PNM Resources : Recommended Decision to Approve Replacement Resources

BEFORE THE NEW MEXICO PUBLIC REGULATION COMMISSION

IN THE MATTER OF PUBLIC SERVICE	)
COMPANY OF NEW MEXICO'S REQUEST	)
FOR APPROVAL OF NEW RESOURCES	)
UNDER 17.9.551 NMAC TO REPLACE	)
114 MW OF LEASED PALO VERDE	)
NUCLEAR GENERATING STATION	)	Case No. 21-00215-UT
CAPACITY	)
	)
PUBLIC SERVICE COMPANY OF NEW	)
MEXICO,	)
	)
Applicant.	)
	)

RECOMMENDED DECISION

MONDAY FEBRUARY 14, 2022

HEARING EXAMINER CHRISTOPHER P. RYAN

Contents

1.	SUMMARY...........................................................................................................................	1
2.	PROCEDURAL HISTORY.................................................................................................	4
3.	DISCUSSION........................................................................................................................	7
	3.1. Applicable Legal Standards - Rule 551 ......................................................................	7
	3.2. Evidence Offered in Support of PPAs/ESAs ..............................................................	9
	3.2.1. Copy of the PPAs and ESAs....................................................................................	9
	3.2.2. Key Terms of the PPAs and ESAs and Description of the Facilities ......................	9
	3.2.3. Methodology and Criteria By Which the PPAs/ESAs Were Selected ..................	12
	3.2.3.1. Intervenor Access to Modeling........................................................................	13
	3.2.3.2. Results of PNM's Modeling ............................................................................	28
	3.2.3.2.1. Planning in a Renewable-Heavy System .....................................................	28
	3.2.3.2.2. Modeling System Reliability Through LOLP Analysis ................................	35
	3.2.3.2.3. 2020 RFP Process .......................................................................................	40
	3.2.4. PPAs/ESAs Consistent With IRP ..........................................................................	45
	3.2.5. Safe and Reliable Service at the Lowest Cost ........................................................	46
	3.2.6.	Ratepayer Recovery ...............................................................................................	51
	3.2.7. Impact on PNM's Financial Condition ..................................................................	51
	3.3. Conclusion: Approval of PPAs/ESAs ........................................................................	52
	3.4. Intervenors' Arguments .............................................................................................	53
	3.4.1. Prospective RFPs, Future Modeling, and Procurement Cases to Come ................	53
	3.4.2. Technical Conference and Capacity Costs ............................................................	61
	3.4.3.	PNM "Bias" ...........................................................................................................	61
	3.4.4.	NEE's Expert Witness ...........................................................................................	63
4. FINDINGS OF FACT AND CONCLUSIONS OF LAW ...............................................	70
5.	DECRETAL PARAGRAPHS ...........................................................................................	71

	ABBREVIATIONS & TERMS
ABCWUA	Albuquerque Bernalillo County Water Utility Authority
CCAE	Coalition for Clean and Affordable Energy
CCN	Certificate for Convenience and Necessity
E3	Energy and Environmental Economics
ELCC	Effective Load Carrying Capability
EnCmpass	EnCompass power supply optimization software
ESA	Energy Storage Agreement
FPPCAC	Fuel and Purchase Power Cost Adjustment Clause
ICAP	Installed Capacity
Interwest	Interwest Energy Alliance
IRP	Integrated Resource Plan
LOLE	Loss of Load Expectation
LOLP	Loss of Load Probability
LTPPA	Long-Term Purchase Power Agreement
MW	Megawatt
MWh	Megawatt Hour
NEE	New Energy Economy
NM AREA	New Mexico Affordable Reliable Energy Alliance
NMAG	New Mexico Attorney General
Onward	Onward Energy Holdings (formerly Southwest Generation)
PNM	Public Service Company of New Mexico
PPA	Purchase Power Agreement
PRM	Planning Reserve Margin
PUA	Public Utility Act
PVNGS	Palo Verde Nuclear Generating Station
RECs	Renewable Energy Certificates
RFP	Request for Proposals
Rule 551	17.9.551 NMAC
SERVM	Strategic Energy and Risk Valuation Model
SJGS	San Juan Generating Station
Staff	Utility Division Staff of the NM PRC
UCAP	Unforced Capacity
WRA	Western Resource Advocates

1. SUMMARY

This case began as 21-00083-UT. That case number was assigned to PNM's application

to (1) abandon leases for 114 MW associated with units at PVNGS and (2) procure solar PPAs and

battery ESAs to replace the power lost from the abandoned leases.

On August 25, 2021, the Commission accepted Hearing Examiner Glick's

recommendation that "PNM's request for abandonment fails to state a claim upon which relief can

be granted because the Commission has effectively already granted PNM authority to abandon the

PVNGS [l]eased [i]nterests when they terminate."1

This did not resolve all questions surrounding abandonment of the leases, but it prompted

the Commission to give PNM's application for approval of the PPAs and ESAs a separate docket

number. This docket number: 21-00215-UT.

None of the intervenors in this case oppose PNM's proposed replacement resources. They

consist of

• The Jicarilla solar PPA - 150 MW of solar energy.
• The Jicarilla storage ESA - 40 MW of four-hour energy storage capacity.
• The Atrisco solar PPA - 300 MW of solar energy.
• The Atrisco storage ESA - 150 MW of four-hour energy storage capacity.
• And, the Sandia Peak storage ESA - 100 MW of two-hour energy storage capacity.

Although none of the intervenors oppose these procurements, 265 pages of initial post-

hearing briefs and 122 pages of response briefs were submitted. That is a lot of writing for

procurements that are "unopposed."

1 Case No. 21-00083-UT, Recommended Decision on Motions to Dismiss at p.15-16(07/28/2021).

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21-00215-UT Reccommended Decision

Contained in all of that briefing are arguments-mostly from intervenor Onward-about what PNM ought to do in its next RFP and next procurement case. In other words, the focus is not on the RFP and procurement processes that led to the resources PNM has proposed for approval here; rather, the focus is on future RFPs and resource-procurement proposals PNM has yet to file. Onward specifically asks the Commission to order PNM in future RFPs to perform particular modeling runs. The modeling runs performed in this case feature only as background.

The Commission should not address anything but the procurements at issue here and apply the appropriate legal standards to them. Doing so is not necessarily a simple, straightforward task. Consider this table.2

This table reflects the proposed portfolio of resources. PNM is proposing "replacement resources" (top) and "resources for resource adequacy" (bottom). Altogether, PNM is proposing 740 total MW that amounts to a total ELCC of 279 MW. This is to replace 114 MW.

2 PNM Ex. 6 at 35.

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21-00215-UT Recommended Decision