High court to hear arguments in community solar dispute

Utility companies say small-scale projects’ prohibition on subtracting transmission costs from bill credits violates state law

The New Mexico Supreme Court will hear arguments Monday over regulations for the state’s community solar program, with the state’s three investor-owned utilities challenging the rules while solar advocates say the utilities are only trying to protect their monopoly.

The hearing comes in a string of battles between the two sides, clashes that began in the Legislature and have continued throughout the yearslong process of implementing the program through the New Mexico Public Regulation Commission.

The utilities have argued the rules violate state law, including a prohibition on subtracting transmission costs from community solar bill credits. One legal brief filed in the case says the rules allow other customers, including non-subscribers to community solar, to subsidize interconnection costs.

Their opponents, in a court filing, called the companies’ arguments “no more than policy disagreements with the legislation” and said they “do not raise actual legal errors.”

The community solar program was created to allow electric customers to subscribe to small-scale, third-party solar projects that would cut costs from their monthly power bills. The projects are aimed in particular at providing the service to low-income ratepayers and renters who lack access to rooftop solar panels.

The program was established by the Community Solar Act, approved by the Legislature and signed into law in 2021. Former commissioners in March 2022 finalized and approved rules for the program, designating the structure of fees and bill credits.

The three privately owned utilities — Southwestern Public Service Co., El Paso Electric Co. and Public Service Company of New Mexico — filed four lawsuits appealing aspects of the Public Regulation Commission’s rules and implementation of the program. Those four cases were rolled into one by a court order.

The utility companies, the commission and advocacy and trade groups will deliver oral arguments Monday

morning, and justices are expected to rule on the appeal sometime after the hearing.

The parties in the appeal declined to comment on the case.

Attorney and former Public Regulation Commissioner Jason Marks is set to deliver arguments for the various groups that intervened in the appeal, including the Coalition for Clean Affordable Energy, New Energy Economy, the Renewable Energy Industries Association of New Mexico, the Coalition for Community Solar Access, the Coalition of Sustainable Communities of New Mexico and the city of Las Cruces.

Attorney Erin LeCocq will deliver arguments for the commission, and Southwestern Public Service Co. attorney Dana Hardy will argue on behalf of the utilities.

The Supreme Court has declined to halt the program’s implementation as the case proceeds. In January, justices denied a request from the companies to issue a stay on the commission’s rules.

Meanwhile, community solar has moved forward: In May 2023, commissioners approved 45 projects throughout the state totaling 200 megawatts of energy. The projects were selected from an applicant pool of more than 400 proposals.

In 2022 and 2023, commissioners rejected proposed community solar agreements or fee schedules from all three investor-owned utilities, with former commissioners slamming the utilities’ attempts to implement unnecessary fees for the program.

In a statement to commissioners, state Sen. Liz Stefanics, D-Cerrillos, a yearslong champion of community solar in New Mexico, wrote the “cost shift” from solar system owners to other utility customers is a myth propagated by investor-owned utilities.

“The utilities see customer rooftop solar and community solar as a threat to their monopoly business,” Stefanics wrote. “For the IOUs, it means customers are buying less electricity from them.”

Stefanics urged the Supreme Court to reject the utilities’ request to halt the community solar program. She wrote that the investor-owned utilities’ purpose is to “slow deployment and implementation of community solar because it introduces competition with the monopoly utility business model.”