PNM offers to buy geothermal energy and more solar power

Electricity from the state’s first utility-scale geothermal energy project could be part of the Public Service Co. of New Mexico’s energy mix starting in 2014.

The utility submitted its new renewable energy procurement plan for 2013 and 2014 on Monday afternoon to the New Mexico Public Regulation Commission.

The plan calls for signing a 20-year power purchase agreement with Cyrq Energy Inc., which plans to build a 10-megawatt geothermal energy electric plant near Lordsburg in southwest New Mexico. Cyrq expects to invest about $100 million to construct its “Lightning Dock” plant, with January 2014 as the targeted start-up date.

PNM also proposes to add 20 megawatts of utility-owned solar energy electricity to the grid. The company currently generates 22 megawatts of solar power from five concentrating photovoltaic plants it installed in various parts of the state last year.

Under its new procurement proposal, PNM would nearly double output from concentrating photovoltaic by adding panels to its solar power plants in Deming, Alamogordo and Los Lunas, and possibly building one or more new facilities in Valencia and Luna counties.

In addition, PNM will add another 9 megawatts of electricity from customer-sited PV systems, extending its incentive program for homeowners, businesses and institutions that want to install their own systems.

If the PRC approves the plan, PNM will pay 4 cents per kilowatt hour to customers who install systems below 10 kilowatts of PV, and 5 cents per kWh for between 10 and 100 KW systems. Unlike previous incentive plans – which reduced the level of incentives paid to customers as customer-owned systems reached maximum, pre-determined tranches of power output – the plan calls for incentives to drop by one-half cent every six months.

Finally, PNM proposes to purchase renewable energy credits from wind farms to fully meet the state’s renewable portfolio standard, which requires public utilities to derive 10 percent of their electricity from renewable sources this year, and 15 percent by 2015. Wind RECs are a low-cost way to push PNM’s procurement up to the RPS mandates, allowing the company to save some money to continue meeting renewable requirements in later years, said Ron Darnell, senior vice president of public policy, in a news release.

“Our plan includes a blend of resources,” Darnell said. “We’ve taken input from the solar community and others as we prepared this proposal, because we know how important our customer-installed program has been to solar businesses in New Mexico. We also considered the resources we’ll be adding in 2015 and beyond. We’ll want to keep listening to our customers as we develop proposals for coming years.”

Renewable procurements, including the proposed purchases for 2013 and previous procurements that have yet to appear on customers’ bills, could cost about $20 million in 2013.

That’s less expensive than it would have been had PNM added more solar PV to its system in years past, Darnell said. That’s because the price of solar panels has declined significantly, allowing PNM to pay 40 percent less for its proposed 20 megawatts of utility-owned PV than it would have a few years ago.

Still, to offset the impact of renewable procurements on customers, PNM is asking the PRC to approve an annually adjusted renewable energy rate rider on bills to spread the costs out, rather than charge a large, lump sum for years of procurements through periodic rate-case recovery.

If the PRC approves the rate rider, customers would see the first charge of around $1.40 in their bills starting in August. That charge would be adjusted in July 2013 and would continue to rise annually, depending on renewable procurements each year.

Kevin Robinson-Avila,