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New Mexico Solar Installer Joins Fight Against Unfair Fee — and Wins

The New Mexico Public Regulation Commission canceled a local utility’s solar surcharge.

Sunny skies are the norm in southeastern New Mexico. But until recently, an unfair fee by the local utility limited local residents’ ability to embrace solar power.

Sunny skies are the norm in southeastern New Mexico. But until recently, an unfair fee by the local utility limited local residents’ ability to embrace solar power.

mrossbach / Getty Images

Southeastern New Mexico is one of the sunniest places in this country. In fact, it’s so sunny in Chris Dizon’s hometown of Eunice, New Mexico, that a football field’s worth of solar panels could generate enough electricity to power close to 750 homes.

Inspired by that potential, Dizon figured out how to install his own rooftop solar system. When he was able to do that cost-effectively, he quickly found himself helping friends and family do the same. Soon after, he decided to launch his own business. Endless Energy installs rooftop solar systems in southwestern Texas, and, in theory, southeastern New Mexico.

Business isn’t booming on the New Mexico side because of Rate 59, a surcharge by the local electric utility, Southwestern Public Service Company (SPS), that singled out rooftop solar customers.

“My primary motivation for becoming a solar installer was to lower the economic barrier for solar and allow more people to benefit from the tremendous solar resource in New Mexico,” says Dizon. But due to Rate 59, “we haven’t promoted ourselves in New Mexico. Rate 59 had altered the economics of DG so much that we could not in good faith promote rooftop solar as an investment in SPS service territory. We could have done more harm than good by perpetuating the myth that solar is still not cost-effective.”

Rate 59 applies to any home or small business with a rooftop solar system. The more homegrown energy you consume, the greater the surcharge.

“Basically, you’re taxed for something you produce yourself,” says Dizon.

The real purpose of the fee is to recover the revenue that SPS loses when customers switch to solar energy, says Rick Gilliam, program director of distributed generation regulatory policy for Vote Solar, a nonprofit organization that advocates for state policies and programs needed to repower our electric grid with clean energy.

“These rates are a barrier to low-income and fixed-income customers adopting rooftop solar,” Gilliam says.

The cost of Rate 59 to typical households with rooftop solar has skyrocketed since it was first imposed in 2011, growing from approximately $10 per month to about $28 per month. 

As a result, rooftop solar became cost-prohibitive for most of Dizon’s potential customers. In a region with among the best solar resources in the nation, there are currently only 155 rooftop solar customers. In fact, many of these rooftop solar customers signed on without knowing about Rate 59, and unwittingly found themselves on the hook for increasing fees, according to Dizon.

However, Dizon refused to give up his dream. He became a member of Vote Solar and testified before the New Mexico Public Regulation Commission (PRC), explaining how Rate 59 has put solar out of reach for moderate-income households in southeast New Mexico and made it harder for him to expand his business and hire more workers.

Solar installer Chris Dizon told the New Mexico Public Regulation Commission that Rate 59 has made it harder for him to expand his business.
Solar installer Chris Dizon told the New Mexico Public Regulation Commission that Rate 59 has made it harder for him to expand his business.
Sara Gersen / Earthjustice

In 2017, SPS applied to the PRC to increase Rate 59 and other charges. Several stakeholders — including Vote Solar, the Coalition for Clean Affordable Energy, and the city of Albuquerque — intervened to challenge the company’s solar surcharge.

Gilliam explained to the PRC that SPS uses Rate 59 to discriminatorily collect extra fees from customers who are actually less costly for SPS to serve. He also told the commission that SPS failed to consider the benefits rooftop solar provides to all customers, such as avoiding the need for new power lines and displacing more expensive sources of power. 

Under New Mexico law, the company is required to to analyze the benefits of rooftop solar. However, Earthjustice and Vote Solar persuaded the PRC that SPS’s benefits study was “riddled with errors and unreliable.”

On September 5, 2018, the PRC rejected SPS’s request to increase Rate 59 and canceled the solar fee altogether, adopting the finding that Rate 59 is “flawed in several respects.”

This decision has been a long time coming for Dizon, who has felt like the fight for rooftop solar in New Mexico has been an uphill battle. “I felt like I was alone in the woods until Earthjustice and Vote Solar came along,” he joked.

“Without Rate 59, families and small businesses in southeast New Mexico will have the first meaningful opportunity in years to invest in rooftop solar,” said Earthjustice attorney Sara Gersen. “This is great news for New Mexico. More clean energy from rooftop solar means less energy from burning coal and gas.”

Earthjustice attorney Sara Gersen, center, helped persuade New Mexico regulators to cancel the Southwestern Public Service Company surcharge that unlawfully singled out rooftop solar customers.
Earthjustice attorney Sara Gersen, center, helped persuade New Mexico regulators to cancel the Southwestern Public Service Company surcharge that unlawfully singled out rooftop solar customers.
Lany Le for Earthjustice

Although the termination of Rate 59 changes the game, there is more work to do to protect solar in New Mexico. The Commission will open a rulemaking to consider corporate utilities’ ability to impose future fees on customers with rooftop solar and other on-site energy generation. New Mexico statute only allows these special fees to recover the costs of ancillary and standby services. The Commission’s Hearing Examiner found that Rate 59 was also invalid because it collected costs beyond the costs of providing ancillary and standby services. The Commissioners did not adopt this part of the recommendation, which would have prevented SPS from reapplying to charge solar customers for these costs in the future, and also set a precedent for what the other investor-owned utilities could charge solar customers. Earthjustice and Vote Solar will keep fighting to make sure the Commission doesn’t allow unlawful solar fees in the future.

“Rate 59 was so high because SPS ignored the limits New Mexico law puts on these kinds of fees,” says Earthjustice attorney Carter Hall. “Even though the law only allows corporate utilities like SPS to put an extra fee on rooftop solar customers to collect the costs of ancillary and standby services, Rate 59 was designed to recover almost all of SPS’s fixed costs — everything from transmission lines to executive salaries and bonuses.”

This wasn’t the first time that Earthjustice and Vote Solar had contended with Rate 59.

In 2015, SPS also proposed an increase in the rate. Earthjustice and Vote Solar intervened and achieved a settlement in 2016 that kept the rate the same for most customers, and decreased it for others. Unfortunately, that didn’t stop SPS from coming back again in 2017 and asking for more of the same.

This decision is especially important as the Trump administration continues to promote fossil fuels at the expense of renewable energy sources such as solar. While the battle continues at the federal level to beat back the Trump administration’s efforts to prop up aging coal plants, Earthjustice, Vote Solar and others are securing crucial regulatory reform at the state level to advance equitable access to clean energy.

Tags:  Clean Energy, Solar
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The views and opinions expressed in this blog do not necessarily represent the opinion or position of Earthjustice or its board, clients, or funders.