Southwestern Public Service Co.'s request for New Mexico to approve its deals for three major wind projects has been bogged down for months over state regulators' refusal to grant confidential treatment for terms of the contracts.
Xcel Energy Inc. subsidiary SPS is seeking approval from New Mexico and Texas utility regulators to build and own two wind farms and to purchase power from a third project. If approved, the 1,230 MW of wind assets will save its customers $2.8 billion over the next three decades, the utility estimated in regulatory filings in both states.
However, full public disclosure would allow other parties to identify contractual terms that have been accepted by SPS and give those parties the ability in future negotiations to extract concessions or demand higher prices, resulting in increased costs and less favorable terms for the utility and its customers, SPS contended in an April 14 memorandum in support of its request to keep details of the contracts under wraps.
In the latest development, the New Mexico Public Regulation Commission voted 3-2 on Oct. 4 to grant rehearing of the company's confidentiality request, but only after a rancorous debate in which Commissioners Patrick Lyons and Valerie Espinoza adamantly refused to reconsider the commission's earlier denial of SPS's request to keep terms of the contracts under seal so only the regulators and parties to the case can see the information.
On Aug. 16 the commission determined that SPS had not provided facts that would support its confidentiality claims. However, SPS moved for reconsideration of that decision.
In response, Commission Chair Sandy Jones and Commissioners Cynthia Ball and Lynda Lovejoy voted to rehear the company's arguments for confidentiality, but they did not set a date for the rehearing.
The Oct. 4 decision follows months of confidentiality agreements, motions, interlocutory appeals, interrogatories, requests for production of documents, procedural orders and pleadings over whether materials filed in the case should be public or confidential.
The discord is delaying the company's efforts to obtain a final order from the Public Regulation Commission for approval of the projects by Dec. 31 to enable SPS to complete construction of the wind facilities in time to meet a deadline for claiming 100% of the value of federal production tax credits.
"In seeking these approvals, Xcel Energy had asked that information such as pricing for subparts of the projects be kept confidential, a request that was initially denied," company spokesman Wes Reeves said in an Oct. 4 email. "The overall costs of the projects have been disclosed publicly. Xcel Energy asked for a rehearing, which resulted in the decision today. The company has agreed to open these records after approval is granted and before expected rate cases in 2019 and 2020 when the company will seek recovery of capital costs for the projects."
The commission's utility division staff, the New Mexico Attorney General's Office and Western Resource Advocates jointly opposed SPS' motion for rehearing, saying the utility's argument makes no sense because the value of the federal production tax credits is scheduled to step down from 100% for projects that began construction in 2016 to 60% for projects commencing construction in 2019, so the information the company seeks to keep confidential is already out of date.
SPS said the projects meet the requirement for full tax credits, according to the company's March 21 application seeking commission approval to construct and operate the 522-MW Sagamore Wind Project in Roosevelt County, N.M., and the 478-MW Hale Community Energy unit 2 wind project in Hale County, Texas. The utility said it will be allowed to receive 100% of the production tax credits for the $769 million Hale project if it gets the facility into service no later than in 2019 and will get the same tax credit value for the $865 million Sagamore project if that facility is placed into service no later than 2020.
SPS said it is buying the Hale project site from NextEra Energy Inc. subsidiary NextEra Energy Resources LLC, which has completed preliminary work at the site and is purchasing the Sagamore site from Invenergy LLC, which has completed preliminary work there, so construction on both sites has begun for full tax credit purposes.
SPS also asked the commission to approve a 30-year power purchase agreement with NextEra affiliate Bonita Wind Energy LLC for an additional 230 MW of wind generation from projects in Crosby and Cochran counties in Texas. (New Mexico PRC Case No. 17-00044-UT, Public Utility Commission of Texas Docket No. 46936)