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Facebook contracts for 267 MW of renewables near approval

Facebook Inc.'s bid to purchase 267 MW of wind, solar and storage from a New Mexico utility moved closer to regulatory approval.

New Mexico regulators on March 7 directed the state's largest electric utility to prepare an order for their approval of three renewable energy power purchase agreements to serve Facebook's giant data center under construction in Los Lunas, N.M.

The Public Regulation Commission on March 7 heard from witnesses in support of PNM Resources Inc. subsidiary Public Service Co. of New Mexico's application for approval of 267 MW of wind, solar and storage contracts to supply the social media company for the next 20 to 25 years. The contracts are in addition to power purchase agreements the PRC approved in August 2016 for 60 MW of solar capacity.

Facebook has a 970,000-square-foot facility under construction but now plans to add nearly 2 million square feet, and the company wants to supply the complex with 100% renewable energy.

Most of the hearing concerned Citizens for Fair Rates and Environment Director Thomas Manning's cross-examination of PNM witnesses. CFRE was the only party that raised questions about the arrangement in which PNM is seeking to provide more renewable energy to Facebook under special service contracts.

Utility officials said the contracts would not impact other utility customers. However, Manning said PNM did not provide in the contracts for the addition of flexible resources to balance the renewables PNM would add for Facebook. Manning asked if PNM's other customers would have to pay for gas-fired or storage resources when future renewable capacity is added to PNM's system, since existing dispatchable capacity would already be in use to balance Facebook's renewables.

PNM Planning Engineer Shane Gutierrez said a consultant ran system reliability scenarios that showed additional flexible resources may be needed if the renewable energy capacity reaches 40% of its portfolio. The utility said in its 2017 integrated resource plan that it meets the state's current renewable portfolio standard of 15% and will require additional renewable resources to meet the state's increased 20% standard in 2020.

The utility's vice president of regulatory affairs, Gerard Ortiz, said Facebook must pay all costs of renewable energy procurement, including its share of transmission expenses.

PNM was directed to file a proposed order by March 13. Despite CFRE's concerns, PRC Associate General Counsel Russell Fisk said CFRE largely supports PNM's application but may want to object to some parts of the proposed order or provide alternative language. Manning said his group will provide its response by March 16. Fisk said the PRC staff will also review PNM's proposed order. Representatives of other parties attending the hearing said they will not file exceptions to PNM's application.

PRC Chairman Sandy Jones said the PRC aims to issue a final order March 21.