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ALBUQUERQUE — Public Service Company of New Mexico has come up with a plan for incorporating renewable energy into its portfolio, and it’s very different from an initial proposal that sparked a firestorm of criticism from the renewable energy industry, environmentalists and consumer advocates.
PNM, the state’s largest utility, met a deadline Monday for submitting its renewable energy procurement plan and other documents to the state Public Regulation Commission.
The product of six months of meetings and intense negotiations, the plan could lead to nearly 80 megawatts more of solar power - enough for 26,000 homes - through expanded incentives for customers who install solar equipment on their property and large-scale solar plants made up of hundreds of thousands of panels at various sites around New Mexico.
PNM’s initial proposal, submitted to regulators last summer, called for scaling back its solar incentive programs.
“Because there was so much concern that came out of the original filing, we decided it was in our best interest and everybody’s best interest to try to come to an agreement that worked for everyone,” said PNM spokeswoman Cathy Garber.
Six percent of the energy generated by utilities that provide New Mexico customers with electricity must come from renewable resources such as solar or wind. That requirement increases to 10 percent next year and 20 percent by 2020.
Garber said PNM must meet the state’s requirement while trying to keep electricity affordable for its customers.
“That’s a hard mix, so when we can have other people’s input and other ideas at the table, it’s always helpful,” she said.
Experts say negotiations like those that led to the PNM plan are becoming more common as utilities try to avoid regulatory delays and courtroom battles. Negotiations also are becoming more of a necessity since much of the development of renewable energy and energy efficiency programs takes place outside utilities.
“It used to be that your resource planning was between the consumer advocate, the utility and the commission, and it was how can we keep the lights on at the lowest cost. Now, it’s a little more complicated. You have these other objectives and other players,” said Adam Pollock, research analyst with the National Regulatory Research Institute in Maryland.
In New Mexico, environmentalists and officials with the renewable energy industry said PNM’s initial decision to limit its solar incentive programs would have had a chilling effect on the young solar panel installation businesses that have popped up around the state.
David Griscom, a program manager with the Regional Development Corp. in Santa Fe, said the utility’s initial plan seemed counter to the goals of state leaders who have tried to position New Mexico as a clean energy state with a green economy.
“From an economic development standpoint, for the renewable energy industry in New Mexico to make strategic decisions, investment decisions, they need certainty. They need to know a particular incentive program is going to be in place for X number of years so they can build their businesses,” Griscom said.
If the Public Regulation Commission approves PNM’s new plan, those businesses will have some certainty.
The proposal lays the groundwork for the utility’s first significant venture into utility-scale solar with construction of up to 45 megawatts of capacity. It also allows for up to 10 megawatts of PNM-owned solar facilities to be sited at government and tax-exempt facilities that currently cannot take advantage of solar tax credits.
The utility also plans to build a biogas plant and develop a 500-kilowatt solar demonstration project for testing energy storage technologies.
As for incentives, the plan would expand the program for customers with solar systems from 2 megawatts to 24 megawatts and change the way customers are compensated for the power their systems generate.
Currently, PNM provides customers with a renewable energy credit for the electricity they generate and use and a net-metering credit for any excess power. The proposed program would give customers one credit for energy produced by their systems.
The credits would range from 22 cents to 26 cents per kilowatt hour based on the size of the customer’s system. When certain participation levels are reached, the credits would be reduced. The credits could eventually bottom out at 16 cents per kilowatt hour.
Those who negotiated the new plan said the tiered reductions would help control the program’s cost as more people participate.