The search for new power sources

Public Service Company of New Mexico scrambles to find alternative energy, but so far nothing beats fossil fuels

Staci Matlock | The New Mexican

8/30/2008 - 8/26/08

The only time Cameron Duncan thinks about the 10 solar photovoltaic panels partially powering his Santa Fe house is when he walks past the electric meter on sunny days.

The meter is spinning merrily backward.

Every spin and every kilowatt hour of electricity the solar panels produce are a little money in Duncan's pocket from Public Service Company of New Mexico, which pays him for the power. "We're hoping this investment will pay off as the cost of polluting, fossil-fuel power rises," he said of his year-old system.

But when the sun doesn't shine and on short winter days, the Duncan house, like thousands of Santa Fe homes and businesses, draws electricity from PNM. And most of that power comes from two aging coal-fired plants in the Four Corners region.

Coal is the most polluting, greenhouse-gas-emitting way to generate power. But for now, it remains the cheapest and most reliable power source for New Mexico customers, according to PNM officials.

"We have to balance cost, reliability and the environment," said Evelin Wheeler, PNM's strategic planning director. "The bottom line is people want to turn on the lights when they want to."

Balancing act

When Duncan flips on a light switch, turns on his computer or starts his washing machine, he taps into a powerful stream of electrons often traveling hundreds of miles through a network of transmission lines. Since his solar system is tied into this grid, its impossible to separate his sun-produced electrons from those coming out of a smoke-belching, coal-fired plant.

Every day, 65,376 Santa Fe area customers rely on PNM for their electricity, almost twice as many as in 1988. Duncan and 91 other customers generate some of their own electricity from the sun, but depend on PNM for the rest. Others pay PNM extra for wind-generated power.

Every year, power's price tag creeps up, although only recently has PNM received permission from the state to pass more of those costs on to customers. Some people have seen their bills go up prior to the rate increases, in part because average use has risen, according to PNM. In 1990, the average customer used 508 kilowatt hours per month; this year the average use is 600 kwh.

Currently, 62 percent of most Santa Feans' electricity comes from two coal-fired power plants near Farmington — San Juan Generating Station and the Four Corners Power Plant.

Greg Nelson, executive director of PNM's utility services, said coal provides the same advantage to both company and customer: It is a proven, reliable power source. "It provides the base load power (the electricity needed year round). Unlike wind and solar energy, it is available 24/7, 365 days a year," Nelson said. "The only things that can do that are coal, nuclear, oil and gas and small amounts of geothermal and biomass."

Coal is available anytime, but the sun doesn't always shine, and the wind doesn't always blow. So the power isn't always available during hours of peak demand when customers decide at once to turn on air conditioners, coffee makers and computers. The only way to take full advantage of that renewable power is store it. No one has figured out how to do that on a large scale.

The billowing smokestacks of the Four Corners Power Plant and San Juan Generating Station, both built more than three decades ago, have raised the ire of environmentalists. PNM and its partners have tried to clean up San Juan with upgrades. They are now in the midst of $320 million in environmental improvements driven in part by a court decree. The upgrades will further reduce particulates, sulfur dioxide and nitrous oxides, and cut mercury emissions in half, Nelson said.

Currently, there aren't emissions standards for the greenhouse-gas carbon dioxide emitted by coal-fired plants.

Another 19 percent of Santa Feans' power comes from the Palo Verde nuclear power plant near Phoenix. The rest is from natural gas, solar, wind and energy efficiency. When all that can't meet customer needs, PNM purchases the balance on the wholesale market.

PNM, an investor-owned power company, must meet a state mandate to supply 20 percent of its power from renewable sources by 2020. Of that, wind and solar each have to represent 20 percent of the power, and the rest can come from other renewable sources such as geothermal.

Taking action

According to a newly released long-range resource plan, PNM doesn't plan on building any new coal-fired plants. But coal-fired power will remain the backbone of the company's energy sources for years to come, Wheeler said. PNM also plans on keeping its share of the Palo Verde nuclear plant, but not increasing the amount of nuclear power it draws in the near future.

The company has laid out its reasoning in the resource plan that it will present to the Public Regulation Commission in September. PNM's number crunchers tried various scenarios for boosting renewable supplies and reducing coal-fired power without increasing the cost of electricity. They included the potential fees Congress might one day levy on carbon dioxide emissions. "The result was it was still very costly to replace that (coal) energy," said PNM's Wheeler. "The reliability decreased if it came from solar or wind, and the costs increased."

Tom Singer, a policy analyst with the Natural Resources Defense Council, participated in many of the public meetings for PNM's resource plan. In the long run, the resource plan hedges PNM's bets, Singer said. "In a nutshell, nobody knows what the numbers will be. No one knows how much a carbon tax or what new renewable technologies will cost. These uncertainties are much larger than in the past."

Singer said the company's plans for the short term show a good commitment to renewables and energy efficiency.

PNM has issued two requests for proposals on renewable energy projects: one for a 100 megawatt solar power plant and the other for any size or type renewable energy project. Both requests have generated interest from dozens of companies. PNM plans to award the contracts by early next year.

Wheeler said some people think PNM overestimated the cost of renewable energy in the resource plan. She said bids on the two requests for proposals will give PNM a better idea of the real cost. "The beauty of this planning process is if (renewable energy) turns out to be less expensive, then we can change (our mix of sources)," she said.

Increasing the large-scale use of renewable energy relies on improving the technology and building more projects, both helped by tax incentives. Congress thus far has failed to renew a 30 percent federal tax credit that ends Dec. 31 for large-scale wind and solar projects.

Even residents rely on tax credits to sweeten the deal on solar PV systems. As much as he supports clean energy, Duncan said, he might not have put out the money for his system without state and federal tax incentives.

Energy efficiency

PNM is hoping new energy efficiency programs will help reduce the energy demands on the system.

One is Peak Saver, a program that lets PNM remotely shut off power to large-energy users temporarily during peak demand. The city of Santa Fe participates and lets PNM periodically turn off power to the ice rink at the Genoveva Chavez Community Center for a few hours, according to Nick Schiavo, the city's energy manager. The city is expecting a check from PNM for about $10,000 for the energy savings.

Reducing energy needs helps PNM meet peak power loads with the energy sources it already has without having to buy more or build new power plants.

Energy efficiency programs also help customers reduce their electric bills, said PNM spokeswoman Susan Sponar. Those programs depend on customers joining, said Singer, whose group is a member of New Mexico's Coalition for Clean, Affordable Energy. "This is not about lights going out. It's about managing our use," Singer said. "Gee whiz, we are just total energy hogs in this country."

Local production

One efficiency PNM can't do much about is the loss of energy from any fossil-fueled power source before it reaches customers. Coal-fired plants lose almost two-thirds of their electricity before it hits transmission lines. Another 3 percent or 4 percent leaks from transmission lines. Those energy losses haven't changed in 50 years.

One way to reduce the energy losses is by generating power closer to customers.

Duncan's photovoltaic panels have their own inefficiencies. But since the panels are next to his house, he doesn't lose any electricity through the power line.

Every month this summer, he's received a check averaging $20. In the winter, he's paying about $20 a month for energy, so he figures he's almost zeroed out his PNM bill. That includes his monthly service fee and a variety of other fees PNM tacks on to his bill.

PNM pays Duncan 13 cents a kilowatt-hour for electricity generated by the PV panels and another 7 cents for each kilowatt-hour produced in excess of his home's power use.

His PV system is part of PNM's distributed generation program that allows any solar PV system up to 10 kwh capacity to tie into the company's power lines. PNM is now asking the PRC for permission to offer a similar program for systems larger than 10 kwh, a potential boon to big energy users.

The city of Santa Fe is looking at some local production projects, said Schiavo. It recently received a $125,000 grant from the state to install a highly efficient combined heat-and-power natural-gas system at the Genoveva Chavez Community Center.

The city also put out a request for bids to install a large solar PV system at the wastewater treatment plant. Those bids were due Friday. Schiavo said the city hopes whoever wins the bid will then submit the project to PNM. If the project is built, the city would contract for the power at a set price for the next 20 years, a buffer against the rising cost of electricity.

Local control

Some energy advocates, like mechanical engineer Mark Sardella, think the best buffer against rising costs would be for the city to establish its own power utility.

Back in 2004, Sardella, co-founder of the nonprofit, Local Energy, lead a joint city-county energy task force. He and others thought the best thing for Santa Fe to do was install renewable energy plants in the city and take control over its energy future. Local control would give the city more options over its energy sources and retain more of the revenue from the utility in Santa Fe. They even talked about alternatives for providing energy to a proposed river-diversion project.

Sardella claims PNM convinced the task force nothing else would work except for the company to provide energy the usual way. Sardella thinks that will hurt Santa Fe in the long run. "You need food, water and energy production to be locally produced for real security," he said.

Others say the cost of starting an independent municipal utility would be prohibitive. The city alone uses roughly 38 million kilowatt-hours per year for buildings, street lights, water delivery, wastewater treatment and other power needs.

Los Alamos County gained control over its power production in 1985. The county and Los Alamos National Laboratory joined together to take over the White Rock distribution system from PNM. The county raised bond revenue to install two hydroelectric plants and bought a share in the coal-fired San Juan Generating Station. John Arrowsmith, the utility's manager, said the rest of the power is purchased from other plants. He said the county serves 9,000 electric customers who pay 8.6 cents per kwh, a little higher than PNM customers. But they pay one service charge and no surcharges, unlike PNM customers, he said. PNM still controls the transmission lines that deliver power to Los Alamos. Arrowsmith said that makes economic sense.

Arrowsmith said the benefits of the county's owning the utility include better coordination with other county departments on projects, a local governing board and revenues directed to improving infrastructure. "If citizens want to go into more renewable resources, we can do that. Just the whole local control thing is an advantage," he said.

To see the PNM long-range resource plan, visit the Web site at
http://www.pnm.com/regulatory/irp_electric.htm

Contact Staci Matlock at 470-9843 or smatlock@sfnewmexican.com.