New Mexico’s Path to a Sustainable Energy Future

1. New Mexico’s Path to a Sustainable Energy Future Jason Marks Commissioner, District 1 April 3, 2009

2. Outline • Environmental & Economic Challenges of the Status Quo • Energy Efficiency • Renewable Energy Technologies • Policy Tools

3. OVERPECK QUOTE "The western United States, in particular the southwestern United States from Southern California to Texas, will probably be one of the hardest-hit and soonest-hit parts of the United States” Jonathan Overpeck, Univ. of Arizona Scientist and a lead author of the Intergovernmental Panel on Climate Change report, as quoted in the Albuquerque Journal, February 3, 2007.

4. Challenging and Evolving Environment:Getting Serious about Climate Change

5. Challenging and Evolving Environment:Getting Serious about Climate Change

6. Challenging and Evolving Environment – Fuel Price Volatility

7. New Mexico Confronts Supply Challenges: Energy Efficiency 2% load growth

8. Cost recovery for DSM • Removing barriers to utility “investment” in DSM • 2007: NMPRC Rejects PNM gas decoupling proposal as too broad • 2008: EUE Act Amendments • 2009: PRC Incentive Docket – Marks proposes electric decoupling

9. New Mexico Confronts Supply Challenges: Natural Gas/Renewables

10. Wind Energy – Prime Mover in R.E. • Approx 17,000 MW installed capacity (2008) • 5000 MW added in 2007 • Utility ownership has begun • Cost $23 - $60/mwh after PTC • PTC = $18/mwh • Prices increasing due to materials, demand, • Exchange Rate Annual Report on U.S. Wind Power Installation, Cost, and Performance Trends: 2007. Wiser, R., and M. Bolinger. May 2008

11. Wind projects in NM or serving NM

12. Wind with Gas Backup: Good for Utilities, Good for Ratepayers.

13. Wind with Gas Backup – Capacity + Reduced exposure to Gas Pricing Pressure

14. Wind Typically Distant from Load

15. Albuquerque HIGH PLAINS EXPRESS SunZia WYOMING Potential Multi-stateTransmission Projects Energy Resource Zones Dave Johnston LRS Pawnee/ Story COLORADO Limon Midway Comanche Lamar Holcomb NEW MEXICO ARIZONA Gladstone Phoenix Socorro Tucson 15

16. Western Renewable Energy Zones www.westgov.org/wga/initiatives/wrez

17. Solar Technologies • Photovoltaic (PV) Panels: • 1 – 3 kw home systems common (~$18,000 installed home system = 25¢/kwh) • Commercial (10 – 100 kw) • Major projects - TriState/FirstSolar 30MW Colfax County Concentrated Solar Power (CSP) • 10-15¢/kwh for 100MW+ projects • Thermal Storage/Backup Possible • Kramer Junction (1980s) 350 MW, Nevada Solar One (2007) 64 MW, Spain

18. Potential Utility Scale Solar Projects in New Mexico • El Paso Electric – 64 MW solar thermal PPA w/ eSolar. Approved by PRC • PNM-led consortium - ~100 MW solar thermal trough plant. Bids currently being evaluated. Possible load-side (Abq) site. • TriState/FirstSolar 30 MW PV in Colfax Cty

19. Biomass & Geothermal Biomass and Geothermal Opportunities Geothermal Plant in Valles Caldera • Dairy & Feedlot Waste • Wood Waste • Landfill Gas

20. State Renewable Portfolio Standards Source: dsireusa.org/Sept 2007 MN: 25% by 2025 (Xcel: 30% by 2020) ME: 30% by 2000 10% by 2017 - new RE VT: RE meets load growth by 2012 *WA: 15% by 2020 ND: 10% by 2015 • NH: 23.8% in 2025 WI: requirement varies by utility; 10% by 2015 goal MA: 4% by 2009 + 1% annual increase MT: 15% by 2015 OR: 25% by 2025(large utilities) 5% - 10% by 2025 (smaller utilities) RI: 16% by 2020 CT: 23% by 2020 • *NV: 20% by 2015 IA: 105 MW • NY: 24% by 2013 • CO: 20% by 2020(IOUs) *10% by 2020 (co-ops & large munis) IL: 25% by 2025 • NJ: 22.5% by 2021 CA: 20% by 2010 • PA: 18%¹ by 2020 MO: 11% by 2020 • MD: 9.5% in 2022 • NC: 12.5% by 2021(IOUs) 10% by 2018 (co-ops & munis) • AZ: 15% by 2025 • *DE: 20% by 2019 • DC: 11% by 2022 • NM: 20% by 2020(IOUs) • 10% by 2020 (co-ops) *VA: 12% by 2022 TX: 5,880 MW by 2015 HI: 20% by 2020 State RPS State Goal Solar water heating eligible

21. New Mexico Renewable Energy Act: NMSA § 62-16-1A Renewable Portfolio Standard (RPS) Law • R.E.: solar, wind, biomass, geothermal • Scope: IOUs, Co-ops (lower reqmts) • RPS 5% of retail sales in 2006 10% of retail sales in 2011 15% in 2015, 20% in 2020 • Reasonable Cost Thresholds • Annual Procurement Plans • PRC’s Diversity Rules – 20% Solar Target

22. NM: Aggressive Targets / Small State

23. Net Metering NMPRC Rule: Utilities must interconnect customer-owned generation via net-metering up to 80 MW NMPRC Orders: PNM Incentive Program: 13¢/kwh for resid RECs 15¢/kwh for comm’l RECs SPS/EPE Incentive Pgms

24. PV Incentive Programs

25. Voluntary Programs Dec 2009: PRC effectively exempts Sky Blue use from fuel surcharge

26. New Mexico R.E. Tax Incentives • Renewable Energy Production Tax Credit • Reduces consumer cost by 1¢ to 4¢ per kwh • One of the best in nation. • Advanced Energy Tax Credit • “Clean coal” bill, also applies to solar! • 6% of eligible plant costs • Other Tax Credits • Homeowner Solar Tax Credit – 30%, $9,000 • Gross Receipts (Sales) Tax exemptions • Bio-diesel PTC

27. Integrated Resource Planning (IRP) • All utilities required to submit • Public process required • PNM IRP prioritizes energy efficiency

28. Next Steps: PRC Regulatory Dockets • Spring ’09: Net-Metered/Customer Owned Systems • Annual True-Up rulemaking • Permissibility of Third-Party Ownership • Fall ’09: Submission/Review of 2010 Renewable Procurement Plans

29. Resources • PRC Website on Energy Efficiency & Renewable Energy in New Mexico – www.nmprc.state.nm.us • www.cleanenergynm.org - ENMRD website • www.jasonmarks.com