N.M. Admin. Code § 17.9.570.11

Current through Register Vol. 35, No. 17, September 10, 2024

Section 17.9.570.11 - DETERMINATION OF RATES FOR PURCHASES FROM QUALIFYING FACILITIES

A.General: A utility shall pay a qualifying facility avoided costs for energy or capacity purchased from the qualifying facility. Avoided costs are defined in Subsection A of 17.9.570.7 NMAC. The energy rate represents avoided energy costs for the purposes of 17.9.570 NMAC. The avoided energy or capacity rate determined as provided herein represents avoided energy or avoided capacity costs for the purposes of 17.9.570 NMAC.

B.Energy rate:

(1) Within one year of the approval of this rule, each utility subject to the commission's jurisdiction shall apply for approval of a tariff that specifies a method for determining avoided energy costs as specified herein to establish the avoided energy cost rates paid by that utility to qualifying facilities.

(a) A utility participating in the Western EIM may establish the energy rate to be paid for power supplied by a qualifying facility by reference to the appropriate Western EIM locational marginal price determined on an hourly basis if such locational marginal price is representative of the utility's avoided cost. To implement this option for the avoided cost energy rate, the utility must set forth in its current tariff on file with the commission the applicable Western EIM pricing location.

(b) A utility participating in the SPP may establish the energy rate to be paid for power supplied by a qualifying facility by reference to the appropriate SPP locational marginal price if such locational marginal price is representative of the utility's avoided cost, as defined herein. To implement this option for the avoided cost energy rate, the utility must set forth in its current tariff on file with the commission the applicable SPP pricing location.

(c) Any utility that participates in a market has the flexibility to establish avoided energy cost rates based on the rule criteria. Any utility that does not participate in the Western EIM or the SPP may establish avoided energy cost rates based on:

(i) Locational marginal prices, if any are available;

(ii) Market hub prices;

(iii) Formulas based on natural gas prices;

(iv) Competitive solicitations; or

(v) Mutual agreement between the qualifying facility and the utility.

(2) In its application for approval of the tariff, each utility applying for approval of a method to calculate avoided energy cost rates for purchases shall specify the method to be used and explain why it results in an accurate approximation of the utility's avoided energy costs.

(3) The avoided energy cost rates calculated in accordance with the method approved under Paragraph (1) of Subsection B of 17.9.570.11 NMAC shall be applied to both energy acquired on an as-available basis and energy acquired pursuant to a legally enforceable obligation.

(4) Until the commission approves a utility's tariff under Paragraph (1) of Subsection B of 17.9.570.11 NMAC, the utility shall pay avoided cost rates calculated under Subsection C of 17.9.570.11 NMAC for both energy purchased on an as-available basis and energy purchased pursuant to a legally enforceable obligation. After the approval of the utility's tariff under Paragraph (1) of Subsection B of 17.9.570.11 NMAC, the utility shall pay the avoided cost rates calculated under the approved tariff for both energy purchased on an as-available basis and energy purchased pursuant to a legally enforceable obligation.

C. Until approval of a utility's tariff under Paragraph (1) of Subsection B 17.9.570.11 NMAC, the avoided cost rate to be paid for the energy supplied by a qualifying facility in any month shall be that respective month's rate from the utility's current schedule on file with the commission. Each utility shall file with the commission its schedule containing monthly energy rates that will be applicable to the next 12-month period. These monthly energy rates shall be listed for each voltage level of interconnection and shall be expressed in cents/kWh. Each month's energy rate contained in the schedule shall be the average of the economy energy purchases by the utility for the corresponding month of the immediately preceding 12-month period. In the event a utility does not engage in economy energy purchases in any given month, the energy rate to be included in its schedule for that month shall be either: the monthly average of hourly incremental energy costs including variable operation and maintenance expenses for generating utilities, or the energy charge of the highest energy cost contract as adjusted for appropriate retail fuel and purchase power pass through for non-generating utilities.

(1) As applicable, those utilities with retail time-of-use rates on file with the commission shall file schedules reflecting monthly energy rates calculated for peak periods only and off-peak periods only which shall be applied to qualifying facilities whose generation is limited to peak periods only or off- peak periods only. Peak and off-peak periods shall be as defined in the utility's retail tariffs on file with the commission.

(2) Within 60 days of the effective date of revised 17.9.570 NMAC each electric utility subject to the rule shall file with the commission the schedule containing rates to be offered along with detailed supporting workpapers showing the input data and calculations, if applicable. After the first submittal each utility shall update its filing within 30 days from the last day of its fiscal year.

(3) To the extent applicable, variable operation and maintenance rates used for the above computations shall be the basis for requested variable operation and maintenance rates in the utility's future rate cases.

(4) The energy rate contained in the schedules shall include the savings attributable to the avoidance of losses due to transmission, distribution, and transformation as applicable for different voltage levels of interconnection. These transmission, distribution, and transformation loss avoidance savings for different voltage levels of interconnection shall be obtained from the utility's filing in the last commission-decided rate case, and those figures shall be shown in the utility's submittal.

D. Negotiations. Notwithstanding the provisions of 17.9.570 NMAC, a utility and qualifying facility may at the qualifying facility's option negotiate rates for the power to be supplied by the qualifying facility. Such negotiated rates shall be filed with the commission within 30 days of the execution of the contract. The contract shall not contain any rate which is higher than the utility's avoided costs as defined in 17.9.570 NMAC.

N.M. Admin. Code § 17.9.570.11

17.9.570.11 NMAC - Rp, 17.9.570.11 NMAC, 10-15-08, Adopted by New Mexico Register, Volume XXXIII, Issue 10, May 24, 2022, eff. 5/24/2022