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<title>May 2004: New Mexicao Adopts Renewable Energy Portfolio Standard</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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<p ALIGN="left"><u><b>May 2004</b></u><font size="6"><b><br>
New Mexico Adopts Renewable
Energy Portfolio Standard</b></font><strong><br>
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>4/</font><font size="2">06/10)</font></p>
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<p align="justify">On April 14, 2004, New Mexico Governor Bill Richardson
issued Executive Order No. 2004-019, declaring New Mexico the “Clean Energy
State” and creating a “Clean Energy Development Council” comprised of
officials from various existing energy-related departments for the purpose
of recommending “significant clean energy policy measures” to be presented
to the legislature. The executive order came shortly after Governor
Richardson signed Senate Bill 43 (the “Law”) into law on March 8, 2004,
which established New Mexico’s renewable energy portfolio standard.<br>
<br>
Under the Law, renewable energy must comprise no less than five percent of
each public utility’s total retail sales to New Mexico customers by January
1, 2006. The renewable portfolio standard increases by one percent annually
until January 1, 2011, at which time the renewable portfolio standard
remains fixed at ten percent.<br>
<br>
“Renewable energy” is defined to include electric energy generated by solar,
wind, hydropower and geothermal resources, fuel cells that are not fossil
fueled, and biomass resources such wood and landfill gas. “Renewable energy”
specifically excludes electric energy generated by fossil fuel or nuclear
energy.<br>
<br>
Renewable energy resources that are already in a public utility’s electric
energy supply portfolio are included in determining compliance with the
renewable portfolio standard. Also, the Law directs the New Mexico Public
Regulation Commission (the “Commission”) to establish a system of tradable
renewable energy certificates (“REC”) representing the environmental
attributes of electricity generated by renewable energy resources that can
be used by a public utility to satisfy the renewable energy portfolio
standard.<br>
<br>
The requirements and procedures to be established concerning RECs must
provide that RECs are owned by the generator of the renewable energy unless
(1) the RECs are transferred to the purchaser of the energy by specific
agreement with the generator, (2) the generator is a qualifying facility
under the Public Utility Regulatory Policies Act of 1978, in which case the
REC’s are owned by the public utility that purchased the renewable energy
unless retained by the generator by specific agreement, or (3) the renewable
energy was purchased under a contract that was in effect before January 1,
2004, in which case the RECs are owned by the purchaser for the term of the
contract.<br>
<br>
The Law recognizes an exception to the renewable portfolio standard. Public
utilities are not required to incur costs for renewable energy above a
“reasonable cost threshold” to be established by the Commission. In
determining the reasonable cost threshold, the Commission is required to
determine factors such as the price of renewable energy, the transmission
and interconnection costs required to deliver renewable energy to retail
customers, the impact of the cost of renewable energy on retail customer
rates, and public benefits and other factors that the Commission deems
relevant. The reasonable cost threshold may be modified by the Commission.
The reasonable cost threshold does not operate to delay the annual increases
in the renewable portfolio standard, and the public utility must meet the
applicable renewable portfolio standard whenever it is able to do so at or
below the reasonable cost threshold.</p>
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<blockquote>
<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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