Over the past two years, New Mexico has been engaged in a significant new approach to implement large purchases of solar power. This effort followed a regulatory process that treated solar power generation similar to conventional generation obtained by an investor-owned utility under the regulation of a public utility commission. In 1997, Public Service Company of New Mexico (PNM) gained approval to purchase power from a 100-MW combustion turbine facility that would be owned and operated by a wholesale generator. At the same time it issued the approval, and following discussions with the utility, the New Mexico Public Utility Commission (NMPUC) also required PNM to issue a request for proposal for a 5-MW central station solar facility, a major step for solar technologies in the state, in what would be the world's largest of its technology type. In cooperation with the staff of the NMPUC, PNM reviewed the proposals received, and Applied Power Corporation was selected for the photovoltaic portion of the proposed plan; retaining ownership of the plant, assuming the risks connected with the technology, and operating the plant in exchange for a power purchase agreement in a first-of-its-kind contract for photovoltaics. During the NMPUC hearings, various parties raised significant opposition to the cost-recovery mechanism that was proposed and voiced issues about the type of solar plant, its size, cost and the tiding approaches to building it. Because of these issues, alternative proposals were put forth that reduced the size and costs of the plant and had implied changes in ownership and risks. The order issued by the NMPUC on October 21, 1998, requires PNM to impose a charge of 0.5% on its retail electric customers' monthly bills to be used to acquire the solar facilities, but also to obtain other renewable electric power resources, both on a pay-as-you-go basis. This paper identifies the issues and their resolution that similar projects are expected to encounter.
