TITLE 17 PUBLIC
UTILITIES AND UTILITY SERVICES
CHAPTER 9 ELECTRIC
SERVICES
PART 551 PRIOR
APPROVAL OF PURCHASED POWER AGREEMENTS
17.9.551.1 ISSUING
AGENCY: New Mexico Public Regulation Commission.
[17.9.551.1 NMAC - N,
7/31/2012]
17.9.551.2 SCOPE: This rule applies to the investor owned
electric utilities operating within New Mexico that are subject to the
jurisdiction of the New Mexico public regulation commission and to purchased
power agreements entered into after the effective date
of this rule. This rule shall not
supersede or modify requirements pertaining to an electric utility’s purchased
power agreements with its affiliates as set by New Mexico public regulation
commission orders.
[17.9.551.2 NMAC - N, 7/31/2012; A, 8/15/2023]
17.9.551.3 STATUTORY AUTHORITY: Public Regulation Commission Act, Section
62-19-9 NMSA 1978, Public Utility Act, Sections 62-3-1, 62-6-4, and 62-6-19
NMSA 1978.
[17.9.551.3 NMAC - N, 7/31/2012; A, 8/15/2023]
17.9.551.4 DURATION: Permanent.
[17.9.551.4 NMAC - N, 7/31/2012]
17.9.551.5 EFFECTIVE DATE: July 31, 2012, unless a later date is cited at
the end of a section.
[17.9.551.5 NMAC - N, 7/31/2012]
17.9.551.6 OBJECTIVE: To establish
review and approval procedures for purchased power agreements.
[17.9.551.6 NMAC - N, 7/31/2012]
17.9.551.7 DEFINITIONS:
A. “Capacity cost” means a charge
separately identified and incurred under a purchased power agreement for
capacity or the reservation of capacity.
B. “Commission” means the New Mexico public
regulation commission.
C. “Electric utility” means an entity
certified by the commission to provide retail electric service in New Mexico
pursuant to the Public Utility Act Sections 62-13-1, et seq. NMSA 1978, but
does not include rural electric cooperatives.
D. “Fixed cost” means a charge separately
identified and incurred under a purchased power agreement that does not vary
with changes in amount used, volume consumed, or units purchased. A fixed cost includes, but is not limited to,
administrative fees, accounting fees, facilitation fees, minimum payment
amounts, and similar charges.
E. “Long term purchased power agreement” or
“LTPPA” means a purchased power
agreement with a term of five years or more and for which an electric utility
seeks or intends to seek rate recovery from its New Mexico retail
customers. The term shall be inclusive
of the base term and any automatic or option extensions.
F. “Purchased power agreement” means an
agreement for the purchase of energy or capacity, or both, by an electric
utility with a term of any length and for which an electric utility seeks or
intends to seek rate recovery from its New Mexico retail customers, but does
not include agreements to purchase renewable energy subject to commission review
and approval under the Renewable Energy Act Sections 62-16-1, et seq. NMSA
1978, or agreements to purchase energy or capacity from a qualifying facility
pursuant to Section 17.9.570 NMAC.
[17.9.551.7 NMAC -
N, 7/31/2012; A, 8/15/2023]
17.9.551.8 GENERAL REQUIREMENTS FOR FILING AN
APPLICATION FOR APPROVAL OF A LONG-TERM PURCHASED POWER AGREEMENT:
A. No
electric utility shall become irrevocably obligated under an LTPPA without
first obtaining the commission’s written approval of the agreement.
B. An electric
utility shall file at the commission within 30 days after the execution of a
LTPPA an application for the commission’s review and approval of the LTPPA.
C. Copies
of the application shall be served on commission staff, the New Mexico attorney
general and parties in the electric utility’s most recent general rate case, in
accordance with Subsection C of 1.2.2.10 NMAC.
D. An
application for commission review and approval of an LTPPA shall be accompanied
by supporting testimony and exhibits that provide:
(1) a copy of the LTPPA;
(2) an explanation of the key terms and
conditions of the LTPPA containing:
(a) the term of the LTPPA including any
options to extend the agreement;
(b) the size in MW of capacity and
the amount of energy in MWh or kWh per month and any conditions regarding
the minimum or maximum amount of energy or capacity made available or required
to be purchased;
(c) the price or pricing formula under
which the electric utility will pay for the power and energy contracted for,
including identification of when charges begin to be incurred, any price
reopeners and any price escalation provisions;
(d) obligations by the electric utility
to pay for any fixed or variable administrative, transactional, or operation
and maintenance costs incurred through the operation of the generation
facility, including start-up costs, taxes, insurance, environmental or
reclamation-related costs, fuel costs, and any other costs that the electric
utility may incur; and
(e) provisions relating to
non-performance by the counter-party and the remedies
provided;
(3) a description of transmission costs
the electric utility will incur or pay to receive the purchased power,
which may include the costs of third-party transmission wheeling, or construction
of transmission to facilitate purchases under the LTPPA or both;
(4) an explanation of how the electric
utility proposes to recover from ratepayers the costs incurred and an estimate
of the effect on rates to customers;
(5) a general description of:
(a) the generating facility or facilities
that will generate the purchased power; or
(b) if the power is to be generated from
one or more specific generating units to be constructed outside New Mexico, a
description of the anticipated siting of the generating unit, expected
construction time, and the expected commercial operation date; and
(c) if the power is to be generated from
one or more specific generating units to be constructed within New Mexico, a
description of:
(i) the
approvals required to construct and operate the generating unit, including air
quality and other environmental permits;
(ii) the expected construction time;
(iii) the expected commercial operation date;
(iv) the fuel type and supply sources; and
(v) other provisions addressing the
electric utility’s ownership options for the generating unit during or after
the term of the agreement;
(6) evidence that entering
into the LTPPA is consistent with the provision of safe and reliable
electric utility service at the lowest reasonable cost, considering both short
and long-term costs and all other relevant factors;
(7) evidence of the LTPPA’s impact on the
electric utility’s financial condition and financial metrics;
(8) evidence that the LTPPA is consistent
with the electric utility’s most recent commission-accepted integrated resource
plan unless material changes that would warrant a different course of action by
the electric utility have occurred, in which case, the testimony shall include
justification for deviation from the integrated resource plan;
(9) evidence addressing whether a
utility-owned generation resource could have been constructed as an alternative
to the LTPPA with greater benefit to ratepayers;
(10) evidence addressing the methodology and
criteria by which the purchased power agreement was selected; and
(11) any other information or evidence that
the electric utility believes will assist the commission in its review of the
LTPPA.
E. The
electric utility may, as set forth in Subsection D of 17.9.551.8 NMAC, submit
any portion of its application and supporting documentation under seal, to the
extent that the electric utility deems the specific information to be
confidential. The electric utility shall
seek a protective order under Subsection B of 1.2.2.8 NMAC for the information
it considers confidential.
[17.9.551.8 NMAC -
N, 7/31/2012; A, 8/15/2023]
17.9.551.9 RATEMAKING
TREATMENT FOR ALL PURCHASED POWER AGREEMENTS:
A. The
following ratemaking treatment shall apply to all purchased power agreements unless
otherwise expressly authorized by order of the commission:
(1) energy
costs incurred under a purchased power agreement are recoverable through a fuel
and purchased power cost adjustment clause (“FPPCAC”) according to the provisions
of the FPPCAC approved for the electric utility; and
(2) capacity
costs and fixed costs incurred under a purchased power agreement, as well as energy
costs incurred by an electric utility without an approved FPPCAC, may be recoverable
through base rates when the commission issues an order authorizing a change in base
rates that includes recovery of the capacity costs and fixed costs, and energy costs
in the case of an electric utility without an approved FPPCAC.
B. An
electric utility may include in an application for approval of an LTPPA a request
that the commission determine other ratemaking principles and treatment that will
apply to the LTPPA.
C. If a request for
a determination of other ratemaking principles and treatment is made, the commission
shall determine the appropriate ratemaking treatment and principles that will apply
to the LTPPA during its term and include that determination in the order granting
approval of the LTPPA.
[17.9.551.9 NMAC - N,
7/31/2012]
17.9.551.10 PROCESS
FOR APPROVAL OF A LONG-TERM PURCHASED POWER AGREEMENT:
A. The commission
may approve an application for approval of an LTPPA without a formal hearing if
no protest is filed within 60 days after the date that notice is given pursuant
to a commission order.
B. The commission
shall issue its final order acting on the application within six months after
the date the application was filed. A
final order denying an application shall be without prejudice. The electric utility may re-file a previously
denied application at any time after that denial. If the commission does not issue its final
order within six months after the date that the application was filed by the
electric utility, the application shall be deemed to be approved.
[17.9.551.10 NMAC -
N, 7/31/2012; A, 8/15/2023]
17.9.551.11 INFORMATIONAL
FILING REQUIREMENTS FOR A PURCHASED POWER AGREEMENT WITH A TERM OF TWO YEARS OR
MORE BUT LESS THAN FIVE YEARS:
A. An
electric utility may, but is not required to, request approval or request
ratemaking treatment other than as provided in Subsection A of 17.9.551.9 NMAC,
for a purchased power agreement with a term of two years or more but less than
five years, by filing the same type of application applicable to a LTPPA. The provisions in 17.9.551.10 NMAC shall apply
to an application regarding a purchased power agreement with a term of two
years or more but less than five years.
B. An electric
utility entering into a purchased power agreement with a term of two years or
more but less than five years for which the utility intends to seek rate
recovery either in base rates or its fuel and purchased power cost adjustment
clause, shall file with the commission a notice of purchased power agreement
within 30 days of execution.
C. A
notice of purchased power agreement shall include a copy of the agreement and:
(1) an
explanation of the key terms and conditions of the agreement, including:
(a) its
term;
(b) its
size in MW of capacity and any conditions regarding the minimum or maximum
amount of energy or capacity made available or required to be purchased;
(c) the
price or pricing formula, including any escalation provisions, and, if
applicable, any obligations of the utility to pay for any fixed or variable
operation and maintenance costs incurred through the operation of any
generation facility providing service under the agreement, including start-up
costs, taxes, insurance, environmental or reclamation-related costs and fuel
costs; and
(d) any
other costs for which the public utility is obligated;
(2) a
description of transmission costs the utility will incur or pay to receive the
purchased power and any impact on the transmission system of the agreement,
including any needed construction of transmission facilities to facilitate
purchases under the agreement;
(3) an
explanation of how the utility intends to recover costs incurred under the
agreement from ratepayers;
(4) an
explanation of the impact of the agreement on the electric utility’s financial
condition or financial metrics;
(5) an
explanation of how entering into the agreement is consistent with the provision
of safe and reliable electric utility service at the lowest reasonable cost,
considering both short- and long-term costs and all other relevant factors;
(6) an
explanation of whether the agreement will result in the deferment or delay of
any capacity addition by the public utility, and whether the agreement is
consistent with the utility’s most recent commission-accepted integrated
resource plan;
(7) evidence
addressing the methodology and criteria by which the purchased power agreement
was selected; and
(8) any
information that the electric utility believes will assist the commission in
its review of the agreement.
[17.9.551.11 NMAC - N, 7/31/2012; A, 8/15/2023]
17.9.551.12 VARIANCES:
A. An electric utility
may file a request for a variance from the requirements of this rule with service
of the request to the same parties on whom the application must be served; such
request shall:
(1) identify
the sections of this rule for which the variance is requested;
(2) describe
the reasons for the variance;
(3) set
out the effect of complying with this rule on the parties and the electric utility’s
customers if the variance is not granted;
(4) describe
the expected result that the request will have if granted; and
(5) state
how the variance will aid in achieving the purposes of this rule.
B. The
commission may grant a request for a procedural variance through an order issued
by a single commissioner or a designated hearing examiner. Other variances shall be presented to the commission
for its determination.
[17.9.551.12 NMAC - N,
7/31/2012]
History of 17.9.551
NMAC: [RESERVED]