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F I S C A L I M P A C T R E P O R T

SPONSOR Cisneros

DATE TYPED 3/18/05 HB

SHORT TITLE Utility Construction & Location

SB 847/aSCORC/aHGUAC

ANALYST Wilson

APPROPRIATION

Appropriation Contained Estimated Additional Impact Recurring

or Non-Rec

Fund

Affected

FY05

FY06

FY05

FY06

NFI

Duplicates HB 903

Relates to SB 627 and HB 748

SOURCES OF INFORMATION

LFC Files

Responses Received From

Environment Department (ED)

Energy, Minerals & Natural Resources (EMNRD)

Department of Cultural Affairs (DCA)

Public Regulation PRC (PRC)

SUMMARY

Synopsis of HGUAC Amendment

The House Government and Urban Affairs Committee amendment removes the SCORC

amendment.

The amendment clarifies that the PRC may approve an application for construction without a

formal hearing if no protest is filed within sixty days of the date that notice is given pursuant to

the PRC order that the application has been filed.

The amendment further states that a public utility subject to the jurisdiction of the PRC may elect

to file an application pursuant to this section with the commission for location approval of an

electric transmission line or associated facilities designed for or capable of operation at a nomi-

nal voltage of 115 kilovolts or more but less than 230 if:

•

the public utility files an application for construction, extension, rebuilding or improve-

ment of the electric transmission line or associated equipment under any applicable

county or municipal land use statute, ordinance or administrative regulation; and

Senate Bill 847/aSCORC/aHGUAC -- Page 2

•

the agency, board or commission of the county or municipality disapproves the applica-

tion.

The amendment defines "disapprove" as the failure of the county or municipal agency, board or

commission to issue a final order approving the application within one hundred eighty days of

the public utility's filing of a complete application with the agency, board or commission.

An application shall be deemed complete if within fifteen working days of the public utility's fil-

ing of the application, or a supplement or amendment thereto, the agency, board or commission

fails to send written notice to the public utility enumerating the specific requirements under the

applicable county or municipal land use statute or administrative regulation that the application

fails to satisfy.

Upon consideration of the application and the standards set in this bill, the PRC may authorize

construction, extension, rebuilding or improvement of the transmission line or facilities notwith-

standing the prior disapproval of the county or municipal agency, board or commission. The

judgment of the PRC shall be conclusive on all questions of siting, land use, aesthetics and any

other state or local requirements affecting the siting.

Synopsis of SCORC Amendment

The Senate Corporations and Transportation Committee amendment changes the kilovolts re-

quirement in the section stating that a public utility subject to the jurisdiction of the PRC may

elect to file an application pursuant to this section with the PRC for location approval for con-

struction, extension, rebuilding or improvement of transmission lines and associated facilities

with an operating voltage of 46 kilovolts or more to requiring the capability of operation at a

nominal voltage of 115 kilovolts but not more than 230 kilovolts if:

(1) the public utility files an application under any applicable county or municipal land use

statutory or administrative regulation; and

(2) the agency, board or commission of the county or municipality disapproves the applica-

tion.

The amendment defines "disapprove" as the failure of the county or municipal agency, board or

commission to issue a final order approving the application within one hundred eighty days of

the public utility's filing of a complete application with the agency, board or commission.

An application shall be deemed complete if within fifteen working days of the public utility's fil-

ing of the application, or a supplement or amendment thereto, the agency, board or commission

fails to send written notice to the public utility enumerating the specific requirements under the

applicable county or municipal land use statute or administrative regulation that the application

fails to satisfy.

Upon consideration of the application and the standards set in this bill, the PRC may authorize

construction, extension, rebuilding or improvement of the transmission line or facilities not with

standing the prior disapproval of the county or municipal agency, board or commission. The

judgment of the PRC shall be conclusive on all questions of siting, land use, aesthetics and any

other state or local requirements affecting the siting.

Senate Bill 847/aSCORC/aHGUAC -- Page 3

Synopsis of Original Bill

Senate Bill 847 amends the Certificate of Public Convenience and Necessity (CCN) and the Lo-

cation Control statute of the Public Utility Act. The modifications provide time limits for PRC

action on CCNs and location approvals, enunciation of ratemaking principles at the time a CCN

is given, separation of CCN and location approvals for regulated utilities, establishing factors to

be considered when approving applications for location approvals and minor language correc-

tions.

Significant Issues

The PRC provided the following:

This bill applies to both generation and transmission facilities and appears to provide additional

certainty for utilities of rate recovery of the costs associated with facilities that are placed into

service after a CCN is received, irrespective of future changed circumstances and public interest.

Currently, in order to protect the public interest, the PRC has been able to evaluate the continu-

ing need of generation and transmission facilities and remove them from rates, if warranted, fol-

lowing proper notice and public hearing. To limit the PRC’s authority in this area, in the manner

proposed in this bill, may jeopardize the ability of the PRC to protect the public interest in the

future.

CCN approvals by the PRC will bind future PRC actions over the 40+ year life of generation and

transmission facilities. Utilities will gain certainty with regard to future regulatory treatment of

such facilities.

The PRC may specify future rate treatment to be the same as exists today, incorporating lan-

guage such as: “rate recovery shall be allowed only while the facility is considered used and use-

ful to ratepayers and, in the future, if the facilities are not found to be used and useful, no rate

recovery will be allowed from that time onwards.”

Depending upon how PRC approvals are drafted, future PRCs’ ability to protect the public inter-

est may be compromised.

EMNRD provided the following

This

bill provides a mechanism by which a public utility may seek greater certainty from the

PRC regarding the ratemaking principles and treatment that will be applied to the utility’s pro-

posed generation and transmission facilities. This will better inform and assist a utility in deter-

mining how the costs of a proposed project will be handled by regulators, thereby helping it es-

timate the impacts of such costs on ratepayers or shareholders throughout the project’s useful

life.

The bill also streamlines the PRC regulatory process for permitting and siting of transmission

facilities in New Mexico. In essence, it affords a utility the opportunity to have the PRC deter

mine whether a new electric plant or transmission line is needed before seeking approval of the

specific location or route of such facilities. The intent of these provisions appears to be to avoid

a situation such as what happened to Public Service Company of New Mexico when it proposed

the Ojo Line Extension (OLE’) project. In that case, PNM spent in excess of $12 million on ac-

tivities relating to a transmission project that was ultimately rejected by the PRC.

Senate Bill 847/aSCORC/aHGUAC -- Page 4

The ED provided the following:

Construction of a transmission line that creates a disturbance that is one acre or greater in size,

must be done in accordance with an individual or general construction storm water permit issued

by the U.S. Environmental Protection Agency pursuant to the federal Clean Water Act. Con-

struction storm water permits are designed to ensure that sediment generated during construction

activities is contained on site, so as to prevent an impact to surface water quality.

There is no obvious link between the ratemaking principles added and air quality. The addition

of specific important environmental values that the PRC can consider is significant environmen-

tally. The additions to the statute are: (1) existing plans for other development; (2) fish, wildlife

and plant life; (3) noise emission levels and interference with communication signals; (4) the

proposed availability of the location to the public for recreation; (5) existing scenic areas, his-

toric, cultural, archaeological or religious sites; (6) additional factors that require consideration

under applicable federal and state laws pertaining to the location.

This bill provides specific factors that are considered to be significant environmentally and al-

lows the PRC to consider these in approving locations of transmission lines. While further clari-

fication will assist in interpretation of the statute, some of these factors would require further de-

tail in any regulation adopted pursuant to this statute. This amendment would not substantively

affect the air quality bureau.

The DCA provided the following:

Cultural resources, as well as the environmental values that are called out specifically in the bill,

can be impacted by public utility approvals. The language within this bill should identify cul-

tural resources more clearly and separately from environmental values.

Potential impacts of the location of a generating plant to environmental values including cultural

resources are not considered.

Sufficient time during the application and approval process must be provided for adequate cul-

tural resource investigations and review and coordination required under current state and federal

statutes.

CONFLICT, DUPLICATION, COMPANIONSHIP, RELATIONSHIP

SB 847 duplicates HB 903 and relates to SB 627 and HB 748, Renewable Energy Transmission

and Storage Act.

TECHNICAL ISSUES

The PRC suggests on page 4, line 2 following “notice is given” insert “pursuant to PRC order.”

DW/lg:yr