PNM seeks fee for solar users who tap into
grid
Tom Engel, with Positive Energy, installs solar modules on a rooftop in 2010. Public Service
Company of New Mexico wants to begin charging its customers with solar panels a monthly fee
to help pay for infrastructure costs. Critics say the move will discourage growth of residential
solar projects. Jane Phillips/New Mexican file photo
By Staci Matlock
The Santa Fe New Mexican, January 3, 2015
New Mexico economist Laird Graeser installed solar power at his house because the numbers
worked.
Public Service Company of New Mexico pays him a little money each month, and when his solar
panels produce more than he uses, he can bank the extra. “We have had two years where we
made no payment to PNM,” Graeser said.
Now the state’s largest electric utility wants to levy an extra fee on people who install solar
power systems after Jan. 1, 2016.
Solar advocates and a couple of economists like Graeser think the fee penalizes people who
invest thousands of dollars of their own money to generate some of their own power. If the extra
charge is approved by state regulators, it won’t affect Graeser, but he said it could discourage
other people from putting in solar panels. “To penalize solar just seems to me to be an argument
that is not sustained by the economics,” he said.
Public Service Company of New Mexico says it’s a matter of fairness to other customers who
don’t have solar power on their rooftops or in their yards. The company says people who hook
their solar power systems into the grid aren’t paying their fair share of the fixed costs, such as
maintaining transmission lines.
The additional interconnection fee for residential solar is among several changes PNM has
requested as part of a rate increase request the company has filed with the New Mexico Public
Regulation Commission. Residential customers will pay an additional $9.75 a month for 600
kilowatt-hours of electricity if the rate increase is approved.
Through the rate increase, PNM said it is trying to cover about $585 million in costs since 2010
and through 2016 for a variety of electric grid improvements.
The company takes the impact of bill increases on customers “very seriously,” and the extra fee
on solar is a way to “fairly allocate the cost of the electric system among all customers,” said Pat
Vincent-Collawn, PNM’s chairman and president.
About $130 million of what PNM seeks to recover from customers is due to energy-efficiency
programs and customer-installed solar. As customers use less electricity, aided in part by PNM’s
own rebate programs to help them buy more energy-efficient appliances, and generate more of
their own power from the sun, the company has to offset the loss in revenues.
People who install rooftop solar power systems or ground-mounted solar panels and hook into
PNM’s grid receive a payment for helping the company meet renewable energy goals set by the
state. These renewable energy credits range from 11 cents per kilowatt-hour for those who
installed rooftop systems in 2006 to 3 cents per kilowatt-hour for systems installed this year. In
2014, PNM paid more than 3,800 customers with rooftop solar a total of $7.5 million, and in
2013 the company paid $5.59 million.
Residential solar owners also can bank any extra power their systems produce beyond what they
use. But that banking system is set to change under the proposed rates.
The flat monthly service fee will change for all customers under PNM’s proposed rate increase,
but even more for solar owners. Currently, the monthly residential fee is $5. Under the proposed
rate, it would more than double to $12.80 a month for every customer, regardless of how much
electricity they use.
On top of that, people who install solar systems after 2015 would pay an additional flat fee of $6
per kilowatt for connecting to PNM’s grid. For the average solar system installed in the state, it
would be an additional $21 per month.
PNM said the issue with solar power systems is that when the sun doesn’t shine, those customers
have to use regular power from the grid. But the company says the solar customers aren’t paying
the same as other customers to maintain transmission lines and other parts of the grid. “A
common misconception is that our solar customers are not using the PNM system. It is really
important to remind people that they absolutely still do, although they use less energy,” said
PNM spokeswoman Susan Sponar.
“They avoid a cost of between 9 and 15 cents for each kilowatt-hour they generate, and if they
generate excess energy, they are able to use the energy at the full retail rate at a later time,”
Sponar said.
Graeser disagrees with how PNM is calculating the costs and benefits of solar.
In the past, the greatest electricity need was in winter to help people heat their homes. Now it’s
in the summer as more people use air conditioners to cool down, Graeser said.
“Now the peak energy needs correspond quite naturally with when the sun is shining,” Graeser
said. “Because of change in demand, PNM should welcome any solar they can get.
“They’re buying my surplus power at 4 cents per kilowatt-hour in the summer, and they sell it at
9 cents per kilowatt-hour,” he said.
Greg Miller, who manages Dahl Electric in Santa Fe and sells some parts to solar installers, said
he doesn’t have solar, but he doesn’t understand PNM’s argument for the fee. He said the person
who installs solar is out thousands of dollars in the upfront costs and has to repair the system if it
breaks. “Where is the logic in penalizing people who put solar on their roof?” he said.
Among other costs the PNM’s new rates will cover, if approved by state regulators, are:
• $79 million for four solar power centers producing enough energy for 16,200 average homes.
PNM has installed 103 megawatts of solar since 2013.
• $56 million to buy La Luz Natural Gas Plant to meet peak demand when customer electricity
needs are highest.
• $81 million to install pollution control equipment at the San Juan Generating Station.
• $38 million to buy the Rio Bravo Generating Station Natural Gas Plant.
• $163 million to buy leased assets at Palo Verde Nuclear Generating Station in Arizona.
• $30 million for an upgrade at PNM’s Rio Puerco Switching Station.
• $8 million for a substation to increase security and upgrade distribution system.
• Businesses will see a 3 percent to 9 percent increase in their monthly electric bills.
Manufacturing companies will see a 7 percent decrease.
“Residential customers are currently the most subsidized customer class, with larger customers
picking up a portion of the costs to serve them,” Sponar said in an email. “We propose charges
that more closely align with the cost to serve each customer group while still limiting the total
increase for each class.”
The rate case won’t be heard by state regulators until later this year.
Contact Staci Matlock at 986-3055 or smatlock@sfnewmexican.com. Follow her on Twitter
@stacimatlock.