El Paso Electric again is seeking regulatory approval for its New Mexico renewable energy plan after resolving tariff-related cost uncertainty of a solar-plus-storage procurement proposed in the plan.

The New Mexico Public Regulation Commission rejected the plan in October based on concerns about the cost of energy from the proposed 150-MW Santa Teresa solar project. EPE reported in August that developer DE Shaw Renewable Investments (DESRI) had told it the project had been “materially and adversely impacted by recent changes in law, in particular related to the imposition of tariffs by President Trump.”

The tariffs were expected to “result in millions of dollars worth of unplanned cost increases for construction of the generating facility,” the developer said. In an Oct. 16 order, the PRC said it could not approve EPE’s plan because the cost of the Dona Ana County-based project was unknown.

But since then, EPE has worked out a deal with DESRI calling for the utility to pay the same rate for energy from the project as in their previous agreement but with the contract terms extended to 25 years rather than 20.

The plan the commission is being asked to approve covers the first 20 years of the agreement; EPE would bear the risk of the five-year extension, PRC staff said in a filing.

The expected cost of the project’s energy assigned to New Mexico for 2026 is $45.67/MWh. That is below an inflation-adjusted renewable cost threshold of $74.14/MWh.

The PRC on Nov. 25 granted EPE’s motion for a rehearing, which could take place as soon as Dec. 11.

EPE and DESRI did not respond to RTO Insider’s request for more details on the tariff impacts.

RPS Challenges

New Mexico’s investor-owned utilities file a plan each year on how they will meet the state’s renewable portfolio standard in the following year.

The required percentage of zero-carbon resources supplied for retail electricity sales increased to 40% in 2025, after sitting at 20% since 2020. It will continue to rise through 2045, when it reaches 100%.

In 2023, EPE supplied about 16% of retail energy sales to New Mexico customers with renewable resources, a figure that grew to just over 20% in 2024.

EPE’s 2026 plan includes renewables and renewable energy certificates from an approved portfolio as well as the proposed Santa Teresa procurement.

Santa Teresa will be built at the former site of the Hecate solar project, which at one time was expected to be in service by 2022 but never was built. DESRI took ownership of the project. EPE’s power purchase agreement for Hecate was terminated in 2024, and the utility received $14.9 million in liquidated damages, according to the 2026 plan.

EPE, which serves customers in New Mexico and Texas, noted in its plan the challenges of providing electricity in jurisdictions with different renewable energy requirements. The utility previously received PRC permission to adjust the amount of renewable energy allocated to New Mexico, rather than Texas, to meet New Mexico’s RPS targets.

For the Santa Teresa project, EPE asked to buy all the solar energy generated in 2026 and allocate it to New Mexico, starting when the project comes online midyear. That allocation would be needed to meet the 40% RPS target in 2026, but it likely would be a short-term arrangement.

“EPE would not expect to propose allocation of the total annual energy output of the [Santa Teresa project] in 2027,” the company says in its proposed plan.

Of the project’s 150 MW of battery storage, EPE wants to purchase and include 50 MW in its RPS portfolio.