November 3, 2022

PRC approves community solar bill credit

After initially rejecting the proposals from the state’s three investor-owned utilities proposals for their community solar programs, state regulators approved one part of the modified versions the three utilities submitted—the bill credits. 

This came as a result of advice notices the utilities were required to file. The notices inform community members and potential developers about the procedures necessary to get a community solar project going. 

Community solar projects are arrays that produce electricity utility customers can purchase through a subscription process. This allows people who cannot afford or get solar power like low-income homeowners as well as renters and apartment dwellers to benefit from clean, affordable solar. The utility takes the solar from the array and delivers it to the subscribers within their territory. The subscribers then benefit from a bill credit, which will be calculated on a per kilowatt hour basis.

New Mexico Public Regulation Commission Solar Innovator Art O’Donnell explained that the utilities’ advice notices contained three components—the bill credits, the agreements between the utilities and owner of the solar array, and the rate rider.

He said the three elements each have a different sense of urgency.

“The solar bill credit is the most important thing to get in place now because that’s the fundamental economic driver for whether people are going to bid into this program,” O’Donnell said.

He acknowledged that there are still some questions and concerns about the bill credits, but those can be addressed in a later rate case. O’Donnell said the bill credits were consistent with what has been seen in other states, especially Colorado. He said the bill credits range between $0.085 and $0.105 per kilowatt hour. 

“The important thing about getting them in place is so that there’s some certainty among the developers,” he said.

The PRC previously rejected the advice notices on Oct. 12 after finding that they weren’t in compliance with the community solar rule that the commission had adopted. The commission required the utilities to make changes.

The commission told one utility, Southwestern Public Service Company, to submit a new one because its bill credit would have required the subscribers to pay for transmission of electricity. The community solar rule allows utilities to charge for distribution, but not for transmission. The difference between the two is distance. Transmission occurs over longer distances and is done at higher voltages.

The utilities have opposed the PRC decision not to allow them to charge transmission costs and SPS is leading the effort to change that with an appeal to the New Mexico Supreme Court.

While SPS did file a new advice notice that would not make subscribers pay for the transmission costs, it did so under protest.

When it comes to the agreements that community solar developers must enter into with the utilities, the commission found that there was too much variation.

O’Donnell said they ranged in length from 13 to 90 pages and, on one end of the spectrum, took a form similar to a power purchase agreement.

The PRC hopes to create more conformity in the agreements.

O’Donnell said the PRC does not want community solar developers to face entirely different types of rules depending on which utility’s territory their project is located within. He said he and another facilitator are having weekly meetings with the three utilities and hope to reach some agreement about conformity by the end of the month.

The rate rider, which essentially allows the utility to recover the costs of administering the program, will likely be controversial. 

O’Donnell said the PRC has more time to work out the rate riders, including potentially having a hearing on the topic.