State regulators in New Mexico rejected a proposal that would have created a separate rate for electric power sold to utility customers who install distributed generation, including rooftop solar panels.
The El Paso Electric Company, an investor-owned utility based in El Paso, Texas, submitted the proposal as part of its general rate case before the New Mexico Public Regulation Commission (PRC). The proposal would have established "a new rate classification comprised of residential customers who own or lease distributed generation systems operating behind their retail electric meter."
The Public Utility Regulatory Policies Act (PURPA) also prohibits commodity price discrimination in electric rates, but with one whopper of an exception.
“Rates for sales which are based on accurate data and consistent system wide costing principles shall not be considered to discriminate against any qualifying facility to the extent that such rates apply to the utility's other customers with similar load or other cost-related characteristics,” the PURPA exception states.
During oral arguments over the distributed generation rate proposal, EPE claimed that this exception in PURPA “allow[ed] EPE to charge residential customers owning qualifying facilities a different rate from other residential customers if it can be shown that there are different load or other cost-related characteristics between those two groups of customers.”
The PRC said this exception could not save the standby rate proposal because it violated a state law based on PURPA.
“While [the exception] gives EPE a path to avoid violating [PURPA], nothing in that section can be read to also give EPE a path to avoiding the requirements of [a New Mexico state law] that [EPE] charge residential qualifying facility owners the same rate charged to other residential customers,” the PRC said.
The trouble for rooftop solar and other distributed generation technologies is that New Mexico is the only state – at least that I am aware of - that has passed legislation using that specific phraseology – i.e., utilities must “charge residential qualifying facility owners the same rate charged to other residential customers.”
