Southwestern Public Service seeks quick approval of two solar contracts

Southwestern Public Service on Aug. 27 submitted to the New Mexico Public Regulation Commission its initial legal brief and proposed recommended decision for consideration by the Hearing Examiner related to two solar projects, and requested that the Hearing Examiner adopt the recommended decision as the basis for his recommendation to the commission.

On April 2, Southwestern Public Service (SPS) asked the commission to issue an order:

  • authorizing SPS to enter into a long-term purchased power agreement (LTPPA) with NextEra Energy ResourcesRoswell Solar LLC for the purchase of 70 MW of solar energy beginning no later than Dec. 31, 2016, and continuing for 25 years; and
  • authorizing SPS to enter into a LTPPA with NextEra Energy Resources’ Chaves County Solar LLC for the purchase of 70 MW of solar energy beginning no later than Dec. 31, 2016, and continuing for 25 years.

NextEra has said that the economical pricing offered under the LTPPAs is contingent on NextEra obtaining the New Mexico gross receipts tax credit, set to expire at the end of 2015, and the federal Investment Tax Credit (ITC), set to expire at the end of 2016. To meet these deadlines, NextEra has emphasized that construction needs to begin by November 2015.

NextEra representatives explained that it will take approximately eight months to build the facilities, with an additional two to three months for transmission work required to connect the facilities to the transmission grid, and that they needed to have a workforce hired and in place soon. Based on these discussions, the parties, with NextEra’s concurrence, agreed to an extension of the approval deadline, which extended the deadline for commission approval from Oct. 2 to Oct. 14.

Noted the proposed decision filed by SPS: “Following its review of the 104 bids received from both distribution and transmission voltage entities, SPS selected two bids submitted by NextEra for the purchase of solar energy from two 70 MW AC solar PV power generation stations, which will be located in Chaves County, New Mexico, one being nearer to the City of Roswell. SPS expects each facility to produce approximately 202,820 MWh of solar energy in the first year and average approximately 190,650 MWh of solar energy per year over the 25-year term of the Solar LTPPAs.”

The Coalition for Clean Affordable Energy said in an Aug. 27 brief supporting these projects: “SPS is seeking approval of the LTPPAs in this case not because they are required by the Renewable Energy Act, but because they are expected to save money for SPS’s customers. At the time the LTPPAs were executed by SPS, they were the lowest price utility scale solar energy PPAs in the country, and are still among the lowest. SPS is estimating that over the term of the contracts, customers will save between $11.5 million (Strategist) and $104 million (Historical LMP), depending on the analysis used. If energy savings alone are used in the calculations, customers are expected to save between $11.5 million and $50.4 million. If expected capacity savings are included in the estimates, SPS expects to save an additional $54 million for each analysis, so the savings would be between $65.5 million and $104.4 million.”

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.