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In Aztec


March 24, 2017

Customers of City of Aztec Electric who install solar or other renewable electricity producing systems will have to wait to be connected to the metered electrical grid. A moratorium is currently in place and will continue until a Cost of Service Study, contracted to the private firm, Raftelis Financial Consultants of Denver, Colorado, is complete.

Aztec Finance Director, Kathy Lamb, stated in an email that the study will cost $116,000 and the scope of the study is a “review of policies and historical financial data, project revenue requirements FY18 to FY22, evaluate existing rate structure to provide funding for operations, maintenance, capital improvement, debt and maintain prudent cash reserves; develop financial planning model; presentation of findings to staff and commission.”

At the upcoming workshop scheduled for Monday, April 3, Raftelis will report to the City on the results of Phase I of the study. It’s anticipated that Phase II will be completed by late May or June, wherein, city administrators will have a better idea of the overall financial model.

Aztec Electric Director, Ken George responded, to the question of whether the department has an overall mission statement regarding supplying electricity to its customers, the citizens of Aztec, with this, “I do not believe we have ever had a mission statement specifically for the Electric Department. If we did it would be something fairly simple. The City of Aztec strives to provide safe, reliable and affordable power to all of its citizens.” Regarding other specific concerns, Mr. George expressed that “part of the Cost of Service Study is to set a rate for customers with generation facilities such as solar or wind where no other customer pays more or subsidizes a customer who has the ability to generate power. Each customer shares an appropriate cost in maintaining the power system.”

Aztec contracts with Guzman Energy, which supplies 70-80% of its power needs; the rest is provided by hydro-generation Western Area Power Authority, a subsection of the U.S. Department of Energy. The power grid is an intriguing part of the electrical infrastructure, in that Guzman buys electricity from many diverse regions in the west. According to Mr. George, it employs “real time pricing” to buy power at the most competitive pricing, on an hourly basis, 24/7-365 days a year.

As a result of their recent cost of service study, The City of Farmington has in place, effective March 1, 2017, an electricity cost increase of about 2.5% over the next three years. Currently, Farmington Electric customers pay a base customer charge of $4.75 and 9.7 cents/kWh for first 12 months; $5.75 base, 9.9 cents/kWh next 12 months and $6.75 base with 10 cents/kWh in the third 12 months of service.

In Farmington, the monthly standby charge for a solar fixed system is $7.28 per kW of installed capacity. For a solar tracking system it’s $7.01 per kW of installed capacity. With the new pricing structure policy, they have removed the incentive for installing solar electric systems and no longer offer net-metering for excess annual generation. Instead, customers who generate excess annual energy are credited at about 3.5 cents/kWh, as opposed to the retail rates above.

Aztec Electric Department customers, which number about 3000, currently pay 13.5 cents per kWh. Farmington Electric has about 50,000 customers, who will pay approximately 10.5 cents/kWh.

As non-publicly traded utilities, Aztec and Farmington electric departments are not required by the NMPRC, to produce a certain amount of energy from renewable sources, whereas, investor-owned utilities and rural electric cooperatives are legally bound to do so, based on the Renewable Energy Act (“REA”), §§ 62-16-1 et seq. NMSA 1978 and Title 17.9.572 NMAC (“Rule 572”).

Concerned citizens and customers of City of Aztec Electric may find it worthwhile to attend the upcoming workshop discussing Phase I of the Raftelis Cost of Services Study. This will be an opportunity to get first-hand information on the initial study results and recommendations regarding electricity rates, customer generated/renewable energy connection to the grid and other utility issues addressed by the study. The date and time of the workshop will be announced as soon as that information is available.


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