A hearing examiner advised state regulators on Tuesday to reject two significant components of Public Service Company of New Mexico’s renewable energy plan — proposals for what she called a rushed deal for a solar project and an agreement to purchase geothermal power from a firm that has filed for bankruptcy.

PNM, which serves half a million customers in the state, sought approval from the Public Regulation Commission in June to increase its renewable energy portfolio by extending its lease for increased wind power from the New Mexico Wind Energy Center in Eastern New Mexico, increasing its investment in a geothermal facility near Lordsburg and commissioning the construction of new solar farms that would generate 50 megawatts a year.

Under the New Mexico Renewable Energy Act, PNM is required to increase the amount of power it gets from renewable sources to 20 percent by 2020, up from 15 percent now.

But Carolyn Glick, a hearing examiner for the Regulation Commission who heard testimony on the projects in September, said in her decision Tuesday that PNM’s solar and geothermal deals weren’t sufficient.

The company failed to consider other geothermal options when it decided to extend its contract for power from the Dale Burgett Geothermal Plant, a project that went online in 2013, she said. The deal it reached with Lightning Dock, the company that runs the facility and filed a bankruptcy case earlier this year, would lead to increasing energy costs in the future, Glick added.

While the power purchase would be just over $7 million in 2020, her ruling said, the cost in 2042 would be more than $12 million, with a total cost of $98 million.

PNM had an opportunity to extricate itself from a contract with Lightning Dock when the bankruptcy case was filed, Glick said.

She also took issue with PNM’s plan to commission Albuquerque-based Affordable Solar to build solar farms to produce 50 megawatts of power, saying the utility didn’t allow potential bidders enough time to develop proposals. The process was “unfair and uncompetitive,” Glick said, adding that PNM should restart the process, and give firms at least 90 days to prepare their bids.

PNM allowed only 31 days for bidders to submit proposals for a solar project, she said, and it received bids from just six firms, some that were only interested in leasing a solar facility to PNM.

The utility rejected all the lease projects outright. Glick said, however, that PNM should consider lease projects rather than only considering facilities that the utility could then purchase from the builder.

The Public Service Commission will consider Glick’s recommendation and make a final decision on PNM’s renewable plan.

PNM said it will file a rebuttal, but critics were encouraged by Glick’s ruling.

Pahl Shipley, a spokesman for PNM, said in an email, “After a preliminary review PNM strongly disagrees with the proposed rejection of geothermal energy from Lightning Dock and the contract for a new solar facility which would be built by a local solar company.

“These initiatives clearly benefit customers, the environment, local communities and the state as a whole,” he said.

Steve Michel of Western Resource Advocates, which supported PNM’s plan, said he hoped the commission would overturn Glick’s ruling.

“The idea behind the renewable energy act is to drive new technology,” he said, referring to the geothermal project, what Lightning Dock calls the first utility-scale geothermal plant in the state.

Rejecting the solar deal, he said, could delay a large-scale solar installation “and might end up with a more costly outcome at the end of the day, anyway.”

Mariel Nanasi, director of the nonprofit New Energy Economy, which argued against the solar and geothermal projects during the September hearings, said the projects, as proposed, were aimed at increasing stockholder value rather than growing the renewable energy market.

She accused PNM of deliberately making it difficult for companies to compete for the solar project because it hoped to develop a monopoly.

“They should allow an even playing field,” she said.

Contact Rebecca Moss at 505-986-3011 or rmoss@sfnewmexican.com.

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