New Mexico regulators this week took the first step toward establishing a community solar program for investor-owned utility customers in the state, but rules that will get the program up and running can't come soon enough for hundreds of developer applicants interested in taking advantage of renewable energy from the state's most abundant resource.
New Mexico's Community Solar Act, passed during this year's legislative session, goes into effect June 18, but the New Mexico Public Regulation Commission is not likely to have rules in place for utilities to administer the program and interconnect installations until April 1, 2022.
NMPRC staff said the response to the prospect of community solar has been overwhelming, with approximately four times the total capacity of the program already requested in more than 150 project applications [21-00112-UT].
Ryan Jerman, corporate counsel for Public Service Company of New Mexico, in an email to NMPRC Hearing Examiner Russell Fisk said the utility since February has received 162 requests for 761 MW total of small-generator capacity, causing PNM "to spend a lot of time, resources and money reviewing the applications."
The new law requires a 200-MW cap on community solar projects, to be allocated proportionately to the state's investor-owned utilities, until November 2024. The cap specifically excludes "native community" solar projects and those of rural electric distribution cooperatives. Low-income customers and organizations serving them will get 30 percent of the electricity produced by the installations each year under the law, which also requires that 40 percent of an installation's capacity be made available in subscriptions of not more than 25 kW.
The commission at the meeting approved an order clarifying that an applicant's position in a utility's interconnection queue provides no advantage at this point. The order also establishes that NMPRC's existing interconnection rules and manual, currently under revision, will remain in effect until amended or replaced by the commission. The order requires the state's three investor-owned utilities to provide notice to current, future and likely applicants of these conditions no later than June 30.
Most of the rules, including fee structures, interconnection standards and cost-recovery mechanisms for utilities administering the programs, will be worked out in public hearings and workshops at the NMPRC over the next several months. The first workshop is scheduled for June 24, during which stakeholders will be asked to provide input regarding consumer protection, ratemaking, market oversight, community outreach and involvement, and information collection.
A separate interconnection rulemaking to revise the interconnection manual is currently undergoing a stakeholder process and is expected to conclude in 2022 [20-00171-UT].
Also at the meeting, the commission approved New Mexico Gas Company's plan to recover extraordinary fuel costs stemming from the February cold-weather event, during which the utility was forced to pay for natural gas at prices much higher than usual due to capacity shortfalls and equipment weatherization issues at natural gas suppliers in Texas [21-00095-UT].
NMGC will spread the impact of the high prices, which are passed through to customers, over a 30-month period using a modified recovery method that includes a residential rate based on annual usage; an irrigation rate based on February usage; and a uniform rate for all other nonresidential customer usage.
In the hope of preventing a recurrence of such a gas-shortage event, the commission's order requires NMGC to seek measures and potentially secure access to gas storage facilities under its control and report on these efforts within 12 months. NMGC must also provide proof of efforts to negotiate with natural gas suppliers with which it did business during the storm in an effort to reduce costs retroactively. Any discounts obtained through the negotiations must be passed on to its customers. The gas company will participate in a regulatory review conducted by NMPRC utility division staff of the impact of the 2021 event within six months (see CEM No. 1632).
The commission previously approved a $100-million loan to enable NMGC to pay its gas bills related to the cold-weather event. An additional $7.5 million, which the company paid out of equity and its line of credit, were charged after the loan approval and added into the company's recovery costs. The commission in its order also granted NMGC's request to refinance the loan, reducing its interest rate from 2.5 to 0.75 percent, and include the additional $7.5 million in recovery. The gas company will also recover carrying charges for the debt at 0.75 percent subject to quarterly adjustment.