New Mexico regulators denied developers permission to build the SunZia Southwest Transmission Project across eastern New Mexico, dealing a blow to plans to link renewable energy projects in that state and Arizona with markets in the Desert Southwest.

The New Mexico Public Regulation Commission denied SunZia's application without prejudice, meaning the developer is free to reapply for a permit to build the lines. SunZia spokesman Ian Calkins said the company plans to file an amended application in the coming months once the U.S. Bureau of Land Management has completed its environmental assessment on some minor alignment modifications. SunZia has asked the BLM to amend the right-of-way alignments the federal agency approved on Sept. 1, 2016, according to the commission's hearing examiner.

The SunZia Transmission project was expected to achieve commercial operation in 2020. Wind developers, including Pattern Energy Group Inc.'s Pattern Energy Group LP, the anchor tenant for transmission service that wants to interconnect about 1,500 MW of wind generation, are depending on the project.

SunZia started its permitting process in 2008 and was placed on a federal regulatory fast-track during the renewables-friendly Obama administration with encouragement from the nation's former United Nations Ambassador, U.S. Energy Secretary and New Mexico Governor Bill Richardson, who championed renewable energy development in New Mexico.

However, the commission on Sept. 5 decided it did not have enough information to approve the estimated $2 billion transmission project, which would include two 500-kV lines that would run about 520 miles between a new substation near Corona, N.M., and the existing Pinal Central substation outside Coolidge, Ariz. The commissioners said they lack the information they need to determine the project's environmental impact across the 320 miles the project would span in New Mexico because too many questions about where the lines would finally be located remain unresolved.

The hearing examiner in July concluded that the boundaries of the proposed transmission corridor lack definition. SunZia's witnesses acknowledged that a 1,000-foot-wide corridor the developer proposed was not shown on any maps, and SunZia did not describe with any precision either the center line or the borders of the corridor, the hearing examiner said in recommending that the application be denied. Property owners asserted that they could not know what impact the proposed project would have on their properties because the project's proposed corridor was not adequately defined.

The hearing examiner also determined that SunZia did not adequately research zoning and land-use requirements along the proposed route. SunZia said it has encountered opposition from ranchers and other land owners and has not had access to the properties to perform studies needed to determine environmental impacts.

As currently configured, the project would pass through 90 miles of private property in New Mexico while 72% of the proposed transmission corridor in the state would extend through federal and state land. SunZia would prefer to obtain a right-of-way from private landowners through bilateral negotiations but would seek eminent domain authority from the state Renewable Energy Transmission Authority as a final resort if it reaches an impasse with property owners, according to the hearing examiner.

The project was the subject of much debate in early 2016 when the Arizona Corporation Commission narrowly approved the 200-mile portion that would cross the southeast portion of that state. Renewable energy advocates championed what would be Arizona's first merchant-owned transmission facility as a means of unlocking large quantities of solar and wind resources for commercial development, but environmental groups have opposed routing the project through the state's pristine San Pedro River Valley.