February 11, 2017

Bill would ask utilities to choose least costly energy alternative

A solar array at Nellis Air Force Base. Wikicommons

State Sen. Joe Cervantes wants to ensure that electric companies in New Mexico are getting the best prices for their power sources, and he wants the state to use more renewable energy.

The Las Cruces Democrat this week introduced a bill that would require publicly owned electric utilities to choose the least-costly alternative when proposing purchases of new energy sources.

“This begins with the recognition that the price for renewable energy is falling dramatically,” Cervantes told The New Mexican on Friday. “So the goal behind this legislation would be to try to encourage a competitive market, which is emerging with renewable energy.”

Currently, Cervantes said, investor-owned utilities “are relying on their own generation of electricity.” His bill would encourage them “to open up and shop for alternatives that may have lower prices from renewable energy and, ideally, pass those savings on to consumers.”

Mariel Nanasi, executive director of New Energy Economy, a Santa Fe-based clean-energy advocacy group, has for years been advocating for such a change.

In recent utility cases before the Public Regulation Commission involving the state’s largest investor-owned electric utility, Public Service Company of New Mexico, Nanasi and other critics raised questions about whether PNM had seriously considered replacing coal and nuclear power with significant amounts of solar or wind energy. These cases included last year’s rate increase request and PNM’s plan to shut down two coal-fired units at the San Juan Generating Station near Farmington and replace the energy with other sources.

“I’m more convinced than ever that an open, competitive and transparent process will yield a cleaner, fairer, cheaper energy mix,” Nanasi said Friday. “And that means the creation of jobs, improved health and protection of the environment. This is the standard in more than half the states, with positive results to show for it.

“With a fair and transparent energy procurement process in place,” she said, “New Mexicans will be assured the best energy at the lowest cost.”

Nanasi said if Cervantes’ bill becomes law, there would be fewer legal battles “because the [Public Regulation] Commission, our utilities, stakeholders and the public will be equipped with the information and choices we need to pursue an energy path that benefits our communities.”

Asked for comment on the bill, PNM spokesman Pahl Shipley said Friday that the utility’s executives are “in the process of reviewing the proposed legislation and do not have a comment at this time.”

A 2008 study commissioned by the National Association of Regulatory Utility Commissioners and the Federal Energy Regulatory Commission said, “Competitive procurements can provide utilities with a way of obtaining electricity supply that has the ‘best’ fit to customers’ needs at the ‘best’ possible terms. In principle, competitive procurements accomplish this goal by requiring market participants to compete for the opportunity to provide these services.”

The report says a utility may benefit financially from the selection of its own self-build offer or a proposal from an affiliate. To guard against that, the report says, an independent monitor should be involved, and efforts should be made to make sure the procurement is transparent.

Cervantes’ bill calls for a “qualified independent evaluator” to be agreed upon by a utility, staff from the Public Regulation Commission’s Utility Division and the state Attorney General’s Office.

The utility would have to provide the evaluator with “prompt and continuing access to all documents, data, assumptions, models, bidding and weighting criteria used, reviewed, produced or relied on by the utility in the preparation of its resource procurement plan,” the bill says.

The evaluator would “verify the results and investigate resource options that the utility did not consider.”

Then the evaluator would report to the Public Regulation Commission on whether the utility’s procurement process was reasonable and “sufficient to solicit and evaluate bids in a fair and reasonable manner consistent with the public interest.”

The bill has been assigned to the Senate Conservation and Judiciary committees. No hearings have been scheduled.

Contact Steve Terrell at 505-986-3037 or sterrell @sfnewmexican.com. Read his political blog at www.santafenewmexican.com/news/blogs/politics.