News Release

Sept. 1, 2005

PNM Seeks PRC Approval To Increase Customer-Owned Solar Generation

HOW IT WORKS Fact sheet: PNM's proposed customer-owned PV program

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NEWS MEDIA CONTACT Susan Sponar Telephone: (505) 241-2768

Albuquerque: PNM today took the first step toward offering its customers an innovative program aimed at significantly increasing the amount of solar energy generated in New Mexico.

Under the program, PNM would buy the environmental attributes associated with electricity generated by customers who own their own grid-tied, 10 kilowatt (kW) and smaller photovoltaic (PV) systems.

PNM officials hope the program will increase the amount of customer-owned solar generation tied to the PNM grid by nearly 14 times within eight years, for a total of about 1.2 megawatts (MW). This figure assumes 45 new customers enroll in the program every year.

"We are excited about the prospect of offering this one-of-a-kind program to our customers," said Hugh Smith, PNM senior vice president of energy resources. "We are committed to increasing the amount of environmentally-friendly renewable energy we provide to our customers, and this is an innovative way to support that goal."

PNM filed for approval of the program with the New Mexico Public Regulation Commission (PRC) today as part of its 2006 Renewable Energy Procurement Plan. Pending PRC approval, PNM hopes to offer the program to its customers by March 1, 2006. PNM plans to seek PRC approval in early 2006 for a similar program for larger customer-owned systems rated higher than 10 kW.

The program differs from other solar PV incentive programs in the nation because it would be based on actual production of solar energy, rather than simply on the installed size of systems.

"This will likely lead to a substantial increase in the amount of state-of-the-art solar generation on homes and businesses in New Mexico, and it could create both high-quality installation and manufacturing jobs," said Ben Luce, chair and policy director for the Coalition for Clean and Affordable Energy, a group that worked closely with PNM on the development of the program. "We applaud PNM for being proactive and seeking to start a production-based, distributed solar energy program that is one of the first of its kind in the nation. We expect that utilities in other states will follow PNM's lead on this."

Benefits for participants

Even small solar PV systems are expensive. A typical 1 kW system costs between $7,000 and $10,000. However, by participating in PNM's program customers could receive about $3,100 during 12 years.

The program would increase the value of the customer's PV system by paying the customer for the environmental attributes of the solar energy generated – known as a renewable energy certificate (REC). For PNM's proposed program, one REC equals one kilowatt-hour (kWh).

A customer's enrollment would require a yearly contract. PNM would credit participants' monthly bills 11 cents per kWh for the environmental attributes of the total energy produced. In addition customers will receive a kWh for kWh credit for all excess energy delivered to PNM's grid through net metering. PNM's current residential rate is 8.03 cents per kWh.

Benefits for PNM

PNM has an environmental sustainability goal of becoming a national utility leader in promoting and providing renewable energy. As a New Mexico utility where sunshine is abundant, PNM is particularly eager to find cost-effective ways of adding solar capacity to its generating portfolio. However, solar PV is still one of the most expensive renewable generating technologies.

Through the program, PNM expects to purchase about 18.7 million kWh during a 12-year period, at a cost of about $2.8 million. PNM estimates that to generate the same amount of electricity it would have to construct a 1.2 megawatt (MW) facility that would occupy about five acres of land, at a cost of about $7.5 million.

"Photovoltaic systems are still an expensive way to generate electricity," PNM's Smith said. "This program is an innovative way to partner with a substantial segment of our customers to bring solar into the PNM portfolio at a lower cost to PNM, while lowering the cost of a small PV system for our customers. It's a good business deal for PNM and for the program participants."

PNM is the principal subsidiary of PNM Resources, an energy holding company based in Albuquerque, N.M. PNM provides electric utility service to 413,000 customers and natural gas service to 471,000 customers in New Mexico. The company also sells power on the wholesale market in the Western U.S. PNM Resources stock is traded primarily on the NYSE under the symbol PNM. For more information, see the company's Web site at PNM.com.