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New Mexico orders Southwestern to stop collecting charge from solar customers

Q2: U.S. Solar and Wind Power by the Numbers

Essential Energy Insights - September 17, 2020

Essential Energy Insights September 2020

Rate case activity slips, COVID-19 proceedings remain at the forefront in August


New Mexico orders Southwestern to stop collecting charge from solar customers

New Mexico regulators ordered Southwestern Public Service Co. to stop collecting a controversial roughly $28 per month fee from rooftop solar customers and ordered the utility to pay back the money it collected.

The Public Regulation Commission concluded the Xcel Energy Inc. subsidiary set the "standby charge" without justification, saying it accepted the commission, or PRC, hearing examiner's conclusion that the utility's study of costs of providing ancillary and standby services was riddled with errors and unreliable. State statute defines such services as those that are essential to maintain electric system reliability.

Solar advocates said the monthly fee was one of the most punitive in the country and stifled distributed generation development in eastern and southern New Mexico.

The PRC's 4-1 vote on Sept. 5 to cancel Rate 59, as the charge is referred to, reversed a December 2010 decision the commission made in authorizing the charge in the first place. Southwestern Public Service, or SPS, sought an 11.6% increase in revenues from the charge on residential solar customers.

This time the commissioners sided with the Coalition for Clean Affordable Energy and Vote Solar, which were two groups who opposed the charge. They contended that the utility's study to justify the charge did not properly determine the costs of providing its services or the benefits of distributed solar for the utility's system.

"Without Rate 59, families and small businesses in southeast New Mexico will have the first meaningful opportunity in years to invest in rooftop solar," said Earthjustice attorney Sara Gersen, whose organization is a member of the coalition.

The utility said it provided the same type of study in the case in which the commission approved the charge in 2010. However, the commission pointed to the solar parties arguments that SPS did not conduct any analysis to determine the generation performance of solar facilities and the utility's most recent study ignored the benefits of distributed generation for the transmission and distribution systems.

The charge was about $28 per month for the average residential solar customer. The commission ordered SPS to make refunds for the next 18 months starting on Sept. 26.

The commission declined to rule on the statutory issues that supporters and opponents raised for and against the charge because addressing those issues would likely impact other utilities. However, the commission concluded it should open a rulemaking "to address the many issues surrounding standby charges" for distributed generation customers.

Solar advocates argued the charge has stunted development of rooftop solar in SPS's New Mexico service territory since only 112 residential solar customers pay the charge as do 14 small commercial and 29 irrigation customers.

SPS argued that elimination of the standby charge will force customers without solar facilities to subsidize customers with solar. The charge is needed to recover SPS's costs of generation, transmission and distribution facilities necessary to back up distributed generation systems and maintain system reliability when the solar facilities are not producing energy. That is an argument utilities across the nation have repeatedly used to justify fees and charges on distributed solar customers.