AP NEWS

PRC won’t rehear case for Facebook transmission line

May 17, 2019

A spokesman said Gov. Michelle Lujan Grisham is “disappointed and frustrated” by the state Public Regulation Commission’s refusal Thursday to reconsider its decision regarding who pays for a power line that will supply the Facebook data center under construction near Los Lunas.

The commission voted unanimously to deny a request that it rehear arguments over whether Public Service Company of New Mexico should be allowed to charge its ratepayers nearly $40 million to help pay for the transmission line.

“This has the potential to have a real chilling effect as we attempt to bring more businesses to New Mexico,” said Tripp Stelnicki, spokesman for Lujan Grisham. “Every time there’s a perception that the rug could be pulled out from under [businesses], that’s not good for the state.”

When Facebook in 2016 announced plans to build a $250 million facility at Los Lunas, part of the deal was an agreement that PNM would supply 100 percent of the power for the data center from renewable energy sources.

The planned transmission line would allow the new La Joya wind farm near Encino — owned and operated by Avangrid Renewables, an Oregon company — to supply 166 megawatts of electricity to the Facebook plant.

PNM has admitted one of its experts had made a mistake by testifying that all of the power carried by the transmission line would be dedicated exclusively to Facebook’s Los Lunas facility. That testimony was a major reason a hearing officer recommended the commission deny PNM’s request to make retail customers pay about half of the cost.

Since that rejection last month, PNM has stressed the proposed 45-mile power line stretching between a switching station at Clines Corners and a new station in Sandoval County would serve all ratepayers by improving its network.

Although the decision not to rehear the case means Facebook would have to absorb that cost, commissioners left the door open to reconsider the case but said the PRC can only base its decisions on evidence contained in the formal hearing record.

“If new facts come to light and they want to reopen that record, we could consider that,” Commissioner Steve Fischmann, D-Las Cruces, said during a short discussion before Thursday’s vote.

As it stands, there is nothing in the hearing record to refute the testimony by a PNM official in February that the line would only serve Facebook.

Others besides PNM had moved to rehear the case. These included the Coalition for Clean Affordable Energy and New Mexico Industrial Energy Consumers — both of which raised similar arguments to PNM’s — and the Bill King Ranch near Stanley, which wanted to completely overturn the approval of the new power line.

While rejecting PNM’s plan to spread construction costs among customers, the commission did approve the location and right of way for the line.

A spokesman for PNM said the utility was “deeply disappointed” by Thursday’s action and has begun reviewing its options on how to proceed.

Immediately before Thursday’s vote on the rehearing request, the commission approved plans for the La Joya wind farm, including construction of a transmission line between La Joya and the Clines Corners switching station.

Earlier this week, PNM announced it had finalized a contract to buy 140 megawatts of energy from another wind project that also would rely on the proposed BB2 line from Clines Corners to a station in Sandoval County. The new wind energy contract “provides further evidence that the BB2 line is indeed a system resource to serve all customers,” a PNM spokesman said.

The Facebook project has been seen as good news for an economy that was severely battered by the recession.

After the commission’s vote last month to have Facebook foot the power line cost, an official with the social media giant wrote to the commission that passing the total cost to his company would raise “significant and serious concerns for us that may jeopardize PNM’s ability to satisfy its contractual obligations to the data center … and could in turn impact our ability to meet the sustainability commitments of our data center in Los Lunas.”

Democrats and Republicans applauded in 2016 when Facebook announced its intention to build the Los Lunas project and use 100 percent renewable energy to operate it. Politicians praised the news as a victory for economic development as well as for the environment.

Since the PRC’s April vote, both sides have criticized the commission, some saying the decision in effect will double-charge Facebook for the energy.

That’s the argument raised by former Public Regulation Commissioner Doug Howe of Santa Fe, who earlier this week wrote the commission in support of a rehearing of the issue.

In his letter, Howe said the commission “overlooked” the fact that charges for Facebook’s use of the proposed transmission line would be collected through increased revenues under a special contract rate.

Howe also argued that by making a retail customer pay transmission construction costs for a power line — when the line isn’t directly connected to that customer — the PRC “has created an entirely new way of recovering transmission costs from retail customers that has never been used in New Mexico or in any other state to the best of my knowledge.” The closest the transmission lines comes to the Los Lunas property is about 40 miles, Howe said.

“Directly allocating costs of this line to Facebook opens a Pandora’s Box of issues that the commission did not consider,” he said.