
The Energy Transition Act requires that New Mexico utilities use “competitively procured” renewable energy to replace fossil fuels in reaching the RPS goals. This is an important part of the law, because competition in procurement of energy will give us the lowest price, keeping rates down.
In 2018, I initiated a Notice of Inquiry docket into the competitive procurement practices of the three utility companies in New Mexico: PNM, SPS, and EPE. After obtaining information on these companies’ procurement practices and practices in other states, I got the Commission’s approval to convert that docket to a rulemaking docket, which was recently inexplicably voted closed by a majority of Commissioners (3 of the 5 Commissioners on the PRC), a week in advance of the hearing on the draft rule. Nevertheless, I will continue to work to have a competitive procurement rule in place as soon as possible. In the meantime, I will use all the tools of inquiry available to scrutinize utilities’ procurement practices on a case-by-case basis.
Distributed Energy Resources (DERs)
DERs are all the types of energy or technology that are “behind the meter” (on the house side of the electricity meter) that provide value to the home owner or the grid. They have been defined as “physical and virtual assets that are deployed across the distribution grid, typically close to load [the places where the energy is used], and usually behind the meter, which can be used individually or in aggregate to provide value to the grid, individual customers, or both.” From Distributed Energy Resources 101: Required Reading for a Modern Grid
DERS include rooftop solar systems, battery storage, energy efficiency practices, such as LED light bulbs and energy saver appliances, and demand-side management practices, such as time-of-use rate programs or thermal energy (passive solar) storage. When aggregated, DERs can support a more flexible and efficient grid and provide energy, capacity, and ancillary services for both the distribution and bulk power systems.
A modern grid that can integrate the high level of intermittent renewable energy we will have in New Mexico will need to be equipped to take maximum advantage of the services DERs provide to enhance grid reliability and resilience. I will work to require utilities to incorporate DERs into their plans for complying with the Energy Transition Act to get maximum value from the new technologies that will be integral parts of a clean grid of the future.
Wholesale Electricity Markets
Wholesale Electricity Markets permit utilities and independent generators of electricity to buy and sell bulk electricity through an electronic competitive bidding process. These markets are called Regional Transmission Organizations (RTOs) or Independent System Operators (ISOs). Because of the competitive bidding process, purchasing utilities can acquire electricity for a lower cost than if they had to produce it themselves. This benefit results in utilities saving the costs of having to build new plant (avoided costs). Solar and wind currently are the lowest cost resources, so many purchasers can acquire these resources at advantageous prices while avoiding costs of capital investment, saving ratepayers money.
One utility in New Mexico, Southwest Power Service Company (SPS), is a member of an RTO, the Southwest Power Pool (SPP). Another utility, Public Service Company of New Mexico (PNM), is in the process of joining the Western Energy Imbalance Market (Western EIM), a simpler type of wholesale market which may become an RTO in the future. These types of markets allow participating member utilities to realize very substantial savings that are passed on to ratepayers. I strongly support participation in these markets by all New Mexico utilities and the transformation in the future of the Western EIM into an RTO.
New Transmission Line Construction in New Mexico
The development of large amounts of renewable energy sources to comply with the new RPS requires the construction of some new transmission lines in the state, based on the locational needs of these renewable sources. Legislation introduced in the 2019 Legislature would have provided funding for a study to assess the needs for new transmission investment in New Mexico, but it did not pass. With the passage of the new RPS, this need is better defined.
I support a Transmission Study for New Mexico that would assess needs for: 1) new lines and opportunities to avoid building new lines through better use of existing lines or new technologies, such as battery storage, and 2) the use of new technologies, such as lines that transmit electricity in both directions and lines with new core material that increases line capacity. I will work to ensure any new transmission proposals use the most efficient designs, materials and locations possible, in order to keep investment costs as low as possible while maintaining reliability and resiliency.
Rural Broadband Service Expansion
The PRC is responsible for regulating the intra-state telecommunications industry under the Rural Telecommunications Act (RTA). A portion of the RTA establishes the Rural Universal Service Fund (RUSF), which provides $30 million annually for telecom services to rural areas, including broadband services. In 2017, the legislature amended the RTA to create a minimum $5 million carve-out program in the RUSF dedicated to specifically fund affordable broadband service expansion to unserved and underserved areas in New Mexico. The PRC’s rule implementing this mandate prioritizes unserved over underserved areas.