The New Mexico Public Regulation Commission at its Oct. 2 meeting unanimously approved Public Service Company of New Mexico's purchase of the 140-mile, 345-kV-capacity Western Spirit transmission line from Pattern Development and the New Mexico Renewable Energy Transmission Authority. The decision clears the way for construction to begin. The line is eventually expected to carry as much as 800 MW from wind farms in eastern and central New Mexico westward via existing 500-kV-capacity lines in the Four Corners area that are being freed up as coal units there shut down [19-00129-UT].
Todd Fridley, vice president of New Mexico operations for PNM, said in testimony before commission staff that he expects two wind projects currently under development, Mesa Canyons and Clines Corners, will likely connect into Western Spirit. Under the transmission service agreements Pattern has executed with PNM, Pattern will be able to use 800 MW of transmission capacity on the line, Fridley said.
PNM will not recover costs associated with the acquisition of Western Spirit through retail rates, but rather through an incremental wholesale tariff charged to Pattern's customers as that company's wind farms come on line. PNM must include filings in its general rate cases demonstrating that Western Spirit project costs are specifically excluded. PNM will also be required to obtain prior approval from the NMPRC for any power-purchase agreements to acquire wind power from generation facilities to be interconnected to the line.
Pursuant to the May 1 agreement among the parties, NM RETA and Pattern Development will develop and construct the Western Spirit project, which will be acquired by PNM upon completion for a net investment of $285 million, according to a PNM statement. PNM expects the project to be completed in 2021. The capacity additions will strengthen the existing PNM system and provide upgrades to accommodate 800 MW of new wind capacity, the statement says.
"This will be Pattern's second suite of New Mexico wind projects delivered to the California market via merchant transmission," Johnny Casana, senior manager U.S. government & regulatory affairs for Pattern, said in an email. In aggregate, the projects represent more than 1,300 MW of wind and transmission primarily developed to serve California, he said.
"The development model of merchant transmission to enable high-capacity-factor wind is innovative, as it does not need to wait for the relatively slower time frame associated with the California Independent System Operator's transmission planning process or interregional planning efforts," Casana said.
The project should also have an influence on California's integrated resource plan, according to Casana. "The 800 MW of Western Spirit wind will be operational and serving California by 2021, but in the 2017-2018 IRP it was considered too uncertain to be included as a candidate resource in the model," he explained.
Casana said the wind projects will help resolve CAISO's recently announced resource-adequacy shortage (see CEM No. 1557). New Mexico wind is highly complementary to the California system, he said, "ramping up to extraordinary capacity factors in the afternoon just as solar is coming off line."
"Pattern Development is on track to create hundreds of construction jobs next year with a major wind and transmission build-out that is deeply in line with the goals of [New Mexico's] Energy Transition Act," Mike Garland, CEO of Pattern Energy and Pattern Development, said in a statement issued by PNM. He added that the decision will keep New Mexico "on a path toward becoming a national leader in clean energy."
"We are pleased that this project has received the required regulatory approvals and continues to move forward," Pat Vincent-Collawn, PNM Resources' chairman, president, and CEO, said in the statement. "We remain proud to be part of this project with Pattern and NM RETA and to expand our transmission grid in support of renewable investments that . . . improve our ability to make New Mexico a leader in clean energy."
In related news, the New Mexico Supreme Court on Oct. 1 denied without comment a petition by New Energy Economy that sought to find elements of the Energy Transition Act unconstitutional [S-1-SC-37552]. NEE in a news release promised to take its arguments against the ETA before the NMPRC. The organization contends that the law compromises the commission's requirement to regulate public utilities as designated in the state constitution and violates ratepayer due process.
The court has not yet ruled on PNM's joint petition asking the court to determine that the Energy Transition Act applies to all aspects of the utility's San Juan Generating Station abandonment, financing and replacement-resources application, filed to the NMPRC on July 1 [S-1-SC-37552].
"We are hopeful that the court will favorably consider our petition and confirm our position that the Energy Transition Act is the law of New Mexico and applies to all our San Juan abandonment filing," PNM said in a statement.
The NMPRC has scheduled a public-comment hearing on PNM's abandonment and securitization of the coal-fired San Juan Generating Station for Dec. 9, with evidentiary hearings to follow Dec. 10-19. Hearings on the proceeding regarding replacement resources for San Juan will begin with public comment on Jan. 21 [19-00018-UT and 19-00195-UT].