South Dakota Energy Infrastructure Authority Rapid City, SD June 2007

1. New Mexico’s Renewable Energy Transmission AuthorityJoanna Prukop, Cabinet SecretaryCraig O’Hare, Special Asst. for Renewable EnergyNM Energy, Minerals and Natural Resources Dept. South Dakota EnergyInfrastructure Authority Rapid City, SD June 2007

2. What is New Mexico’s Renewable Energy Transmission Authority – “RETA”? • The nation’s first state-level financing authority whose primary focus is on developing renewable energy-related transmission infrastructure. • Another “first”: RETA can fund energy storage projects (e.g. compressed air storage for wind power) as well as transmission facilities.

3. RETA Allows NM’s Renewable Energy Projects to “Plug in” to the Regional Market • The critical “transmission side” of achieving NM’s clean energy-related economic diversification objectives  development of the state’s world-class solar and wind energy resources for export to out-of-state markets.

4. Presentation Outline • New Mexico's "vision" for establishing the Authority • Overview of RETA's mission and responsibilities • RETA complements NM’s focus on renewable energy development • Getting RETA up and running • Coordination with other regional transmission initiatives

5. Why RETA?Background to and Vision for Establishing the Authority • Past century, NM a national leader in energy resources and development. • Crude Oil: 4th in production • Natural Gas: 4th in production • Coal: 12th in production • State’s economy enjoys but is also heavily reliant on traditional energy resource extraction and power generation. • Governor Richardson and NM Legislature recognize need to diversify state’s energy-based economy into clean energy, clean tech industries • April 2004: Governor declares NM “The Clean Energy State”  sets out aggressive clean energy economic development policy agenda.

6. Why RETA? • 2004: NM’s first “wind ranch” on the eastern plains makes renewable energy’s economic development potential “tangible” to policymakers. • 2004-2006: Interest in aggressive wind resource development and recognition of concentrating solar power’s (CSP) long-term potential, highlight transmission constraint problems. • RETA “sold” as an economic expansion tool to facilitate development of in-state renewable energy resources for export to out-of-state markets needing to satisfy RPS and other policies • Third time’s a charm! 3 legislative sessions later, RETA passed the state legislature in March, 2007

7. Overview of RETA • Similar to the Wyoming, Kansas, and South Dakota authorities. • Renewable Energy Emphasis: >30% of energy in RETA- acquired or constructed transmission infrastructure must be renewable. Up to 70% may be from traditional sources. • 8 member board: • 3 by the Governor, w/consent of Senate • 1 by the Speaker of the House • 1 by the President Pro Tem of the Senate • State Treasurer • State Investment Officer • EMNR Dept. Cabinet Secretary (non-voting)

8. RETA Overview • Board: Politically-appointed but notpolitical appointees! • Act dictates experience and qualifications • No board member “shall represent a person that owns or operates facilities”. • RETA has financing (revenue bonds), contracting, and eminent domain powers to develop projects. • Storage projects: “…technologies that convert, store and return electricity to help alleviate disparities between electric supply and demand…(or)…to facilitate the dispatching of electricity …”.

9. RETA Overview • RETA first identifies “projects” (transmission infrastructure driven by one or more renewable and traditional power generators) • …then issues RFP to determine private sector’s interest in constructing and operating the facilities • … and only proceeds on its own to construct facilities in the absence of private sector interest. • Any projects related to or affecting in-state retail rates or reliability must be approved by the NM Public Regulation Commission  NM’s elected utility commission.

10. RETA Overview • RETA-developed projects are exempt from state gross receipts (sales) and compensating taxes. • Interstate Projects: finance or acquire “…facilities located in whole or in part within the state of NM.” • Coordination with Regional Transmission Initiatives: “through participation in appropriate regional transmission forums, coordinate…plan… and negotiate with entities within and outside the state for the establishment of interstatetransmission corridors”.

11. RETA Complements NM’s Commitment to Renewable Energy Resource Development 1000s of MWs of Wind! 2nd in Nation Solar Resource

12. RETA and NM’s Renewable Energy Development: Projects • Nearly 500 mw of wind farm development in the past 4 years, including the state’s first merchant wind farm. • State’s largest IOU signs on to 35 mw biomass project. • Concentrating Solar Power: 5 different project developers considering various projects • 20 to > 100 MWs • Stand alone parabolic troughs • CLFR – trough “lite” • Solar field hybrid “add-on” to existing coal plant • Solar hybrid with new NGCC plant

13. Renewable Energy in NM:RPS & Nation’s Best Financial Incentives Create “Market Pull”! • RPS: increased in 2007 legislative session • 15% by 2015, 20% by 2020 • Rural coops added: 5% by 2015 and 10% by 2020. • Incentives added to go beyond RPS MW requirements • RE Production Tax Credit – enhanced in 2007 session • One of only 2 states with a RE PTC • 1¢/kwh for wind and biomass  $4 million/facility/year for 10 years! • 2.7¢/kwh (avg.) for Solar  equates to $54 million over 10 years! • Credit is “refundable” – ie. fully “accessible” by RE project developer regardless of NM tax liability

14. Renewable Energy Incentives Complement RETA • Advanced Energy Tax Credit • 6% tax credit for solar (as well as advanced coal) • $200 million CSP project would receive a $12 million tax break • Overview of Adopted Clean Energy Legislation: • http://www.emnrd.state.nm.us/main/ documents/

15. RETA: Critical role in developing NM’s merchant renewable power industry • NM ideally situated to serve neighboring state’s RPS-driven demand for RE  10s of 1000s of MWs over the next decade • NM straddles the Eastern and Western Interconnects NM RETA

16. The Real Work Begins!Getting RETA Up and Running • Establishing the Board • Recruiting a dynamic well-qualified Executive Director • Applications Due: 15 June 2007 • Interested? Know anyone who might be?! • Job Announcement: (website) • Preparing procedural materials for Board: by-laws, procurement procedures, personnel policies, etc. • Getting the word out that RETA exists! • Attending conferences and regional transmission forums. • “Pinch hitting” for RETA until she’s up and running!

17. RETA will (must!) Coordinate with Other Regional Energy and Transmission Initiatives • Projects: • High Plains Express • Sun Zia Southwest • Frontier Line, TransWest, etc. • The Alphabet Soup of Regional Energy and Transmission Forums: • WIEB, WECC, SWAT, WIRAB, WSPP, WestConnect • WY,KS, and SD transmission authorities • ISOs and Control Areas • FERC - and Order 890, in particular • DOE’s transmission corridors • NM and neighboring state utility commissions • In and out-of-state investor-owned utilities

18. Questions, Comments? • Joanna.prukop@state.nm.us (505)476-3200 • Craig.ohare@state.nm.us (505) 476-3207 Thank you!