The state’s largest electric utility is planning to acquire 100 megawatts of solar energy through a power purchase agreement and 310 megawatts of battery storage capacity through three energy storage agreements and one utility-owned facility to help meet customer summer demands in 2026.
But, first it must receive approval from the New Mexico Public Regulation Commission.
The Public Service Company of New Mexico filed an application seeking that approval in late October and, on Thursday, the PRC appointed a hearing examiner. Appointing a hearing examiner is the first step that the state regulatory body takes when it comes to such applications. The order issued Thursday by the commission also allowed several stakeholders, including the Albuquerque-Bernalillo County Water Utility Authority, to intervene.
The PRC has six months to approve or deny purchase power agreements and energy storage agreements. However, state statute gives the commission nine months with a possible extension of six months for certificates of convenience and necessity, which are needed for utility-owned facilities.
PNM asked the PRC to approve the CCN at the same time as it rules on the other resources, but the commissioners expressed reservations about such a timeline.
“I don’t feel that we should somehow shortchange our review of the company owned asset because they’ve negotiated a certain deadline with a developer,” Commissioner James Ellison said during the meeting.
Ellison further said that there should be increased scrutiny when deciding whether a company-owned asset is in the customers’ best interest because a utility might have incentives to own a facility even if it is not necessary.
Approving the utility-owned facility within six months would mean the commission would rule on it in May.
That battery storage facility is known as Sandia Energy Storage and would provide 60 megawatts of four-hour battery storage. It would be located near an existing PNM substation in southeast Albuquerque.
PNM hopes to have the project completed and operational by May 1, 2026. But it needs PRC approval before construction begins.
Under state statute, the PRC could choose to rule on it by as late as Jan. 25, 2025.
Having a utility-owned asset allows PNM to dictate how it operates and how it is maintained “so as to ensure reliable and efficient service,” Henry Monroy, PNM’s vice president of regulatory and corporate controller, said in filed testimony supporting the application.
But that also means the utility will be responsible for operations and maintenance costs.
Monroy said that approval of the Sandia facility within six months will ensure that it is available for use in 2026.
The facility will cost an estimated $131.4 million, but that calculation does not include the possible investment tax credits of up to 30 percent that is available through the federal Inflation Reduction Act, according to R. Brent Heffington, PNM’s managing director of generation.
Once built, PNM anticipates a little more than $1 million in annual operating and maintenance costs.