Opinion ID: 2582369
Heading Depth: 2
Heading Rank: 1

Heading: renewable energy act

Text: {3} The Renewable Energy Act entered into effect on May 19, 2004. Section 62-16-1, note. Pursuant to Section 62-16-7, the Commission adopted Rule 572, implementing the REA. See 17.9.572 NMAC. The REA requires public utilities [1] to include renewable energy as part of their electric energy supply portfolios. Section 62-16-4(A). Beginning January 1, 2006, renewable energy must comprise no less than five percent of each public utility's total retail sales to New Mexico customers. Section 62-16-4(A)(1). This requirement is called the Renewable Portfolio Standard (RPS), and it increases by one percent each year until January 1, 2011, when it will reach ten percent of each public utility's annual retail sales in New Mexico. Section 62-16-4(A)(2). {4} Utilities must establish their compliance with the Renewable Portfolio Standard by filing Renewable Energy Certificates with the Commission. Section 62-16-5(A) (directing the Commission to establish a system of RECs); 17.9.572.13 NMAC (stating that utilities must establish their annual compliance with the Renewable Portfolio Standard through the filing of [R]enewable [E]nergy [C]ertificates with the [C]ommission). Rule 572 defines a Renewable Energy Certificate as a document evidencing that the enumerated renewable energy kilowatt-hours have been generated from a renewable energy generating facility. 17.9.572.7(E) NMAC. Each REC must have a minimum value of one kilowatt-hour of renewable energy represented by the certificate for purposes of compliance with the [R]enewable [P]ortfolio [S]tandard. Section 62-16-5(A). RECs may be traded, sold or otherwise transferred by their owner to any other party; provided that the transfers and use of the certificate by a public utility for compliance with the renewable energy portfolio standard shall require the electric energy represented by the certificate to be contracted for delivery in New Mexico. Section 62-16-5(B)(1)(b). Rule 572 adds that transfers and use of the [Renewable Energy] [C]ertificate by a public utility for compliance with the [R]enewable . . . [P]ortfolio [S]tandard do not require physical delivery of the electric energy represented by the certificate to a public utility. 17.9.572.13(B)(2) NMAC. Thus, compliance with the RPS provision of the REA can be established through RECs representing renewable energy the utility itself has generated; renewable energy the utility has purchased from another source; or renewable energy generated and contracted for delivery in New Mexico without the utility itself purchasing the energy. To ensure that compliance costs are reasonable, the REA requires that each year until 2012, and if necessary thereafter, public utilities file for the Commission's approval a report on their purchases of renewable energy during the prior calendar year as well as a procurement plan. Section 62-16-4(D)-(E). {5} The REA authorizes public utilities to recover the reasonable costs of compliance with the REA through the rate-making process. Section 62-16-6(A) states: A public utility that procures or generates renewable energy shall recover, through the rate-making process, the reasonable costs of complying with the renewable portfolio standard. Costs that are consistent with commission approval of procurement plans or transitional procurement plans shall be deemed to be reasonable. The REA does not define the rate-making process. {6} A related statute, the Public Utility Act (PUA), NMSA 1978, § 62-13-1 (1993), grants the Commission general and exclusive power and jurisdiction to regulate and supervise every public utility in respect to its rates and service regulations. NMSA 1978, § 62-6-4(A) (2003). In order to change or increase rates, a utility normally must go through a notice, hearing, and approval process. Section 62-8-7(A)-(E). However, utilities can recover certain costs  taxes or cost of fuel, gas or purchased power  automatically through an automatic adjustment clause. Section 62-8-7(E). The Commission adopted Rule 550, 17.9.550 NMAC, regarding the implementation, oversight, and maintenance of automatic adjustment clauses, pursuant to Section 62-8-7(E).