Xcel Energy disappointed about defeat of ROFR in New Mexico

Officials with Xcel Energy (NYSE:XEL), parent company of Southwestern Public Service Company (SPS) of New Mexico, said they are disappointed by the demise of two bills that would have established a right of first refusal (ROFR) for New Mexico utilities and co-ops that wanted to develop transmission.

House Bill (H.B.) 163, passed by the state House of Representatives on March 14, died in a state Senate committee when the New Mexico Legislature adjourned shortly after noon March 16. A companion measure, Senate Bill (S.B.) 175, was passed out of the Senate Conservation Committee on Feb. 19 with an 8-to-0 “do pass” recommendation, but it never emerged from the Senate Judiciary Committee.

Xcel Energy supported the measures and company officials said they will continue to support such efforts going forward.

“In future sessions of the New Mexico Legislature, Xcel Energy will continue to support legislation granting a transmission owner the first right to construct new, regionally funded transmission projects that connect to its existing transmission network,” a company spokesperson told TransmissionHub March 19. “Electricity demand in our New Mexico and Texas service areas continues to grow, and new transmission will be required to serve these new loads.”

While FERC’s Order 1000 removes the ROFR from FERC-approved tariffs, it also contains an exception for states that have ROFRs in place.

In New Mexico, SPS and Farmers’ Electric Cooperative, part of the Western Farmers Electric Cooperative, currently operate transmission and are part of a regional transmission organization (RTO). Transmission projects would have to have been approved for construction by an RTO to be eligible for the ROFR under the New Mexico legislation.

For its part, Xcel Energy said part of the reason it supported the ROFR is economic.

“When we build these lines, our customers benefit from a cost standpoint from the economies of scale Xcel Energy offers,” the spokesperson said. “Additionally, the reliability of future lines will be enhanced by locally based maintenance and restoration teams with extensive knowledge of the network and the ability to respond quickly in outage events.

The utility is regulated by the New Mexico Public Regulation Commission, which puts the state in a better position to control the costs of new projects “and to hold the transmission provider accountable for the quality of service on the transmission lines and ultimately to New Mexico retail customers,” the spokesperson said.

The utility would not specify which future projects might be affected by the failure of the ROFR because many of those projects have not been publicly announced. However, the company is studying the 167-mile TUCO-Amoco Switch-Hobbs 345-kV project in Texas and New Mexico, for which Xcel Energy has accepted a conditional notification to construct from the Southwest Power Pool, the spokesperson said.

Future bills intended to establish a ROFR can be introduced during future legislative sessions but will have to be introduced as new bills; there is no provision that allows for resurrecting bills that did not receive full consideration during the prior session.

FERC Order 1000 contains no deadline by which a state must pass a ROFR if it chooses to provide that right to its incumbent utilities, so similar legislation could be re-introduced during a subsequent session.