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PNM Integrative Resource Planning kick off, part 2

The July 19 PNM Integrative Resource Planning process meeting was opened up to questions.

Western New Mexico President Joseph Shepard asked what percentage of electricity is from renewable sources in New Mexico.

"It is 10 percent now, will be 15 percent by 2015 and 20 percent in 2020," Pat O'Connell, PNM planning and resources director, said.

To Shepard's question about which type of renewable energy is most efficient in New Mexico, O'Connell said solar, although it is more expensive, does a better job. Wind is cheaper, but blows the hardest in the spring when the demand is lower. "At the peak hours of the day, we are getting only 5 percent from wind." He encouraged the use of renewable energy credits.


"I would love to entertain PNM to help the university provide photo-voltaic solar," Shepard said.

"It could be us or other developers," O'Connell said. "The rate structure is a blend of peak and base rates."

Nick Sussillo of the Silver City Office of Sustainability said after the commission of solar at the town wastewater treatment plan, the town ahs talked about community solar. "We don't have the ability as other states do," he said. "But community solar wouldn't be tied to a roof or adjacent property."

O'Connell said his team is looking at the possibility and sifting through what it means.

"We talked about having a PNM-owned facility to get a locked-in rate, given the uncertainties of price," Sussillo said.

"We're serious about addressing the issue, but we want to do it right," Bob Darnell, PNM senior vice president of public policy, said. "We could not implement it one way in Santa Fe and another way in Silver City. There are serious rate design issues. We don't want to embed it in a solar garden."

Kurt Albershardt, Murray Hotel owner, said renewable energy credit net metering plus the REC offset is necessary. "The grid is still there even if the array is at zero. We have to make sure PNM is getting compensated for the grid. If I put photo-voltaic on my house, I get the benefit of a fixed rate, with less volatility in prices, which provides energy security, especially for those on fixed incomes."

Gerald Schultz of Tyrone said the number of people using renewable energy is increasing. "On a trip we saw too many windmills. They are making rural areas look like cities. Someday it may reach a point there are so many solar arrays and windmills that it might bring a backlash."

"That a great illustration of the balance we are looking for," O'Connell said. "In eastern New Mexico, farmers think wind helps keep the farm viable. Different people have different points of view. There are environmental benefits, but also environmental impacts."

Mike Sauber of the Office of Sustainability suggested that brownfields, such as reclaimed mining land in the area, be used before virgin land. "The other aspect is reducing need and demand."

Ron Parra said, due to environmental concerns and limiting of forest thinning, "in the past two years, we have lost one-third of our forest to fires. How much pressure from environmentalists do we have to sustain?"

"We have strong advocates for cost and the environment, and reliability also has to be there," O'Connell said. "The pressure is to do our best to balance them."

Darnell said PNM works with the EPA under Region 6 out of Dallas, as well as the national EPA. "I was once highly critical of the EPA, but I have developed a respect for them. They have to promulgate regulations. The rules they have to live by don't always fit the scenarios. They are looking for states to come up with regulation plans. Whatever the EPA accepts is subject to suing by environmental groups, which is the way some of them do business. It takes the EPA a long time to accept states' plans, because they have to cover their tracks. Some environmental groups are easier to work with."

Parra said he was seriously considering photo-voltaic. "Excell Electric just last week reversed its prices and is increasing them. Does PNM have any plan to increase rates if someone puts in solar?"

"We want to leave prices in place until our next request for a price increase," Darnell said. "Photo-voltaic can be zero cost. When you use less than you are creating, you put it into a bank and then when there is higher use, it is pulled out of the bank. Public policy is questioning whether it is fair, because you are still on the grid."

Shepard asked if the grid is still getting compensated. Albershardt answered and said there were different rate structures for small and large systems. "A standby charge for the grid is probably a model where we can agree."

Darnell said he was "sick and tired of talking about avoided costs. We build from the bottom up. What is the value of the grid?"

Albershardt said it probably means that it would be much better if the price reflected real costs, which doesn't let the customer make the decision.

Priscilla Lucero, Southwest New Mexico Council of Governments executive director, said a study by the EPA, in partnership with the National Renewable Energy Laboratory, has done a study on using brownfields in Grant County and Las Cruces. It is now being approved.

O'Connell asked for a link to the study and the approval, when completed.

"We are also a pilot site for a broadband study," Lucero said. "How does that impact you, so we know how it will impact us, as we increase our broadband capacity?"

An answer will be forthcoming.

Denise Smith of the Office of Sustainability said two large fires that began in the northern part of the state were caused by trees falling on transmission lines. "Are you looking at widening the easements?"

Stan Garrison of the Silver City PNM office said: "We have to take a broader look. As far as the easements, we are not looking at widening them. Our obligation is to take care of trees in the easement. If it is a safety issue, we will work with contractors. We are looking at primary and secondary voltage. It is your responsibility to take care of trees on your own property. We do it on a case-by-case basis."

Sussillo mentioned a New Mexico Energy, Minerals and Natural Resources Department energy assurance plan. "How do communities assure the energy is there?"

Darnell said it gets to the understanding of the capacity of the grid. "Is storage in the public interest?"

"If we lose power, our emergency vehicles can't go to the gas station without electricity," Sussillo pointed out. "The broader issue of public safety loses. I suggest you do B, while we do A."

Darnell said the utility companies in Texas are starting to put in smart metering, in a collaborative approach.

Silver City Mayor James Marshall asked about prices.

"The demand to rebuild as part of the San Juan solution causes the problem that in 2018, we will probably ask for a 5 to 6 percent rate increase based on what we know about the load," Darnell said. "It would be just for building infrastructure. It costs $6.6 million just to rebuild. For instance, in Santa Fe, we have no additional sales, but we still have fixed costs."

"We're still waiting for a list of needed infrastructure," Marshall said. "In rate cases, there are capital costs. We want to know if we're paying for everyone else, while we're deteriorating."

"District costs are socialized," Darnell said. "The Rio Grande corridor is likely subsidizing the smaller communities."

Garrison said locally, PNM has just completed $1.3 million in infrastructure in the Mining District to double its capacity. "We are looking at other projects. We will be replacing 35 poles in the Burro Mountains and redoing the underground lines in Tyrone. There is another project out of Tyrone to tie into the grid in Silver City."

"Stan is doing a good job," Marshall said. "He has already told me all this."

"Stan has a large job," Darnell said. "The public often doesn't know about these projects. In Santa Fe, we call it a stealth project, because people don't realize it's being done."

Schultz asked if doing laundry at 3 a.m. benefits the consumer.

"Assuming you are on standard rate, the rate is the same," O'Connell said.

Albershardt said PNM's costs are higher at 3 p.m.

"We are out of the IRP and into pricing," Darnell said. "Electrical use in the state is changing. PNM is looking at replacing the baseload capacity. Many hours of the year, San Juan is on the margin. It is running 24 hours a day. Utilities must recover their regulated price. That could justify a higher price at peak daytime use, but we would have to justify it. Smart meters would help. We would like to do smart meters, but we don't have the cost justification in New Mexico. The use here is about 600 watts compared to 1,500 in Texas."

"In Texas, the peak loads are high, but they can't afford to build plants, because they can't recover costs," Albershardt said.

Sussillo asked if anyone could speak to energy efficiency in the future.

"We have a member of our team working on that," O'Connell said.

"For a small fee, we'll do an energy efficiency study," Sussillo said. "In small communities, the potential for energy efficiency is huge."

O'Connell said PNM has a whole home program for $40, but not for larger entities.

"In the last legislative session, New Mexico changed its energy efficiency policy slightly," Darnell said. "It capped the amount of dollars at 3 percent in the Efficient Use of Energy Act. I think it's because energy efficiency is a big subject. We have these goals that 5 percent of the retail load be met with energy efficiency. It gets back to policy and regulation. We think that with the energy efficiency systems we have in place, the consumer gets half of the benefit and the other half goes to the grid. What has happened over the years is that the commission doesn't approve pricing structures to protect PNM. When we promote energy efficiency, we are losing. It is not in our interests and is sort of unsustainable.  Coming down here to talk about a rate increase is not fun. It has nothing to do with San Juan how fast the system should be depreciated."

Smith pointed out the reality in Grant County is that it is a low-income community. "We went into 800 homes and helped provide them energy efficiency."

" The whole home program is at no cost to low-income customers," O'Connell said.

"We have a database of the homes," Smith said.

Darnell encouraged those present to "shoot a note to the Public Regulation Commission Chairman Ben Hall for the agenda, as the administrative law judge decision will be discussed."

The presenters packed up and headed to a similar meeting in Deming.

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