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New Mexico rules utilities must include energy storage in resource plans

New Mexico regulators changed their integrated resource planning rule to require utilities to include electricity storage in their integrated resource plans.

The state Public Regulation Commission, or PRC, on Aug. 2 decided to require utilities to evaluate electricity storage as a demand-side resource in the same manner they plan for power plants. The final order will take effect on Sept. 1.

The order will apply to PNM Resources Inc. subsidiary Public Service Co. of New Mexico, Xcel Energy Inc. subsidiary Southwestern Public Service Co. and El Paso Electric Co.

The rule already requires each utility to present an analysis comparing all feasible resources so energy storage will be included in each comparative analysis, according to PRC spokesman Carlos Padilla. (Rule 17.7.3 NMAC)

PRC Associate General Counsel Judith Amer told the commission a specific requirement for a cost-benefit analysis of energy storage was not recommended because comparable analysis already requires this.

Also, the commission declined to adopt suggestions from some parties that it establish benchmarks or targets for energy storage since there is not yet an adequate record on which to base targets, as New Mexico has limited experience with storage. The commission may set targets with future amendments to the rule if it determines that would be in the public interest, Padilla said.

Commissioner Cynthia Hall, who presided over a hearing on the subject, said none of the parties opposed the rule change.

Commissioner Patrick Lyons wanted to change the IRP rule further by removing a provision that requires utilities to present evidence they are complying with their IRPs when they submit requests for specific resource permits. He said IRPs are just long-range plans, and things change. He pointed to how solar has gotten more efficient, and storage technology will change too, he said.

Utilities are required to update and file new resource plans every three years. Commission Chairman Sandy Jones said he had no problem with opening up the entire IRP rule for amendments. However, he said the commission should address the storage amendment first, which the commissioners did with unanimous approval.

Amer said the a legal notice of proposed rulemaking simply addressed storage and that a new legal notice would have to be issued to make further amendments. Lyons said he would meet with staff to discuss it.

The staff had proposed the mandate that utilities consider cost-effective storage in their resource mix as part of the IRP process. Although battery storage is most common, the amendment requires that utilities consider all feasible energy storage options, noting the Energy Storage Association described not only solid state batteries, but flow batteries, flywheels, compressed air energy storage, thermal and pumped hydropower storage.

"Staff believes that the benefits that energy storage may be able to provide at all stages of the generation, transmission and distribution process may warrant giving extra weight to the consideration and inclusion of energy storage in cost-benefit analysis stage," the proposal said.

To date, PNM has the only electric storage facility in New Mexico, the Prosperity Energy Storage Project, which was put into service in 2011 and includes a 500-kW solar array and battery units near the Albuquerque International Sunport, which is the state's largest public airport. Noting the paucity of energy storage in the state, the staff asked, "What is each utility waiting for?"

During a May 31 hearing, PNM Deputy Associate General Counsel Stacey Goodwin said PNM supported inclusion of battery storage as an item to be analyzed in the rule, but said the utility believed the existing rule requires all feasible supply-side and demand-side resources to be analyzed on a comparable basis, including storage. SPS representative Mario Contreras said the utility did not oppose the amendment as long as energy storage analysis is done on equal footing with other resources.