Public Service Company of New Mexico is challenging a directive from state regulators that it buy more real-time wind power for its electricity customers rather than using renewable certificates as outlined in state law.
The state Public Regulation Commission recently issued an order concerning PNM's 2011 renewable energy procurement plan to spend up to $6 million annually for wind power from a New Mexico plant.
Utilities, by law, can meet renewable energy directives by producing or buying the power directly or purchasing renewable energy certificates from another company that has exceeded state requirements with previous generation.
PNM proposed to spend $5 million to $6 million to buy certificates to help meet the 2011 requirement that 10 percent of its electricity be generated from renewable sources. But the commission, led by Jason Marks, said it would not accept more paper certificates. It wanted actual wind power.
PNM Director of Planning and Resources Cindy Bothwell said the certificates represent real wind energy.
She said PNM had proposed to buy the certificates from other companies at low cost – $4 to $10 a certificate – for wind energy generated a few years ago and banked for future use, permitted by law for up to four years.
Since the commission's order, Bothwell said, PNM has discovered it couldn't come up with enough real-time wind energy to meet goals this year and secondly, the price of certificates had risen into the $60 range.
"This really has some real ratepayer consequences," she said.
The company, the state's largest electric utility, contends it was following the law and wants the commission to reconsider the order, approved on a 5-0 vote.
Even PRC staff said the company's original energy plan complied with the law. If the commission holds firm, the company could appeal to the New Mexico Supreme Court.
PNM's decision to challenge the commission's order is different from other legal skirmishes between utilities and the state, said Roy Stephenson, director the commission's utility division. In this case, both sides agree that the company is in compliance with state law.
Marks said the question becomes whether an elected commission, trying to diversify the state's energy supply, has the discretion to order a utility to revise its business practices.
