The state Public Regulation Commission turned down a power storage proposal Wednesday by two heavyweights — Facebook and Public Service Company of New Mexico — and told them to work out a different plan.
The five-member commission unanimously agreed Facebook and PNM must make another run at an agreement that would help the social media giant expand its already big data-center operation in Los Lunas. A couple of commissioners said the proposal was so complicated it seemed intentionally deceptive, and some raised concerns it would lead to higher costs for other PNM customers.
Two PNM executives said in an interview Wednesday evening this was far from the case. “While it’s complicated, it’s all transparent,” said Ron Darnell, senior vice president.
Vice President Tom Fallgren said other customers will not get stuck paying for the deal. “I think we’ve clearly demonstrated no adverse impact on the other retail customers,” he said.
In sometimes blunt language, Public Regulation Commission members said PNM’s plan to grant Facebook more storage space for electricity in a major expansion generally didn’t make sense.
They said they appreciated the economic development provided to New Mexico by Facebook’s data center but couldn’t support a plan that might call for other customers to pay higher costs. The project involved Facebook subsidiary Greater Kudu.
Asked for comment, a Facebook spokeswoman wrote in an email: “We have submitted the appropriate approvals to allow for the possibility of expansion, but we do not have anything further to share.”
As described by commissioners and documents, PNM would supply electricity through solar sources for Facebook’s expansion project. The main sticking point was a plan for power storage.
The commission said its understanding of the proposal was that Facebook would pay PNM for batteries but would then be rewarded for using more and more of the stored electricity. Ultimately, the commission said, it was likely other ratepayers would get stuck with the bill while Facebook enjoyed incentives to use more stored energy.
The commissioners asked the companies to work out a simpler contract that wouldn’t have the potential to affect regular customers.
They also complained the proposal offered was convoluted. Commission Chairman Stephen Fischmann of Las Cruces called it “confusing, tangled and quite frankly it felt to me like it was an intentional effort to mislead.”
Commissioner Cynthia Hall of Albuquerque called the plan “unfortunately flawed” and too risky to PNM’s other customers.
Commissioner Joseph Maestas of Santa Fe said while the Facebook plant in Los Lunas “has a lot of momentum,” this particular proposal raises questions about fairness to ratepayers.
Fallgren said the commissioners had notions about Facebook getting “credits” for use of stored energy. Facebook will pay about $7.9 million a year for a long row of large batteries that will serve as storage, he said.
“They are not getting a credit” for use, he added.
After the $7.9 million annual payout for the storage, Fallgren said, there will be no additional payouts or credits for that part of the project.