Many councilors object to solar rate they say is a subsidy
FARMINGTON — A San Juan Regional Medical Center official expressed disappointment Wednesday over a City Council decision Tuesday night to reject a proposed lower electric rate for customers with large-scale solar power array.
Most councilors objected to the proposed Rate No. 23 — which hospital officials had asked for to accommodate a multi-acre solar farm they are considering building — in their Tuesday meeting because it would cost the Farmington Electric Utility System about $47,000 each year in lost revenue. Rate No. 24, which they unanimously approved instead, is a higher rate.
"I think basically it all came down to the subsidy," Councilor Gayla McCulloch said in an interview Wednesday.
She said the utility's residential ratepayers should not have to subsidize commercial business.
"That $47,000-plus each year comes from somewhere," McCulloch said.
Hospital representatives declined to be interviewed for this story, but they responded with email statements.
"We are very disappointed that the City Council chose to ignore the Public Utility Commission's recommendation of rate 23 in favor of the higher rate 24," marketing manager Roberta Rogers said.
Rate 23 would've charged customers who use solar panels larger than 10 kilowatts — such as the hospital, if it carries out its plans to build the farm — $11.97 per kilowatt. Rate 24 charges these large-scale solar users a $15.11 per kilowatt fee.
City officials said in an August Public Utility Commission meeting that rate 23, with its low fees, would encourage commercial customers to build large-scale solar-panel projects and allow the utility to collect data on large systems.
Commissioners Carol Cloer and Marty Johnson said losing revenue under rate 23 would be a worthwhile investment for the information the utility could gain, according to the August meeting minutes. After their comments, hospital official John Buffington said the rate would make the solar project the hospital is planning feasible, according to the minutes.
But during the commission meeting, city officials said rate 24 would also allow the utility to collect data on large solar-panel systems — though that rate would be less appealing to the hospital, according to the minutes.
The utility will conduct a cost-of-service study in 2016 and re-examine all its rates. That solar data would be helpful in the study, officials say.
Rogers didn't say how much the project could cost or if it is feasible without the lower rate. But she said hospital officials are "considering" constructing a solar farm on 6 to 8 acres of land by the Drake Building, and it would generate about a third of the hospital's power.
She said hospital officials are contemplating the project because New Mexico Attorney General Hector Balderas urged a state regulatory agency to gather more accurate information about "the true costs and benefits of wind and solar energy in New Mexico" in late July.
The solar farm could also save the hospital nearly $300,000 a year, she said.
During the City Council's meeting Tuesday, many councilors said they were disappointed that no hospital representatives were present. Councilor Mary Fischer described the attitude of hospital officials as "cavalier," while Councilor Nate Duckett said he was discouraged. McCulloch said in an interview later the rate 23 proposal might have passed if a hospital representative had attended the meeting.
"I felt all day we were not given enough information," Duckett said in the meeting.
Rogers said the hospital wasn't notified that the City Council was scheduled to consider the issue Tuesday night.
But the utility's business operations manager, Sue Nipper, said the city didn't notify the hospital about the two Public Utility Commission meetings to discuss the rate proposal in July and August, either, "and they showed up."
"And," she said, "the meetings are published on the city's website."