PNM requests relaxed renewable energy mandate

ALBUQUERQUE - New Mexico's largest electric utility is seeking a waiver from regulations that require the use of more renewable energy, saying it won't be able to comply next year without exceeding cost thresholds designed to protect customers.

Public Service Company of New Mexico filed a revised version of its proposed renewable energy procurement plan in December, and the Public Regulation Commission has scheduled a hearing in April on its waiver request. Commissioners don't expect to make a final decision until late spring.

Commissioner Jason Marks said the request will undergo close scrutiny to ensure PNM is making a "reasonable effort" to meet the state's requirements.

"We need to determine if they have done everything that they could have done and have planned to do everything they can do in order to either comply or come close to complying," he said.

As part of New Mexico's renewable energy portfolio standard, 10 percent of the electricity generated by utilities that serve customers around the state must come from renewable resources such as wind, solar and biomass. That requirement is up from 6 percent last year, and it will increase to 20 percent by 2020.

The requirement also specifies that utilities must be diversified in the types of renewable resources they are tapping into, and the cost of doing must result in only modest increases in customer bills. The cost threshold this year is 2 percent. It will climb to 2.25 next year and 3 percent by 2015.

PNM spokeswoman Valerie Smith said the challenge is balancing all of the requirements.

"In order to stay below the reasonable cost threshold, we have asked for a wavier and said that we will not be able to reach the quantity and diversity requirements and stay within that cost threshold," she said.

PNM plans to meet the requirements this year with nearly $5.5 million in wind energy purchases and more solar generation facilities, including five units that will produce about 22 megawatts.

To meet requirements in 2012, Smith said the utility would have to invest between $3.3 million and $6 million in renewable energy generation. However, doing so would result in an increase in customer bills beyond the 2.25 percent limit allowed in 2012.

PNM is also seeking a variance for the diversification requirement. The utility contends that the cost threshold imposed by the Public Regulation Commission and the expense of solar compared to other renewable energy resources limits the amount of solar it can develop and still meet all of the mandates.

Smith also pointed to participation in PNM's solar incentive program for those customers who have installed photovoltaic systems on their homes or businesses.

"It's just mainly that as costs go up and distributed generation adoption grows, then our compliance goes down," she said.

Another issue is the limited availability of electricity generated by non-solar and non-wind sources. A biogas plant that PNM had hoped would be ready this year has been delayed.

By 2012, PNM expects its renewable energy portfolio to include nearly 64 percent wind, about 9 percent solar and 2 percent biomass.