N.M. Officials Warn Against Charging Facebook for Power Line Project

The Public Regulation Commission voted against a proposal to make retail customers pay $39 million for a 45-mile transmission line that would also power a large Facebook data storage facility.

by Steve Terrell, The Santa Fe New Mexican / April 19, 2019

(TNS) — Two New Mexico officials are warning that the Public Regulation Commission’s unanimous rejection of PNM’s request to charge retail customers nearly half the construction costs for a multimillion transmission line that would power Facebook’s data storage facility could have a negative ripple effect on state economic development efforts.

The initial plan for the Facebook facility in Los Lunas was approved unanimously by the PRC in 2016. Politicians, business leaders and environmentalist groups enthusiastically backed the effort, saying the large center could help attract jobs while using clean energy to power it.

Public Service Company of New Mexico last year asked the commission to approve a 45-mile transmission line between a switching station at Clines Corners and a new station in Sandoval County. The new “BB2” line would allow the new La Joya wind farm near Encino — owned and operated by Avangrid Renewables, an Oregon company — to supply electricity to the Facebook plant.

While approving parts of the proposal, the commission decided to nix PNM’s request to make retail customers pay $39 million of the cost.

Instead, the commission is requiring PNM to bill Facebook for the expense.

Early this week, two state Cabinet secretaries wrote a joint letter to the PRC to “express concerns about the potential chilling effect on statewide economic development and renewable energy investment that could result in New Mexico” if PNM wasn’t allowed to charge ratepayers for the line.

“If New Mexico does not keep all of the promises made to this company, we may not have the opportunity to land another project of this caliber for years,” wrote Economic Development Secretary Alicia Keyes and Energy, Minerals and Natural Resources Secretary Sarah Cottrell Propst. “There is no bigger ‘red flag’ to a site selector or business executive than failing to follow through on an agreement.”

The two secretaries noted that last month Facebook purchased the remaining 400 acres in the Huning Ranch Business Park near Los Lunas, where it already owned 300 acres.

“The growth of this company in our state could go on for many years,” the letter said. “In addition, we can build on this success by attracting other businesses that want to co-locate with New Mexico’s abundant renewable energy resources.”

Commission Chairwoman Theresa Bicente-Aguilar, D-Albuquerque, said Thursday that she stood by the recommendation.

“We are not going to allow ratepayers to have to pay for the power lines and infrastructure,” she said.

Though PRC hearing officer Carolyn Glick recommended approval for parts of the plan, including the location and right-of-way for the power line, she recommended against the proposal to allow PNM to charge retail customers about $39 million.

In an interview Thursday, Glick said that during a hearing on the proposal, a PNM official had testified all of the 166 megawatts of power from the La Joya project would be dedicated exclusively to Facebook’s Los Lunas facility.

Therefore, Glick said, Facebook should have to pay for it.

PNM’s existing 1,000-megawatt “BB” line already transmits energy from three other wind farms in Eastern New Mexico. Because that power line is “fully subscribed,” PNM can’t use it for additional transmission service, thus making the second line necessary.

In a March 29 letter to the commission, a Facebook official said that adopting Glick’s recommendation could hurt the project.

Bobby Hollis, head of energy and site selection for Greater Kudu LLC, a Facebook subsidiary, said in a March 29 letter that the action raises “significant and serious concerns for us that may jeopardize PNM’s ability to satisfy its contractual obligations to the data center under the [special service contract] and could in turn impact our ability to meet the sustainability commitments of our data center in Los Lunas.”

Hollis wrote that since the 2016 approval, Facebook has “invested over $400 million in the Los Lunas data center, built almost one million square feet of data center buildings and had an average of over 1,000 people helping construct the site. Ultimately we plan to invest over $1 billion [in the center] and support approximately 300 jobs.”

He said the requirement for Facebook to reimburse PNM $39 million “is a significant deviation of our understanding of the terms and conditions of our [contract] with PNM, creating uncertainty around the long-term cost of our operations in New Mexico.”

A PNM spokesman Thursday declined to comment on the PRC’s decision, but said the company is determining its next steps. PNM has the right to a rehearing on the case, but so far has not filed a request, he said.

©2019 The Santa Fe New Mexican (Santa Fe, N.M.). Distributed by Tribune Content Agency, LLC.

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