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<title>February 2003: New Mexico Adopts Renewable Energy Portfolio Requirement</title>
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<p align="left"><strong><small><font face="Arial">About The Author:</font></small></strong></p>
<p align="left"><font face="Arial" style="font-size: 9pt">Robert A. Olson is a partner in the law firm of
Brown, Olson & Gould, P.C. which maintains a nationwide practice in energy law,
public utility law and related commercial transactions.</font></p>
<p><small><font face="Arial"><font style="font-size: 9pt">He can be reached at:</font><br>
<br>
<b><font color="#0000FF">Brown, Olson & Gould, PC</font></b><br>
2 Delta Drive<br>
Suite 301<br>
Concord, NH 03301<br>
<a href="mailto:[email protected]">[email protected]</a><br>
(603) 225-9716<br>
<a href="mailto:[email protected]"></a></font></small></p>
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<img src="../images/statelin.gif" alt="STATELINE by Robert Olson" border="0" width="375" height="75">
</center><p align="left"><b><u><br>
February 2003<br>
</u></b><font size="6"><b>New Mexico Adopts Renewable Energy <br>
Portfolio Requirement<br>
</b></font><strong>by Robert Olson -- Brown, Olson and Wilson, P.C.<br>
</strong><font face="Arial" size="2">(<em>originally published by PMA OnLine Magazine:
200</em>3/06/14)</font></p>
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<p ALIGN="JUSTIFY">The New Mexico Public Regulation Commission ("PRC") recently
adopted a renewable energy portfolio requirement for electric utilities. See
In the Matter of an Inquiry into Renewable Energy as a Source of
Electricity, Final Order Adopting 17.9.573 NMAC, Utility Case No. 3619
(December 17, 2002) (the "Order"). The PRC adopted New Mexico Administrative
Code Section 17.9.573 (the "Rule") over the objections of some utilities
that the PRC lacked authority to impose a mandatory renewable energy
portfolio.</p>
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<p align="left">The Rule specifically favors some forms of renewable energy
over others. Utilities can satisfy the portfolio requirement with tradable
renewable energy certificates.</p>
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<p align="left">The Rule requires electric utilities to "develop an energy
portfolio appropriate to its suppliers and customers" that includes "a
progressively greater percentage of service from renewable sources." By
2006, at least 5% of the total energy "distributed by a public utility to
its retail New Mexico customers," must be generated by "renewable energy."</p>
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<p align="left">This renewable energy standard increases by 1% each year
until 2011, when the standard is fixed at 10%. "Renewable energy" is defined
to include energy generated by solar, wind, hydroelectric, geothermal and
fuel cell technology, and to specifically exclude fossil fuel or nuclear
energy.</p>
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<p align="left">The renewable energy standard can be satisfied with tradable
renewable energy certificates. All transactions between public utilities and
suppliers of renewable energy are required to be documented by such
certificates. The certificates belong to the producers of renewable energy
until "transferred by sale" to a public utility. They may be transferred
separately from the electric energy represented by the certificate as long
as the electric energy is metered in New Mexico. The energy need not
necessarily be generated in New Mexico, but "[o]ther factors being equal,
preference [must] be given to renewable energy generated in New Mexico."</p>
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<p align="left">Certificates are assigned values that are weighted
differently depending on the type of renewable energy used to generate the
electricity represented by the certificate. Each kilowatt hour generated by
wind or hydroelectric technology receives a value of one kilowatt hour, each
kilowatt hour generated by biomass, geothermal, landfill gas or fuel cell
technologies receives a value of two kilowatt hours, and each kilowatt hour
generated by solar technology receives a value of three kilowatt hours.
Thus, as compared to other forms of renewable energy, the Rule favors solar
technology and disfavors wind and hydroelectric technology.</p>
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<p align="left">Based on the Order, the PRC’s decision to assign greater
weight to some forms of renewable energy than others was motivated largely
by a desire to encourage diversified sources of electric generation. The PRC
reasoned that hydroelectric power represented an inexpensive, mature
technology that already accounted for one percent of electric supply, and
reliance on hydropower to satisfy the renewable energy requirement would
impede the development of new sources of renewable power. The Order notes
that wind power also enjoyed a cost advantage over other renewable sources.
In addition, reliance on wind power was considered less desirable because of
its intermittent availability and because the best wind power locations tend
to be at a significant distance from population centers, requiring upgraded
or new transmission facilities. Solar power, on the other hand, could be
located near concentrations of customers and therefore was thought to
warrant greater incentive.</p>
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<p align="left">The Rule takes effect on July 1, 2003, and by November 1,
2003, utilities are required to submit a renewable energy plan for
satisfying the renewable energy standard. Annual portfolio summaries are
required, beginning July 1, 2004.</p>
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<p align="left"><font face="Arial">
<small>Robert A. Olson is a partner in the law firm of Brown, Olson &
Gould P.C.
which maintains a nationwide practice in energy law, public utility law and related
commercial transactions. He can be reached at:</small></font><p align="center">
<font face="Arial"><small><font color="#0000FF"><b>Brown, Olson & Gould, PC</b></font><br>
2 Delta Drive, Suite 301<br>
Concord, NH 03301 <br>
<br>
<a href="mailto:[email protected]">[email protected]</a> | (603) 225-9716<a href="mailto:[email protected]"></a></small></font>
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