Kit Carson Electric to cut consumer costs
Taos Mesa solar project to go online June 1
When Kit Carson Electric Cooperative announced to its customers last week that “a decrease in electricity cost is coming soon,” many Taoseños thought they’d entered The Twilight Zone.
New Mexicans are plenty familiar with energy cost hikes, not to mention the rising cost of nearly everything right now, but how often do utility companies reduce consumer costs?
“It’s pretty unusual, and it’s consistent with the way the rates were structured” by Kit Carson several years ago, said John Reynolds, utility division director for the N.M. Public Regulation Commission.
A combination of factors will see the average Kit Carson customer’s monthly bill reduced by as much as 25 percent starting in August or September, according to company officials, and the biggest contributing factor is a
significant reduction in the “fuel adjustment” line item on consumers’ electric bills.
In New Mexico, utility companies are allowed to charge customers fluctuating amounts commensurate with whatever the market cost is of buying an energy commodity like electricity or natural gas over a given period.
The reduction in fuel adjustment cost is due to Kit Carson deciding in 2016 to exit its relationship with the company that had long provided the bulk of its energy supply, Tri-State Generation and Transmission Association,
with which Kit Carson still partners for transmission services.
“They raised their rates 10 times in 12 years,” said Kit Carson CEO Luis Reyes, shaking his head as he stood amidst the cooperative’s new solar array on the Taos Mesa northwest of town. He explained that the cooperative’s new supplier, Guzman Energy, offers more stable energy rates and is a better overall fit with Kit Carson’s goal to transition away from non-renewable energy.
After negotiating down from the original $137 million price tag, buying out its energy contract with Tri-State still came at a cost of $37 million, which Kit Carson paid off through a payment arrangement with Guzman Energy. That expense has been reflected in the fuel adjustment line of consumers’ energy bills for the past six years.
“The fuel adjustment line item on their bill includes fuel, or purchases [of] green energy — it’s a basket of items, including a certain amount of money to pay off the loan,” Reynolds said. “So that will no longer be part of the basket of items that’s recovered.”
Michael Santistevan, public relations coordinator for Kit Carson, said the timing couldn’t be better.
“We paid our debt off over the last six years,” Santistevan said. “Our last payment will be June 30, 2022. In this hard world of inflation, [customers] will start seeing savings — business owners will really save.”
A customer who currently pays $10 in fuel adjustment costs could see that line item on their bill reduced to as little as $2, Reyes said, depending on individual customers’ energy usage.
Because they tend to rely on less-efficient sources of heat to warm what are typically less energy-efficient homes, “low-income users will see a bigger decrease” in their overall bills, Reyes said. “Some people’s bills will go down 20 to 25 percent.
“At a time when everything’s going up in price, we’re pushing things down,” Reyes added. “All the planning we’ve done has paid off.”
Kit Carson has been planning its transition to renewable energy sources far longer than other electric utilities in New Mexico, and has been installing solar energy infrastructure throughout its territory for years.
Adjacent to the Taos Regional Landfill, it’s nearing completion of the 170-acre, 15 megawatt Taos Mesa solar array project, which is by far the largest array in the company’s portfolio. When it goes online in June, its 44,000 solar panels will have the capacity to provide 100 percent solar-derived energy — during the day, when the sun is shining — to all of Kit Carson’s Taos area customers, representing 20 percent of the cooperative’s total energy needs.
The addition of 10 1.25MW Tesla Megapacks — each of which look like a medium-sized storage container, but are, in the words of Tesla, a “large-scale rechargeable lithium-ion battery stationary energy storage product” — will enable 12.5MW of solar energy to be stored and released at times of peak demand, at night, or into the grid. Megapacks cost $1 million each, and Kit Carson now owns 13 of them: 10 for the Taos Mesa Array and three destined for Angel Fire.
When its 7.5-MW Angel Fire Array is completed later this year, Kit Carson says it will have the capacity to produce enough solar power to serve all of its customers with energy derived from the sun during daylight hours on non-cloudy days. Two-sided, or “bifacial” solar panels catch sun on both sides, making them particularly efficient when sunlight reflects off snow-covered ground.
“We have 300 days of sun here, so that’s 60 days” (and 360 nights) that will require energy sourced from the power grid or battery storage, Reyes said. Because the solar energy is produced locally, unlike the energy purchased from elsewhere, there are virtually no transmission costs. And if there are shortages on the national grid, Kit Carson says its ready to fill the gaps with stored or locally-produced energy so customers don’t lose power.
“We’re in a much better position because we planned ahead,” Reyes said. “When PNM’s having shortages, we’ll have the power here to cover Taos.”
Dustin Satterfield, site superintendent with Affordable Solar (the company contracted to oversee the Taos Mesa Array project), said the fact that Kit Carson was ahead of the curve on solar energy also helped it avoid severe project disruptions due to problems in the supply chain caused in part by a booming demand for solar panels, inverters and other related equipment.
“We’ve still got supply chain issues, there’s a 56-week lead time on some” material orders, he said. “But there’s more solar projects than there used to be, and a lot of them are stalled right now because they can’t get industrial commercial material.”
‘Low-income users will see a bigger decrease. Some people’s bills will go down 20 to 25 percent.’
LUIS REYES
Kit Carson Electric CEO