PRC can’t let this energy opportunity blow away

Two energy-related stories published in the Journal a week apart reveal a troubling disconnect between clean energy advocates and state regulators.

On. Nov. 7 there was the report about Xcel Energy’s efforts to gain Public Regulation Commission approval of two huge wind farms — a 522-megawatt facility between Portales and Lovington, and a companion 478-megawatt facility north of Lubbock, Texas. Once built, the $1.6 billion wind farms would provide enough electricity to power about 440,000 average homes annually.

It was followed by the report Nov. 14 that an energy analyst with the Union of Concerned Scientists had informed N.M. lawmakers they have an opportunity to encourage development of renewable energy that could exceed the state’s goal of having 20 percent of its electrical power produced by renewables by 2020.

So it should follow that “A” — a huge wind project that capitalizes on the fact the Land of Enchantment has the most reliable wind save for that offshore — leads to “B” — a lower carbon footprint for the region, right? Not yet. Xcel, which operates in eight states, says the project could save customers of its subsidiary Southwestern Public Service Co. about $2.8 billion in electric costs over 30 years by offsetting higher fuel costs from natural gas and other sources. Southwestern has been in Roswell for more than a century and serves about 385,000 people in New Mexico and West Texas.

The PRC wants those savings guaranteed as an unprecedented precondition for approval, and wants Xcel to forgo recovery of its investment for the first two years that the wind farms come online. Brooke Trammell, director of customer and community relations for Southwestern, says the utility isn’t opposed to “reasonable” protections for ratepayers, but forgoing all financial recovery for two years — the amount of time it would take the PRC to set rates for the new electricity — is a deal breaker.

That’s understandable — why would any business invest $1.6 billion into a community and “forego two years of recovery that we would never get back?” As Trammell says, the utility company “just can’t.”

So with talks stalled, Xcel is considering moving the project elsewhere — Colorado and Minnesota have been mentioned — even though wind conditions are more favorable in Eastern New Mexico and West Texas than anywhere in the country and thus deliver more reliable power and more reliable savings.

A public hearing on Xcel’s proposal is set for Nov. 27, and along with cost recovery, timing is key. That’s because federal tax credits for wind facilities are being phased out, and it’s those credits — more than 2 cents a kilowatt hour — that make the wind farms financially feasible. As Trammell says, “wind is on sale” right now. The project needs a green light by March for Xcel to qualify for the tax credits.

Capitalizing on N.M.’s abundant wind now, before other states with smoother regulatory approval processes snatch such opportunities away, makes good fiscal sense. So does building our energy portfolio to include more renewables — renewables the energy industry is eager to provide at a savings to consumers.

Xcel has already offered additional compromises to power up this project — including a cap on cost estimates and a guarantee customers receive savings equal to 100 percent of the tax credits. It’s time the PRC did the same and balanced consumer protections now with consumer savings in the future from having renewables make up a larger percentage of the state’s energy portfolio.

Because this sure sounds like the opportunity scientists told New Mexico to seize, and it would be a costly mistake to blow it.