SENATE BILL 456
54th legislature - STATE OF NEW MEXICO - first session, 2019
Joseph Cervantes and Abbas Akhil and Andrea Romero
RELATING TO ELECTRIC UTILITIES; REQUIRING A TRANSPARENT COMPETITIVE RESOURCE PROCUREMENT PROCESS FOR INVESTOR-OWNED ELECTRIC PUBLIC UTILITIES; REQUIRING INDEPENDENT EVALUATION OF THE COMPETITIVE RESOURCE PROCUREMENT PROCESS FOR PROPOSED PURCHASES OF POWER OR SOURCES OF POWER.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:
SECTION 1. A new section of the Public Utility Act is
enacted to read:
"[NEW MATERIAL] INVESTOR-OWNED ELECTRIC PUBLIC UTILITIES--COMPETITIVE RESOURCE PROCUREMENT PROCESS--INDEPENDENT EVALUATION.--
A. As used in this section:
(1) "competitive resource procurement process" means a utility's:
(a) instructions to bidders for a new energy resource;
(b) conditions, forms or requirements included in a request for proposals for a new energy resource; and
(c) inputs, assumptions, criteria and models used to evaluate responses to proposals for a new energy resource or to negotiate with bidders;
(2) "energy storage" means technology that allows the capture of energy produced at one time for use at a later time;
(3) "integrated resource plan" means a utility's plan to meet jurisdictional retail customers' existing and future energy demand;
(4) "purchase power agreement" means an agreement for the purchase of energy or capacity by a utility with a term of any length for which a utility seeks or intends to seek rate recovery from its retail customers;
(5) "resource" means a supply-side electric
energy, capacity, transmission or energy storage resource for a duration greater than one year;
(6) "resource procurement case" means a docketed case before the commission in which a utility has filed an application for the issuance of a certificate of public convenience and necessity or seeks approval of a purchase power agreement; and
(7) "utility" means an investor-owned electric public utility.
B. Whenever a utility intends to apply for commission approval of the utility's proposed procurement of a new energy resource, including an application for issuance by the commission of a certificate of public convenience and necessity for inclusion of such a resource in the utility's rate base, or for commission approval of a purchase power agreement for such a new resource, the utility shall issue a request for competitive proposals for the new energy resource or purchase power agreement that:
(1) affords interested bidders a reasonable opportunity to submit a bid that may feasibly satisfy the utility's energy resource need;
(2) provides inputs, assumptions, criteria and models used to evaluate responses to proposals for a new energy resource or to negotiate with bidders;
(3) does not unreasonably discriminate between proposals for a utility-owned resource and proposals for a resource owned by an independent power producer through a purchase power agreement; and
(4) complies with all applicable commission regulations.
C. Except as otherwise expressly provided in this section or by law, an application by a utility for commission approval of the utility's proposed procurement of a new energy resource, including an application for issuance by the commission of a certificate of public convenience and necessity for inclusion of such a resource in the utility's rate base, or for commission approval of a purchase power agreement for such a new resource, shall be accompanied by evidence providing and describing the responses to the request for competitive proposals required pursuant to Subsection B of this section.
D. Bidders in a utility's competitive resource procurement process shall be permitted access to modeling inputs and assumptions that were used by the utility to evaluate the facility and that reasonably relate to that facility or to the transmission of electricity from that facility to the utility, as the modeling inputs and assumptions apply to the bidder's particular facility, in time to ensure that errors and omissions may be corrected before the competitive resource procurement process is completed. If it is determined that an error or omission, as defined by commission rulemaking, exists in the utility's modeling and assumptions, the commission shall require the utility to perform additional modeling to confirm that electric generation and energy storage facilities are fairly and accurately represented in the results of modeling performed by the utility.
E. A utility's competitive resource procurement process shall not prevent bidders from proposing, or the utility from considering, a resource owned by an independent power producer through a purchase power agreement at a site owned or controlled by the utility unless the utility can show the commission that it would not be feasible for it to lease or transfer that site to an independent power producer for reasonable compensation.
F. At least one hundred twenty days before a utility files an integrated resource plan with the commission, or files an application with the commission to procure a new energy resource, the utility shall file for commission appointment the name and qualifications of an independent evaluator whom the utility, the commission's utility division staff and the attorney general jointly propose to monitor the utility's competitive resource procurement process as required by this section and a proposed contract between the commission and the independent evaluator. If the utility is not seeking to procure any new resource in its integrated resource plan, the utility need not file an application for the appointment of an independent evaluator or engage in a competitive resource procurement process.
G. If the utility, the commission's utility division staff and the attorney general fail to reach agreement on an independent evaluator, the utility shall so notify the commission. The commission shall then name an individual it proposes to appoint as an independent evaluator to evaluate the utility's competitive resource procurement process as required by this section and propose a contract between the commission and the independent evaluator.
H. The commission shall, at least one hundred twenty days before the utility begins its consideration of an application for the issuance of a certificate of public convenience and necessity or a purchase power agreement, provide public notice of the name and qualifications of the proposed independent evaluator. The public notice shall state that within seven days of its publication, an interested person, organization or entity may file a verified protest of the commission's proposed appointment of the independent evaluator for good cause shown.
I. Following the expiration of the seven-day notice period provided for in Subsection H of this section, the commission may by written decision appoint as the independent evaluator the person proposed in that notice. If the commission does not appoint that person as the independent evaluator, the name of another individual proposed to be appointed shall be subject to the notice requirement set forth in Subsection H of this section. At any time, the commission may terminate its appointment of an independent evaluator according to the terms of the contract between the commission and the evaluator.
J. Following the commission's decision to appoint an independent evaluator, the commission shall by written decision approve a contract between the independent evaluator and the commission, including the terms and conditions of compensation. The utility shall reimburse the commission for compensation and costs incurred for the independent evaluator; the utility may recover this expense through rate recovery charges. The terms of the contract between the commission and the independent evaluator shall prohibit the independent evaluator from assisting any entity in making proposals to the commission for a period of three years from the date the contract terminates or expires. At any time, the commission may terminate its appointment of an independent evaluator according to the terms of the contract between the commission and the evaluator.
K. The utility shall provide the independent evaluator with prompt and continuing access to all documents, data, assumptions, models, bids and weighting criteria used, reviewed, produced or relied upon by the utility in the preparation and conduct of its competitive resource procurement process. The utility shall provide the independent evaluator, in a timely manner so as to facilitate the independent evaluator's obligations pursuant to this section and applicable commission rules, with bid evaluation results and modeling runs so the independent evaluator can verify the results of the utility's competitive resource procurement process and investigate whether that process reasonably invited and considered all feasible resource options to satisfy the utility's service needs.
L. An independent evaluator shall advise the commission whether the competitive resource procurement processes of the utility, including the utility's inputs, assumptions, criteria and models, are reasonable and sufficient to solicit and evaluate bids in a fair and reasonable manner consistent with the public interest.
M. In the event an independent evaluator finds a problem or deficiency in the utility's competitive resource procurement process, the evaluator shall promptly notify the utility of the problem or deficiency. After the utility responds to that notice, the independent evaluator shall promptly notify the commission in writing of the problem or deficiency and the utility's response to and resolution of that problem or deficiency. The notification by the independent evaluator and the utility's response and resolution shall be made part of the commission's record in the utility's relevant resource procurement case.
N. An independent evaluator shall report to the commission, prior to the commission's evidentiary hearings in a resource procurement case, whether the competitive resource procurement process of the utility, including assumptions, criteria and models, are reasonable, competitively fair and sufficient to reasonably identify the most cost-effective option among feasible resource alternatives available to satisfy the utility's service needs.
O. The commission shall schedule at least one procedural conference in every utility resource procurement case. During a procedural conference, the utility, the commission and other parties to the proceeding will have an opportunity to ask questions of the independent evaluator regarding the evaluator's filings in the case. Opinions, determinations and statements by the evaluator in filings with the commission shall constitute evidence in a resource procurement case. All parties shall have a reasonable opportunity prior to closure of the record in a resource procurement case to examine the independent evaluator regarding the evaluator's filings in the case.
P. An independent evaluator shall not be a party to a utility resource procurement case but shall testify if a party calls the evaluator as a witness.
Q. The commission may grant a request by a utility for a waiver of the application of the requirements of this section or from the requirements of the commission's rules implementing this section upon a showing by the utility that extraordinary circumstances exist, that such waiver and the alternative method of resource acquisition proposed by the utility are necessary to protect the public interest and that such request otherwise satisfies the requirements of all applicable commission rules addressing waivers of or variances from commission rules.
R. This section shall not apply to a utility's procurement for a customer that executes a special service contract with the utility that requires the customer to pay the utility for all costs associated with the utility's resource and which contract is approved by the commission.
S. The independent evaluator's work for the commission shall be public record, except where competitively confidential information needs to be protected. Those confidentiality restrictions shall be lifted two years after the commission issues its decision on a utility's resource procurement case to allow retrospective analysis, unless there is good cause shown to the commission.
T. Within six months of the effective date of this section, the commission shall establish rules necessary for the implementation of the requirements of this section."
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