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New Mexico Industrial Energy Consumers v. New Mexico Public Regulation Commission

Supreme Court of New Mexico

August 8, 2019

NEW MEXICO INDUSTRIAL ENERGY CONSUMERS, Appellant,
v.
NEW MEXICO PUBLIC REGULATION COMMISSION, Appellee, and NEW ENERGY ECONOMY, Intervener-Appellee/Cross-Appellant, and PUBLIC SERVICE COMPANY OF NEW MEXICO, and COALITION FOR CLEAN AFFORDABLE ENERGY, Interveners-Appellees. In the Matter of Public Service Company of New Mexico's Application for Approval of its Renewable Energy Act Plan for 2018 and Proposed 2018 Rider Rate Under Rate Rider No. 36, NMPRC Case No. 17-00129-UT

          APPEAL FROM THE NEW MEXICO PUBLIC REGULATION COMMISSION

          New Mexico Industrial Energy Consumers Peter Jude Gould Kelly D. Gould Santa Fe, NM for Appellant

          Judith Ellen Amer Santa Fe, NM for Appellee

          New Energy Economy Mariel Nanasi Santa Fe, NM for Cross-Appellant

          PNM Resources, Inc. Stacey J. Goodwin Ryan T. Jerman Albuquerque, NM Miller Stratvert, P.A. Richard L. Alvidrez Albuquerque, NM for Intervener Public Service Company of New Mexico

          Charles F. Noble Santa Fe, NM for Intervener Coalition for Clean Affordable Energy

          OPINION

          C. SHANNON BACON, JUSTICE.

         {¶1} New Energy Economy (NEE) appeals an order issued by the New Mexico Public Regulation Commission (Commission or PRC) approving Public Service Company of New Mexico's (PNM) renewable energy procurement plan (Plan) for the year 2018.[1] The Renewable Energy Act, NMSA 1978, §§ 62-16-1 to -10 (2004, as amended through 2019), requires public utilities like PNM to submit such plans annually for the Commission's approval, see § 62-16-4(F)-(I).

         {¶2} PNM submitted an application for the Commission to approve its 2018 Plan in PRC Case No. 17-00129-UT. In its application, PNM sought to demonstrate its compliance with Renewable Energy Act requirements and obtain the Commission's approval of renewable energy procurements, among other items. NEE challenges the Commission's approval of PNM's 2018 Plan by arguing that PNM's proposed procurement of solar energy generating facilities relied on an unfair request for proposal (RFP) process. NEE contends that PNM designed its RFP to limit the universe of potential bidders and select its predetermined, preferred type of renewable energy bid.

         {¶3} We conclude that NEE did not meet its burden of proving that the Commission's approval of the solar energy procurement was unreasonable or unlawful because evidence in the record supports the Commission's determination that the challenged provisions of the RFP were reasonable under the facts and circumstances of this case. We affirm the Commission's final order approving PNM's 2018 Plan.

         I. BACKGROUND

         {¶4} In its 2018 Plan, PNM sought the Commission's approval to procure 50 megawatts (MW) of photovoltaic power generation facilities to be constructed beginning in 2018 by Affordable Solar, Inc. Affordable Solar proposed to construct these facilities in response to PNM's RFP for 50 MW of renewable energy. PNM issued its RFP on March 3, 2017, and allowed thirty-one days for responsive bids. Under 17.9.572.13(B), (C) NMAC, PNM was obligated to select the most cost- effective renewable energy project proposed in response to the RFP. To rank the proposed projects by cost-effectiveness, PNM compared the projects in terms of levelized cost, which is a measure of the cost per unit of energy over the lifetime of a project.

         {¶5} The RFP did not solicit a specific type of renewable energy or a specific type of project through which PNM would receive the energy. In other words, the RFP was not limited to proposals that offered solar energy through a turnkey agreement, such as Affordable Solar's proposal. In this context, a turnkey agreement is an agreement in which one party constructs electricity generating facilities and then transfers ownership of the facilities to another party. By contrast, a purchased power agreement (PPA) is an agreement in which one party generates electricity and another party purchases the electricity without obtaining ownership of the generation facilities. PNM's RFP treated turnkey proposals and PPA proposals differently by requiring only PPA bidders to determine transmission and interconnection costs for their bids. PNM predetermined this information for turnkey proposals. The basis for this distinction is that PNM had control of six locations capable of housing solar generating facilities (PNM-Designated Sites) and was able to predetermine the transmission and interconnection costs for turnkey projects to be housed at these sites. Unlike turnkey projects, PPA projects would not be housed at the PNM- Designated Sites, and PNM therefore did not predetermine transmission and interconnection costs for PPA proposals.

         {¶6} PNM received six bids in response to its RFP: four turnkey bids and two PPA bids. Notably, each of the two submitted PPA bids failed to meet all the requirements of the RFP. One PPA bid failed to include the required transmission and interconnection cost information for PPA bids, and the other PPA bid was expressly contingent upon PNM procuring an additional 50 MW of solar energy in excess of the 50 MW requested in the RFP. PNM did not select either of these PPA bids, and instead selected ...


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