FARMINGTON — Aztec residents who have long lamented the town's high electricity rates may get some relief after commissioners approved a new contract with a Florida-based energy company.
Last week, Guzman Energy — a firm based in Coral Gables, Fla., with offices in Denver — announced it has struck a seven-year agreement with Aztec to be the city’s primary power provider starting July 1. The wholesale power agreement comes with a renewable energy component.
On an eight-acre parcel of undeveloped land south of Western Circle referred to by the city as the Townsend property, Guzman Energy will build a 1-megawatt solar-powered electric energy generating facility by mid-June. Guzman Energy will pay approximately $2 million to build the solar facility.
In 2023, when the contract expires, Guzman Energy will sell the solar facility to the city for $1, according to Ken George, Aztec's electric director.
The project is currently in the design phase.
Leopoldo Guzman, Guzman Energy’s chairman and CEO, said the company aims to offer municipalities like Aztec affordable energy with a renewable component.
“Guzman Energy is committed to delivering sustainable and reliable cost savings to municipalities,” Guzman said in a release. “We are excited to partner with the city of Aztec and look forward to developing a long term relationship as we provide locally-produced, cost-effective clean energy.”
The solar facility will generate approximately 8 percent of Aztec’s electricity with the balance coming from Guzman Energy’s other assets, according the release.
That is good news to George, who said 10 years under a no-wiggle-room contract with Public Service Company of New Mexico, or PNM, has led to Aztec having the highest electric rates in the San Juan County. Aztec's contract with PNM expires on July 1.
"I was so excited when I saw the numbers on this contract," George said. "I can't tell you how elated I was."
Ten years ago, Aztec locked in a rate of 7.5 cents per kilowatt hour with PNM that included yearly increases based on natural gas futures, George said. Those yearly increases have meant the city is actually paying PNM closer to 8 cents per kilowatt hour. The city's new contract with Guzman is set at 5 cents per kilowatt hour.
Aztec's agreement with PNM allowed for up to three megawatts of solar power, but George said PNM"s solar rates were never affordable.
"Every time we went and looked at (solar with PNM), it wasn't cost effective so we could never do it," he said.
Guzman's solar rate represents about half what the city was offered under PNM, George said.
George said a cost-of-service study undertaken by the city will explore ways to pass savings on to residents each month, he said. Currently, the city charges its residents about 13 cents per kilowatt hour.
"I would like to drop the current rate at least by 1.5 cents per kilowatt hour," George said. "We now have a much better contract, so whatever savings we can provide, we are going to provide it to our citizens."
City Manager Josh Ray said that the city's transition into renewable energy and the ability to provide lower rates for its residents is welcome progress that has been a long time coming.
"We are very excited ... Guzman is the type of company that sets themselves above all others with their proactive and environmentally friendly approach to energy," Ray said. "This new agreement will allow us to finally offer our customers a better rate — something we are extremely excited about after 10 years under our current agreement."
Aztec has been looking into alternative energy sources such as solar power for the past 14 years, Ray said. Mayor Sally Burbridge and former Commissioner Diana Mesch made alternative energy for Aztec a priority, he said.
At a special meeting on Dec. 21, Aztec commissioners approved two agreements with Guzman Energy — one to build the solar system and the other for the power agreement.
"Through this partnership with Guzman, we have found an efficient way to ... expand our energy portfolio and increase our overall efficiency," Ray said. "Local government must find new and creative ways of doing business in order to continue providing services to our citizens."
James Fenton is the business editor of The Daily Times. He can be reached at 505-564-4621.