September 5, 2023

During groundbreaking of SunZia transmission line, lawmakers discuss the future of New Mexico’s electric grid

U.S. Sen. Martin Heinrich

Officials break ground on the SunZia transmission project.

The electric grid in the United States was built in a time when populations were smaller, climate change was not a concern and cybersecurity wasn’t something people were thinking about. But that is changing and Rikki Seguin, the executive director of Interwest Energy Alliance, said a regional transmission organization is needed to help address challenges associated with that.

Seguin presented to the interim Science, Technology and Telecommunications Committee on Friday during its meeting in Corona.

She compared an RTO to air traffic control for electric wires, in particular transmission lines.

“When we’re talking about transmission, we’re talking about transmission lines, which are the high voltage, big power lines that you are likely used to seeing when you drive down the highway, not the little lines that you see when you’re driving down your neighborhood streets, we consider those distribution lines,” she said.

The New Mexico Public Regulation Commission is currently looking into the impacts of regionalization and how utilities could participate in an RTO.

Related: PRC looks to develop guidelines for utility participation in regional energy markets

The western United States is one of the few areas in the country where there is no existing RTO, but that will likely change as Nevada and Colorado have both passed laws that require utilities to join RTOs by 2030.

Most of New Mexico is considered to be in the western power grid, though a small section in the southeast is in the eastern power grid. 

That means most of New Mexico’s utilities have no ability to join an RTO at this moment—because none exists.

Southwestern Public Service Company, a subsidiary of Xcel Energy, is the one exception. SPS is part of an RTO and the PRC has asked SPS for input as it develops guidelines.

“We need a system that can pull in renewable resources from all across the West when we need them. We need to be moving electrons on a regional basis,” Seguin said.

She gave an example of a cloudy day in New Mexico limiting the output from solar arrays. If an RTO was in place, power generated at hydroelectric facilities in the Pacific Northwest could be moved down to New Mexico to cover that gap.

There is a possibility that such movement of power can occur now, but it is done in a much more expensive fashion. 

Seguin explained that there are currently 38 different areas in the western United States where power demands and supplies must be balanced. Utilities make phone calls to determine who has excess power when they need to purchase more to meet demand. Sending electricity over a long distance is also expensive because a fee is added on whenever the power is sent through transmission lines owned by different utilities.

An RTO would set a single price for transmission over long distances and would oversee the availability of power so that it could easily be moved from areas with surplus to areas with deficits.

But an RTO won’t solve all the problems needed as New Mexico moves into a renewable energy future.

“To have a reliable grid in this changing world where we’re relying on renewables, we’re going to need more transmission lines to move the electricity from the generation projects,” Seguin said.

An RTO could also assist in building out transmission lines by helping identify areas where more transmission is needed and enabling multiple utilities to share the costs of building out large sections of transmission.

The RTO would not own the transmission lines nor would it take the place of state regulators. Nor would the RTO own power plants, though an RTO could reduce the number of power plants that utilities have to build by creating regional efficiencies. Building fewer power plants could, in turn, mean lower electricity costs for customers.

SunZia transmission 

The meeting occurred on the same day that federal and state officials, including Interior Secretary Deb Haaland, gathered in Corona, New Mexico to celebrate the groundbreaking of the SunZia Transmission Project, which will take up to 4,500 megawatts of renewable energy generated in New Mexico to customers in Arizona and California.

“The SunZia Transmission Project will accelerate our nation’s transition to a clean energy economy by unlocking renewable resources, creating jobs, lowering costs, and boosting local economies,” Haaland said in a statement. 

She said the investments that are part of the Biden administration’s Investing in America agenda are helping the Department of the Interior “build modern, resilient climate infrastructure that protects our communities from the worsening impacts of climate change.”

U.S. Sen. Martin Heinrich, a Democrat, also attended the groundbreaking. He said the transmission line will “have a massive economic impact in New Mexico, creating thousands of jobs in our rural communities, while also bringing us one huge step closer to meeting our climate goals and conserving wildlife habitat.”

Heinrich said climate change is the greatest threat people face.

“But solving the climate crisis by building out clean energy infrastructure like SunZia will also be the greatest economic opportunity of our lifetime.” 

Although SunZia has been heralded as a great opportunity for New Mexico to take advantage of its renewable energy resources, state Sen. William Soules, D-Las Cruces, had some questions about how big that economic impact will actually be for New Mexico itself.

During the committee meeting, John Tysseling, an energy consultant with Energy, Economic and Environmental Consultants, LLC, listed the potential economic impacts of the SunZia transmission line and its associated wind farm. The wind farm alone will bring $4 billion in investments to New Mexico over the next four years and, between the two projects, New Mexico is looking at $17.5 billion in capital investment. This investment, he emphasized, is primarily in rural New Mexico. That, he described as the good news.

But, at the same time, he said 70 percent of that investment will be paid to out-of-state contractors. He said that is in part because there is not enough local labor to satisfy the needs of a project the size of the SunZia project.

Once completed, Soules said, the state will not get much continuing money from the transmission lines. He said there will be some property tax revenue generated, but the annual operating and maintenance costs are only $36 million a year.

Soules also noted that the average pay for the jobs the SunZia project will create is about $46,000 a year, which he described as middle-wage pay.

“Other than the initial build costs. That’s not a whole lot of benefit for New Mexico, compared to the extractive industries where we’re getting royalties for every gallon they’re taking out of the ground,” he said.

The SunZia project will result in about $31 million annually in royalties and payments to private landowners, according to information Tysseling presented.

Additionally, Soules said, the energy transported on the SunZia lines will go out of state and won’t be available to New Mexicans. Instead it will be exported out of state.

“It seems like New Mexico is being exploited for California because they’ve got higher energy costs there and we get the wind turbines and not much after they’re built,” he said.

But SunZia is only one of the transmission lines that is in the works and Fernando Martinez, the executive director of the New Mexico Renewable Energy Transmission Authority, said other projects will have the ability to provide electricity to New Mexicans.

“We need more transmission, we need to be in an RTO, don’t get me wrong about any of that,” Soules said. “I just worry about New Mexico being exploited as our energy is going to California. The (transmission lines) to move it within New Mexico is wonderful. But if our utilities aren’t buying it and making it cheaper for us, because they don’t own the asset, that doesn’t help New Mexicans. And as we’re trying to move off of oil and gas…the state, our coffers, so to speak, aren’t getting a whole lot once these projects are built out like we do from oil and gas where there’s a continued funding stream.”