The New Mexico Public Regulation Commission should grant a certificate of public convenience and necessity to Public Service Company of New Mexico (PNM) in order for the company to build, operate, and maintain the proposed BB2 Project, subject to certain conditions, according to a March 11 recommended decision by Carolyn Glick, hearing examiner for the commission.
As noted in the recommended decision, PNM in August 2018 filed an application requesting that the commission:
- Issue a certificate of public convenience and necessity (CCN) authorizing PNM to build, operate, and maintain a 345-kV transmission line and associated facilities – the BB2 Project, which would run adjacent to PNM’s existing BB Line and be located on lands in Santa Fe and Sandoval counties owned primarily by private landowners. A few miles would be located on state land managed by the New Mexico State Land Office
- Determine the ratemaking principles and treatment to apply to the BB2 Project
- Approve the location of the BB2 Project, which would be located in Santa Fe and Sandoval counties, originating at the PNM Clines Corner 345-kV switching station and proceeding west for about 45 miles to a point of interconnection with the existing PNM Norton-BA NB 345-kV Line
- Authorize a right of way (ROW) width greater than 100 feet
Glick noted that wind resources in New Mexico are concentrated in the eastern part of the state and that to reach the PNM system, as well as the western energy market, those wind resources need access to the interstate transmission network.
These wind farms have already been developed in eastern New Mexico: the New Mexico Wind Energy Center, Aragonne Mesa, Broadview, El Cabo, and Casa Mesa. Glick added that those existing wind farms interconnect to PNM’s BB Line, which has a maximum capacity of 1,000 MW and is fully subscribed. With the BB Line fully subscribed, PNM cannot offer additional transmission service even if existing interconnected wind farms can produce more power, Glick said.
The maximum capacity of the BB2 Line is 362 MW, and PNM has already committed the entire 362 MW of capacity to Avangrid Renewables, which is a PNM wholesale transmission service customer that does not purchase electricity from PNM, but purchases transmission service from PNM to move Avangrid’s own energy.
Glick also said that in a separate case – Case No. 16-00191-UT – the commission approved a Special Service Contract (SSC) between PNM and Facebook that requires PNM to procure sufficient renewable energy to meet Facebook’s load as it increases over time at its data center in Los Lunas. In Case No. 18-00009-UT, the commission approved a purchased power agreement (PPA) between PNM and Avangrid for PNM to purchase the output of the 166-MW La Joya wind facility, to be owned and operated by Avangrid, to meet Facebook’s increased load, Glick said.
The BB2 Line is necessary to move power from the La Joya facility to PNM’s system, Glick said, adding that of the total 362 MW of capacity of the proposed BB2 Line, 166 MW would be used to deliver wind energy from the La Joya wind farm. The remaining 196 MW of capacity would be used to deliver energy from future wind farms developed by Avangrid, Glick said.
The BB2 Line would be built to meet the needs of only two PNM customers: Facebook and Avangrid, Glick said, adding, “The only reason that PNM is pursuing the BB2 Project ‘is because of the transmission commitments that have been made on it.’”
PNM has shown that it needs the additional capacity of the proposed BB2 Project to serve Facebook’s expanded load and that the project is the most cost-effective project among feasible alternatives, Glick said, adding, “Therefore, the commission should issue a CCN for the proposed BB2 Project.”
Glick also said that the PNM has shown that the proposed project would not impair important environmental values, and that the commission should grant location approval.
Discussing PNM’s request for ROW width determination, Glick said that according to PNM, the maximum distance between towers – the span length – for the BB2 Line would be 1,760 feet. Under wind blowout conditions, for a DBD-1901 tower, which PNM proposes to use, and a span length of 1,760 feet, a 150-foot ROW width would comply with the National Electric Safety Code (NESC).
However, Glick added, under extreme wind conditions, an ROW width of 200 feet is necessary to comply with the NESC. In recent cases, the commission has determined necessary ROW widths based on extreme wind conditions and therefore, PNM’s request that the commission determine that a maximum 150-foot ROW width is necessary should be rejected. The commission should determine that a 200-foot ROW width is necessary, Glick said, adding that that does not mean that PNM must obtain a 200-foot ROW width for the entire line, but that PNM must comply with NESC requirements for an extreme wind condition for all sections of the line.
Of PNM’s request for ratemaking treatment for the BB2 Project, Glick noted that the estimated cost of the BB2 Project is $85m. The estimated revenue requirement of the project – both wholesale/FERC and retail – is $10.5m, Glick said, adding that the revenue requirement is less than the cost of the project, and is the annual amount that PNM would recover from ratepayers for the project.
PNM requests authority to recover from its New Mexico retail customers, in a future rate case, an estimated $5.4m for the BB2 Project, which is the estimated retail allocation of the revenue requirement.
Glick added that PNM’s request for ratemaking treatment should be denied because approving it would preclude the commission from enforcing the SSC between PNM and Facebook and ordering Facebook to directly reimburse PNM for costs of the proposed BB2 Project.
The only PNM retail customer that the BB2 Project is necessary to serve is Facebook, Glick said, adding that under generally accepted principles of cost causation, Facebook should be required to directly reimburse PNM for 45.9% of the costs of the project – 166 MW ¸ 362 MW – or an estimated $39m.
The ratemaking principles and treatment that should apply to the BB2 Project once it is placed in service are that PNM should not be allowed to recovery any costs of the BB2 Project from retail ratepayers other than Facebook unless and until otherwise ordered by the commission, Glick said.
Among other things, Glick said that the conditions for commission approval of the project include that Facebook directly reimburse PNM for costs of the BB2 Project under generally accepted principles of cost causation, and that PNM file copies of all construction permits received for the project within two weeks of receipt.