New Mexico Coalition for Clean Affordable Energy

PRC Dramatically Expands Net-Metering

On January 11, 2006, the PRC approved a ground-breaking enhancement to New Mexico's net-metering rules:

Electric customers can now net-meter renewable energy systems with a peak capacity larger than 10 kilowatts, all the way up to 80 megawatts (yes, megawatts, which means there is essentially no cap on system size). There is also no cap on the total amount of net-metered capacity, short of what might endanger the safety or reliability of the grid. This is in contrast to virtually every net-metering rule in other states, which tend to cap either or both the system size or the aggregate amount.

This opens the door, finally, for commercial size net-metered systems in New Mexico.

We congratulate the PRC on the passage of such a strong rule, especially Chairman Ben Ray Lujan and Commissioner Jason Marks, who led the charge. This Commission has been extremely supportive of renewable energy. See the article below from the Albuquerque Journal for a quote from Chairman Lujan on the significance of the new rule.

Secondly, we congratulate Governor Bill Richardson, who made, and kept, a campaign promise to expand net-metering. The Governor strongly promoted a bill to do so in the 2005 Session, a bill that we worked extremely hard to pass. Unfortunately, a poison amendment was attached to the bill at the very end, forcing us to request that the Governor veto the final result. He did (which we also thank him for!). He then proceeded to work closely with the PRC to promote the expansion at the regulatory level.

In the end, due to the strong support of our Commissioners, we ended up with a much stronger rule than we hoped for!

This ruling comes on the heels on an announcement by the California Public Utilities Commission that it has ruled that Renewable Energy Credits, or "RECs" associated with customer owned systems belong to the system owner. There is a case with similar considerations pending before the Commission right now (see http://www.nmccae.org/regulatory/recs.php for details and the testimony of the various parties).

Important details about the new rule

  • The PRC's existing rule for net-metering of systems smaller than 10 kw, NMPRC Rule 571, remains unchanged. This rule has held up well and everyone agrees there was no need to modify it.
     
  • The new rule is really a modification of NMPRC Rule 570, which governs the interconnection of so-called "qualifying facilities", or "QFs" under the federal "PURPA" law. PURPA stands for "Public Utilities Regulatory Policy Act of 1978",  and is a Jimmy Carter era law that allows QFs, which are basically defined as renewable energy or co-generation systems under 80 megawatts, to interconnect with their local utility and sell their power back into the grid at "avoided cost", which is  closely related and roughly equal to the wholesale rate for electric power generation. The new modification simply adds a true net-metering option to NMPRC Rule 570, allowing net-metering for systems greater than 10 kw.
     
  • Note that the "avoided cost" rate is still relevant to net-metered systems: At the end of some specified period, which varies from state to state,  the "accounts" of net-metered systems are "trued up", such that the excess credits of the net-metering customer are zeroed out, and the customer receives a payment at the avoided cost rate for any net excess credits they happen to have at the time. The PRC's existing rule for net-metering of systems under 10 kw allows systems to "true-up" their accounts on an annual or system-life-time basis, that is, any excess credits at the end of a billing cycle are carried for month-to-month until the true up time kicks in.
     
  • Under the new rule, net-metered systems greater than 10 kw will be trued-up at the end of each billing cycle. This perhaps is the weakest aspect of the new rule from the standpoint of subsidizing renewable energy systems, and there was much discussion of this by the Commission and parties involved with the new ruling.  The biggest impact of this will likely be to decrease the size of commercial systems somewhat: People will be incentivized to size their system closer to their monthly minimum usage as opposed to their average usage.

    The Commission has indicated clearly, however, that it will reconsider this aspect if it turns out that the impact is greater than currently anticipated. Personally, we feel that this compromise is far outweighed, at least for the time being, by the fact that we now have a rule with no caps on either systems size or total aggregate (notwithstanding safety limitations).
     

  • Finally, the Commission did not yet undertake upgrading the technical interconnection standards to IEEE standards, but has resolved to do this very soon. This will make it easier for large systems to get approval on a safety basis. For the time being, systems over 100 kw will have to utilize the process for addressing technical interconnection issues as laid out in the existing NMPRC Rule 570. This process is not too bad, however, as it provides various protections for customers, such as time limits for application processing, reasonable interconnection costs, grievance process, etc.

Megawatts Can Flow to Grid

BY ANDREW WEBB
Journal Staff Writer

SANTA FE – The Public Regulation Commission on Thursday approved new rules vastly expanding net metering, which allows consumers who generate their own electricity to offset their bills by selling their power back to suppliers, such as PNM.

The rule expands from 10 kilowatts to 80 megawatts the peak amount of electricity that qualified consumers, such as homeowners, businesses and schools, can generate with renewable energy and return to the grid.

The broader rules will allow electric utility customers to experiment with much larger renewable energy generation systems, including biomass, photovoltaic cells, geothermal and wind turbines, in order to offset electricity bills. The previous rule limited net metering to residential-scale renewable energy installations.

The new limit, 80 megawatts, is about the same as the peak generating capacity of a small to medium natural gas-burning power plant.

“This opens up net metering for businesses,” said Ben Luce, director of the New Mexico Coalition for Clean, Affordable Energy.

The rules passed unanimously during Thursday’s regular meeting of the PRC. Commissioners also stipulated that power companies must pay retail value for the customer-generated electricity and require monthly accounting.

PRC Chairman Ben Lujan said the new rules would benefit ratepayers and providers by helping to offset peak electricity demands with a more plentiful supply of power.

“All over New Mexico, homeowners and businesses are investing in renewable technology,” he said. “This net metering rule is another example of how we are taking steps, through innovation, to make New Mexico a leader in this area.”

The rules also set out some standards for contracts and interconnection systems, though the PRC will revisit standards for interconnections larger than 100 kilowatts later.

Net metering, is available in about 40 states.

History of the Net-Metering Expansion Case

In June 2006, the New Mexico Public Regulation Commission announced its intention to upgrade New Mexico's net-metering rule, NMPRC Rule 571 (for information on that rule, see http://www.nmsea.org/Grid_Interconnection/Interconnection.htm).

In particular, Commissioner's Ben Ray Lujun (PRC Chair) and Jason Marks expressed interest in increasing the maximum system size allowed under Rule 571, which is presently 10kw. Workshops then proceeded, at the PRC, with official comments provided by interested parties, to develop an initial proposed rule, which was then subject to a rule-making.

CCAE's interest in the rule stems from the fact that we believe that New Mexico's 1998 net-metering rule has functioned well, but is no longer up to date either with respect to limits and interconnection standards. In particular, Rule 571 does not take into account interactions with the grid arising form a large number of distributed generators or generators significantly larger than 10 kilowatts, and interconnecting large systems might possibly require expensive system impact studies by utilities. Fortunately, much has happened in the development of interconnection standards in the US since 1998, and New Mexico can now take advantage of new model standards. These, for example, provide simple checks a utility can do to determine if systems up to 2 MW will have adverse impacts, without requiring an expensive study. 

Click here to find CCAE's first round of informal comments, and an attachment containing a summary of details of some interconnection "screens". These comments can serve as an introduction to the topics of net-metering and interconnection.

There were two workshops to date (on August 2nd and 9th), at which the parties in attendance primarily hashed through the provisions of a net-metering bill that was considered by the Legislature in 2005. This bill was passed, but vetoed by the Governor due to a negative provision added at the last moment (which technically should have been removed, and which we believe the Legislature thought was removed, but for some reason the amendment to remove it wasn't delivered to the floor). In any case, this bill represented a consensus of the parties involved at the time (CCAE, utilities, co-ops, etc), so it was thought to be a good starting point for the current deliberations.

New Draft Language

During the August 9th workshop, PRC Staff indicated that they think it may be possible to simply add some language to NMPRC Rule 570 to allow a single-meter option and accomplish true net-metering for systems larger than 10 kw. A draft of the change, as initially prepared by PNM for consideration of the parties, can be found here.

The Commission then opened a rulemaking and proposed this draft rule as proposed rule. CCAE and Vote Solar suggested a more flexible true-up mechanisms (annual or system lifetime). The Commission then passed the rule as described above.

Testimony