[Editor's Note: This is part 2 of a multi-series of articles covering the work session of May 14, 2019. This one covers the presentation by PNM on renewable energy.]

By A.J. Ward and Mary Alice Murphy

After the county reports, Grant County commissioners at their work session on May 14, 2019, heard presentations. The first presentation was by Bruce Ashburn of PNM talking about the PNM Solar Direct Project, which PNM plans to have available in the near future.

"At the recent legislative session, legislators passed the Energy Transition Act," Ashburn said. "Inside that energy bill are the renewable energy requirements for PNM, which have changed dramatically. We had a 20% renewable requirement by 2020 for a very long time. We will be required to provide 40% of our retail sales of renewable energy by 2025, 50% by 2030 and the ultimate goal is to get to 100% carbon-free production by 2040. When we had those new goals established and sent to us, we realized in order for us to hit the goals going forward, the only way to do it was to try to find a way to work with municipalities and other entities throughout New Mexico. I know that stated or unstated, renewable energy is important to this Commission."

"Inside the packets that I provided for you is a little information sheet," Ashburn said. "This is a voluntary program. It is a 50-megawatt facility that is going to be built in southern Rio Arriba County. The electricity that is going to be generated is going to be assigned on a subscription basis. You are eligible for approximately 450 kilowatts, which is about half a megawatt. I looked at your bills to verify usage. Should you decided to accept that subscription level, when this is viable and on line, you would be able to advertise to know that 69% of the energy used by the County at that point would come from renewable sources.

"Additionally, going forward because of those renewable goals that have changed, Grant County by 2025 would be at 81% renewable usage.," he added. "By 2030 at 84% and by 2040, you would be at approximately 94% as far as renewable electricity used in the County. Even if you do absolutely nothing else, just based on the requirements that are coming out for PNM. So, the benefits for GC would show your commitment for renewables, will take advantage of economies of scale and would put GC in the forefront as a leader in NM and a national renewable energy leader."

Ashburn said it would provide stability against fuel generation costs going forward. "Grant County is going to be able to benefit in the project because the developer will be able to take advantage of ITC tax credits that are going to be stepped down after 2019. Probably the biggest advantage is we’re not asking for any capital up front at all. There is no cost for this pro Grant County desea anunciar una junta publica para informar de CDBG 061419gram initially."

He said in the packet is an update timeline. "We're at Step 2 and what we are looking from you at the regular meeting is a notice of intent to go ahead and participate in this program. The NOI becomes incredibly important because if we go to the PRC and ask for approval of this program going forward, it is much easier to get that approval if we have a fully subscribed program as opposed to going up there with an idea and telling the PRC we think we can sell this."

PNM anticipates it will take about six months to get PRC approval, if it can get the project fully subscribed. "Facility construction should take about nine months with a target operational date of March 2025."

Ashburn noted that because it is on a subscription basis, "none of your bills are going to change at all. The program will generate either a credit or a surplus and that credit or surplus will be added to or subtracted from the following month's bill, with a 30-day lag."

He explained that the 450 kWh or about half a megawatt is what the county is eligible to subscribe for.

Ashburn further qualified that the production based on the number of hours that are available to produce, taking out nighttime, the annual total kilowatt hours would be about 1,222,020 kWh. The actual cost annually to generate the portion of electricity the county would be eligible for is $26,884 and administrative fees for each entity total is estimated, with Grant County's at about $269 per year.

"We went through the time period that is listed there from October 2016 through April 2019," Ashburn said. "We looked for the highest fuel costs during that period of time which came out to be 2.24 cents. That is the highest fuel cost in that time frame. We also looked for the lowest during that time period, which was 0.015, basically a bit less than 1½ cents per kWh. Over that timeframe the average fuel cost during that period of time was 0.0202 so a bit over 2 cents per kWh. Because the solar system doesn’t use fuel, you are going to get credited back to you all the fuel costs that are associated with it. If you stayed at the high end of the fuel cost, you would actually get a credit of $27,387 back to your bill. If it stayed at the low during that time period, it would be $18,517. You are also going to get a credit because the electricity generated from this project doesn’t have operation and maintenance costs. You don’t have to worry about a plant or employees. You will get a variable operational maintenance credit of $7,359 credit, if fuel costs stay at the high level. If fuel costs stay at the low level it would actually cost you $1,511 more a year to enter into this program. There is total cost of $120/month or so for participation in the program. This will give you a hedge against fuel costs as we go forward."

He said the project would protect the county against the fluctuation in costs of nuclear, gas, and coal. "We anticipate being out of coal in 2032. This contract is for 15 years; the majority of this contract would still have coal fuel being credited as well. What happens is even if the fuel costs, say gas, come under scrutiny, and gas prices shot up, this gives you a hedge against the increase in fuel, based on your bill. The PRC has long given us the ability to pass on the fuel costs to everyone that participates on the system. If it is not profitable for us, we are not allowed to make a dime off it, but we have the ability to pass it on. This gives you a hedge against the additional fuel costs going forward and allows you to reach some of your very important solar energy goals."

Commission Chairman Chris Ponce said the contract is for 15 years, and Ashburn confirmed it was. Ponce asked for a repeat of the estimates of what portion of Grant County's usage would be from renewable.

Commissioner Javier Salas said: "As I see it, what it is they will build a plant in northern New Mexico and we can get a supply from that plant. I think I saw it in here somewhere, but what is the kilowatt cost?"

Ashburn said the kilowatt cost "really is irrelevant because it will be the same for you as it is now. The difference is that the fuel cost that is involved in that production is going to be credited back to you. This program is 100% driven by fuel costs, which right now range from 7 cents to 13 cents, with commercial customers paying the higher amounts."

Salas said: "This is one of the things I've been thinking of. Why can't Grant County build its own? All we have to do is put it on the grid, and we can save a lot. I don't know what the aggregate amount is of billable hours that we use, but I imagine it is a high number."

Ashburn said the county's demand is approximately 800 kilowatts, less than a megawatt.

Commissioner Harry Browne asked: "We could use your estimate if we are getting 1.2 million kilowatt hours a year from this project and that would represent at the beginning roughly two-thirds of our use?" To which, Ashburn replied affirmatively.

Salas said that Silver Schools entered into an agreement with the county for the Great Divide Wind Farm and will receive a couple hundred thousand dollars.

Browne pointed out that Silver Schools will not be using that wind energy. "They are just going to be getting some sweet revenue from it, as will we."

Salas said: "And I think we have great places where we can put either solar or wind in our county and I would like to see us… I think sometimes the concept is we have to have them on our roof, or like the hospital, it has to be there. But that is not the reality; we would just have a plant and put it in the grid."

Ashburn replied: But that doesn’t work currently the way the laws are written. Harry, I know you already know this. Everything you generate from solar capability for your own personal use has to be behind your meter. You can’t just go and build a solar facility and sign a contract with three or four different people to buy that electricity. That is against the law in the state of New Mexico."

Salas said, "But what I was looking at, is we build a solar facility or just generate some wind for our own use."

Ashburn said, "Yes, let’s talk about that, too. I know in your ICIP for a very long time, there was a solar goal. The estimated cost for the solar goal was approximately $1,000,000. What I am saying to you is, you can reach those goals that you have with no money out of your pocket. At some point there has to be a time value of that $1,000,000. You can invest in roads or some other project going forward and still hit the goals that you have in front of you with participation in a program like this."

"I don’t mean to be argumentative, but it seems like that your production costs are going to be much less than 13 cents a kilowatt hour," Salas said. "So, it is going to be very helpful with those fuel costs, but also 13 cents an hour, current generation using fossil fuels. So maybe there would be the ability to cut the kilowatt hours.
A typical home uses about 1,000 kilowatts per month. You are looking at $100 - $120 per bill and if you are using solar, the kWh is not going to cost you that much."

Browne said, "I think you are asking the right questions. These are the questions I have as well. This may be the most cost-effective way for us to meet our implicit renewable energy goals. But we don’t know that. The commissioner is raising the question that if we install facilities to generate our own, it might or might not be more cost-effective. I think that is something we are going to have to evaluate. I’m not asking you that question. But that is essentially what you are saying. If we go with this contract, as I understand, it, if we’re locked in for 15 years, and during that time, the benefit to us of installing our own would be reduced."

Ashburn said, "But what I am saying to you is as we speak today is about the 69% level; if you install a system that is less than the 69% you are taking production from the other side of that equation and it would still be very much a great benefit to you."

"But according to what I heard you say, in another 10 years the 69% becomes 84%," Browne said

Ashburn said, "That’s correct, but it is only because of our production and what we have to do. That’s not going to be your subscription level. Your level doesn’t grow. It is just because of the requirements on PNM. Our production is going to be changing."

Browne said, "So, you weren’t projecting a reduction in our usage that accounted for the increase in the percentage. That was based on your adoption of other renewables elsewhere in the system."

Ashburn said, "That is correct."

Browne said, "So we would still have that roughly 31% or so that we could make up for."

Ashburn said, "Absolutely."

Browne said, "OK. Again, I think we are going to have to do our own math. If it turns out that that’s the sweet spot us generating 31% and buying 69% from you—that would be awesome. But we don’t know that yet."

Ashburn said, "Ok, and here is my issue. This needs to be done. We are going to present this to the PRC on the 31st of this month. So, we are looking for that Notice of Intent before the 24th of this month."

"Ok, and here is my issue," Browne continued. "As I understand it, this 50-megawatt facility in Rio Arriba is the subject of a lawsuit right now at the Supreme Court in the state about your procurement process. Unless this is an amazing coincidence, I believe this is the same 50-megawatt solar facility."

Ashburn said he was reasonably sure that it was not the same facility, because this one is a power-purchase agreement between PNM and the developer on Indian reservation land. He said he would confirm it.

"I look forward to being corrected because I would like to go forward with this, but again what I understand about this process is there is way too much uncertainty for me in this project to back it with Grant County’s imprimatur, as it were," Browne said. "So, if you would look into that, I would appreciate it. But I really hesitate to have Grant County stick its foot into the subject of ongoing litigation."

With no more questions, Ponce thanked Ashburn for the presentation.

The next article should cover the presentation on fire conditions by Gabriel Holguin of the Gila National Forest.