FERC denies request for expedited connection of New Mexico merchant line

FERC on Sept. 20 denied a joint request for a one-time waiver that would have cleared the way for construction of a new merchant transmission line designed to tap into abundant renewable energy in eastern and central New Mexico (Docket Nos. ER12-1698 and ER12-1699).

The request, filed jointly by Public Service New Mexico (PNM), the New Mexico Renewable Energy Transmission Authority (RETA) and Power Network New Mexico, sought a one-time waiver of PNM’s transmission queue process that would have allowed PNM to set aside its “first-come, first-served” approach and adopt a “first-ready, first-served” approach to process the interconnection request for a merchant transmission line proposed by RETA and Power Network.

The applicants cited nine benefits that allowing the project to be studied ahead of other projects would provide. Those included the addition of delivery capability and market access for new renewable generation; economical transmission capacity that can be constructed relatively quickly, allowing customers timely access to lower-cost renewable generation from New Mexico; enabling the project to enter service in the 2015 timeframe when California and other western markets will need high-quality, lower cost wind and solar power to meet renewable portfolio standards; and that it would help clear both the PNM interconnection queue and the PNM transmission service queue.

The project is a 200-mile, 345-kV line that would tap into PNM’s transmission system at Rio Puerco, N.M., and transfer 1,500 MW of power to the Four Corners switchyard in Fruitland, N.M., which is a gateway to western energy markets, including Arizona and California.

While PNM’s current transmission queue process evaluates requests for transmission service on a first-come, first-served basis, applicants said the RETA/Power Network project was ready to move forward, and cited that readiness as a basis for the waiver request.

“We are highly disappointed that FERC couldn’t see its way clear to approve the request,” Jeremy Turner, RETA’s executive director, told TransmissionHub Sept. 27. “What we were asking to do is to accelerate development in New Mexico and actually provide the opportunity to build transmission.”

In its application for a waiver, the applicants stated that there were 45 projects ahead of the RETA/Power Network line in the transmission queue, and that all but one indicated a point of delivery at Four Corners. The applicants also stated that, based on existing transmission commitments, an increase of as little as 100 MW of firm point-to-point transmission service requests from eastern New Mexico to Four Corners “would trigger a major transmission expansion on PNM’s system,” which the project would, in part, provide.

RETA/Power Network said they had already received commitments from two customers for 1,050 MW of transmission capacity.

The applicants presented a number of reasons FERC should approve their request, including that their line would “advance public policy goals” and would aid in clearing the backlog in PNM’s interconnection queue through the anchor customer solicitation and open season processes that would accompany the new line.

Several renewable energy developers opposed the request.

Iberdrola Renewables, Western Water and Power Production, Tres Amigas, and Berrendo Wind Energy all argued that the proposal did not comply with PNM’s obligations under its open-access transmission tariff (OATT). Tres Amigas and Berrendo also argued that PNM had not engaged in an “open and transparent transmission planning process with stakeholder participation, as required by Order No. 890,” according to FERC’s order.

Western Water argued that a waiver would allow the RETA/Power Network project to “corner the market on the remaining available transmission capacity on the PNM system from the Albuquerque area to Four Corners, which will likely hinder other market participants from gaining access to Four Corners for decades,” according to the order.

In its order, FERC said it previously “has found good cause to grant waiver where the waiver is of limited scope, there are no undesirable consequences, and the resultant benefits to customers are evident,” but said the applicants had not demonstrated that their waiver would meet those criteria.

Further, FERC said the request to implement a “first-ready, first-served” approach on a one-time basis would not “ensure not unduly discriminatory access.”

For its part, PNM recognizes the need to reform its transmission interconnection process.

“[The current] serial approach has presented a major impediment to renewable generation in New Mexico,” Jeff Mechenbier, PNM’s director of transmission/distribution planning and contracts said in the request for the waiver.

In September 2011, FERC approved PNM’s request to move its generation interconnection queue processing to a “first-ready, first-served” approach. Now, the utility intends to work to develop a transmission interconnection process “that better serves the interests of our stakeholders,” a PNM spokesperson told TransmissionHub Sept. 27.

“We worked with our stakeholders to reform our generator interconnection queue; we’ll work with them to come up with a different proposal for the transmission interconnection queue and submit that to FERC,” the spokesperson said, while acknowledging that the process will not happen overnight.

Meanwhile, the line’s backers still intend to move forward with the project, which they characterize as a way for small renewable power generators in eastern New Mexico to get their power to market.

“We’re just more to a normal business cycle as opposed to an accelerated timetable,” Turner said. “The basic fundamentals that make it a good project are all still there; it’s just that the timing has changed.”

PNM is a subsidiary of PNM Resources (NYSE:PNM), based in Albuquerque, N.M.