Project Development, Wind Power

Utility Commits $4 M for REC Purchases

PNM Resources’ New Mexico utility, PNM, which receives the full output of renewable energy from the 200 MW New Mexico Wind Energy Facility, near House, New Mexico, signed a six-year agreement to sell renewable energy certificates to El Paso Electric Co.

The sale, which helps El Paso Electric meet the state’s renewable energy portfolio standard, begins in 2006 and is worth about $4 million during the term, based on current market prices for RECs. The number of RECs sold will vary year to year. According to the PNM-El Paso agreement, the price of each certificate will be adjusted annually based on inflation from 2007 through 2011. One certificate represents 1 MWh of electricity generated by a renewable source. New Mexico’s renewable portfolio standard requires investor-owned electric utilities to produce or buy renewable energy or equivalent certificates. According to the law, renewable energy must make up 5 percent of the utilities’ sales by 2006 and 10 percent by the year 2011. New Mexico, like many other states, allows utilities to either provide renewable energy to customers or purchase RECs, which encourage the development of renewable energy. The seller of RECs must provide evidence that the energy has been generated by a renewable resource.