NMPRC RPS Filing 06-30-10
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BEFORE THE NEW MEXICO PUBLIC REGULATION COMMISSION IN THE MATTER OF EL PASO ) ELECTRIC COMPANY'S 2010 ) PROCUREMENT PLAN PURSUANT ) TO THE RENEWABLE ENERGY ACT ) CASE NO.to-OO -UT AND NMAC 17.9.572.16 ) ) DIRECT TESTIMONY OF RICARDO ACOSTA JULY 1, 2010 TABLE OF CONTENTS Subject I. INTRODUCTION AND QUALIFICATIONS 1 II. PURPOSE OF TESTIMONy 2 III. SUMMARY OF EPE1s 2010 PLAN 4 IV. OVERVIEW OF EPE1S RPS REQUIREMENTS 5 V. ANNUAL PROCUREMENT PLAN REQUIREMENTS 7 VI. STATUS OF SUNTOWER PROJECT 12 VII. EPE1S PROPOSED 2010 PLAN 15 VIII. EPE1S DIVERSITY RFP PROCESS AND NEW RESOURCE SELECTION 18 IX. COST OF EPE'S 2010 PROCUREMENT PLAN 30 X. REQUEST FOR VARIANCE FROM DIVERSITY REQUIREMENTS 31 XI. CONCLUSION 35 EXHIBITS Exhibit RA-1 EPE's New Mexico Jurisdictional Retail Energy Sales' Requirement Exhibit RA-2 SPS REC Agreement Exhibit RA-3 REC Purchases to Meet Renewable Portfolio Standard including NRG Alternative Exhibit RA-4 Renewable Energy Percentages by Technology Exhibit RA-5 2011 Solar Diversity Requirements Deferred to 2012 - 2014 EL PASO ELECTRIC COMPANY DIRECT TESTIMONY OF RICARDO ACOSTA 1 I. INTRODUCTION AND QUALIFICATIONS 2 Q. PLEASE STATE YOUR NAME AND BUSINESS ADDRESS. 3 A. My name is Ricardo Acosta, and my business address is 100 N. Stanton, EI Paso, 4 Texas 79901. 5 6 Q. HOW ARE YOU EMPLOYED? 7 A. I am employed by EI Paso Electric Company as Director of the Resource and 8 Delivery Planning Department. 9 10 Q. PLEASE SUMMARIZE YOUR EDUCATIONAL AND BUSINESS 11 BACKGROUND. 12 A. I graduated from The University of Texas at EI Paso with a Bachelor of Science 13 Degree in Mechanical Engineering in 1975 and a Master of Science Degree in 14 Mechanical Engineering in 1977. Upon graduation, I was employed by Rockwell 15 International in EI Segundo, California until January 1980. 16 In January 1980, I began working for EPE as a Planning Engineer with 17 duties including generation and fuels planning, regulatory compliance and 18 economic evaluation of generation and fuel alternatives. This activity included 19 forecasting fuel prices and the development of EPE's PROMOD base case for use 20 in Company planning activities and regulatory filings and proceedings. In 21 January 1989, I was promoted to Supervisor-Resource Planning. In October 22 2005, I was promoted to Manager-Resource Planning. In May 2010, I became 23 Director of Resource and Delivery Planning. 1 EL PASO ELECTRIC COMPANY DIRECT TESTIMONY OF RICARDO ACOSTA 1 Q. PLEASE DESCRIBE YOUR CURRENT RESPONSIBILITIES WITH EPE. 2 A. My current duties include the management and supervision of the Company's 3 generation expansion planning and renewable energy procurement. 4 5 Q. HAVE YOU PREVIOUSLY PRESENTED TESTIMONY BEFORE 6 UTILITY REGULATORY BODIES? 7 A. Yes, I previously presented testimony before the City of EI Paso Public Utility 8 Regulatory Board, the Public Utility Commission of Texas, and the New Mexico 9 Public Regulation Commission ("NMPRC" or "Commission"). 10 11 II. PURPOSE OF TESTIMONY 12 Q. WHAT IS THE PURPOSE OF YOUR TESTIMONY? 13 A. The purpose of my testimony is to present EPE's 2010 Procurement Plan ("2010 14 Plan"). I calculate EPE's 2011 and 2012 renewable energy portfolio standard 15 ("RPS") requirements and set forth EPE's 2010 Plan to meet EPE's RPS 16 requirements for 2011 and 2012. I will explain how renewable energy resources 17 fit within EPE's overall resource portfolio. 18 I will address EPE's request for a variance to the 2011 solar diversity 19 requirements of the Commission's Renewable Energy Rule 17.9.572 NMAC 20 ("Rule 572"). A variance is required because of the default by a supplier in 21 performing, and the Commission's recent approval of termination of the PPA 22 previously approved in EPE's 2008 Procurement Plan for the solar concentrating 23 project known as the SunTower project. Because of the default and recent 2 EL PASO ELECTRIC COMPANY DIRECT TESTIMONY OF RICARDO ACOSTA 1 termination of the PPA, the solar energy and Renewable Energy Certificates 2 (IRECs") that were counted on for 2011 will not materialize, and instead EPE 3 must purchase an alternative resource to ensure full compliance with the statutory 4 RPS. EPE proposes to purchase wind RECs from Southwestern Public Service 5 Company C'SPS") to enable EPE to meet the full RPS for 2011. However, there 6 are not adequate solar resources available to EPE in 2011, and EPE will be able to 7 meet only a portion of the solar diversity targets for 2011. For that reason, my 8 testimony supports EPE's request for a Variance for 2011 and approval of the 9 purchase of the alternative wind RECs from SPS to meet the statutory RPS 10 requirement. Iexplain that EPE will meet the diversity requirement in the years 11 2012-2014 through purchases of solar energy from an alternative project under 12 the Amended Agreement with the SunTower project supplier, approved by the 13 Commission, and other new solar projects proposed in the 2010 Plan. EPE will 14 voluntarily "make-up" in years 2012-2014 any shortfall in solar diversity levels 15 from 2011. Thus, EPE ultimately will comply with the amount of solar energy 16 targeted for 2011, but needs additional time to do so. 17 I address EPE's evaluation of new solar energy projects to replace or 18 augment the SunTower project. I explain the procurement actions EPE is 19 proposing to prepare for the 2011 and 2012 diversity targets. 20 I also provide the estimated costs of compliance to meet the RPS 21 requirements for 2011 and 2012, including diversity targets in 2011 and 2012. I 22 discuss and conclude that EPE's proposed 2010 Plan for 2011 and 2012 is 23 reasonable as to price, availability, dispatch flexibility, certificate values and 3 EL PASO ELECTRIC COMPANY DIRECT TESTIMONY OF RICARDO ACOSTA 1 diversity. 2 In addition to my testimony, EPE Witness Carpenter addresses policy 3 matters and incorporates Commission action regarding substitution of a 20 MW 4 PV project for the originally-approved SunTower solar thermal project. EPE 5 Witness Evans will address EPE's Small and Medium System Renewable Energy 6 Certificate Purchase Programs, and estimate the number of RECs and costs 7 associated with those programs. Mr. Evans also evaluates whether EPE's 8 proposed Plan would require EPE to reduce its RPS requirement in order to stay 9 within the Commission's Reasonable Cost Threshold ("RCT") or the large 10 customer cap. 11 12 III. SUMMARY OF EPE'S 2010 PLAN 13 Q. BEFORE PROVIDING THE DETAILS, PLEASE SUMMARIZE EPE'S 14 2010 PROCUREMENT PLAN. 15 A. EPE's 2010 Plan will meet its RPS requirements for 2011 and 2012, as well as 16 most of its resource diversity targets in 2011 and all of its diversity targets for 17 2012. EPE's 2010 Plan is to meet its statutory RPS obligations through REC 18 acquisitions pursuant to previously approved agreements with Public Service 19 Company of New Mexico (ltpNMIt),Southwest Environmental Center ("SWEC"), 20 Camino Real Landfill Gas to Energy Facility ("CRLEF"), and SPS, as well as 21 through EPE's approved incentive programs for customer-installed Qualifying 22 Facility (rrQFrr)projects. As approved by the Commission on June 24,2010 in the 23 re-opened Case No. 08-00219-UT, EPE's 2010 Plan also includes the purchase of 4 EL PASO ELECTRIC COMPANY DIRECT TESTIMONY OF RICARDO ACOSTA 1 solar energy under the Amended Agreement with NRG (SunTower) from a newly 2 constructed 20 MW solar PV facility. In addition, the 201 0 Plan also includes the 3 following new procurement actions that require Commission approval: 4 1) procurement of increased amounts of SPS wind REC purchases for 2011, to 5 ensure compliance with the overall 2011 RPS requirement to cover the 6 termination of the solar thermal project; 2) procurement of solar energy and RECs 7 by entering a new PPA with SunEdison for a 24 MW PV project; 3) procurement 8 of solar energy and RECs by entering a new PPA for a 5 MW PV project, located 9 in Hatch, New Mexico; and 4) receipt of a variance from the full solar diversity 10 requirements of Rule 572 for 2011. 11 EPE's 2010 Plan requires a variance from the Commission's Rule 572 12 solar diversity requirements for 2011 due to the unavailability of adequate solar 13 supplies in 2011. EPE is requesting that those portions of its 2011 diversity 14 requirements that cannot be met be deferred to the years 2012-2014. I will 15 address each element for approval of the Variance later in my testimony. 16 17 IV. OVERVIEW OF EPE'S RPS REQUIREMENTS 18 Q. PLEASE PROVIDE AN OVERVIEW OF THE RENEWABLE ENERGY 19 REQUIREMENTS EPE MUST MEET. 20 A. The New Mexico Renewable Energy Act ("Act" or "REA") and the Commission's 21 Rule require that a percentage of EPE's New Mexico retail jurisdictional energy 22 sales (stated as an energy requirement) be met by renewable energy resources. 23 The RPS requirement for 2010 is six percent and for the period 2011 through 5 EL PASO ELECTRIC COMPANY DIRECT TESTIMONY OF RICARDO ACOSTA 1 2014, ten percent. Thereafter, EPE must meet an RPS requirement of 15 percent 2 in 2015 through 2019 and 20 percent beginning in 2020. 3 4 Q. HAS EPE CALCULATED ITS RENEWABLE ENERGY RESOURCE 5 REQUIREMENTS FOR 2011 AND 2012? 6 A. Yes. EPE calculated these requirements based on its latest Long-term Load 7 Forecast dated March 18,2010. 8 EPE's 2011 total New Mexico retail jurisdictional energy sales are 9 estimated to be 1,685,406 megawatt-hours ("MWh"), resulting in a RPS 10 requirement of 168,541 MWh; and the 2012 total jurisdictional sales are estimated 11 to be 1,757,908 MWh, and the RPS requirement is 175,791 MWh.