Southwestern Public Service Co. v. New Mexico Public Regulation Commission

New Mexico’s Community Solar Act called for the development of community solar facilities, which were solar-panel farms connected to a utility’s local distribution system. A facility’s subscribers, who effectively funded the facility, would receive a bill credit on their utility bills per kilowatt hour of consumed electricity that the facility provided to the utility’s system. The act charged the New Mexico Public Regulation Commission (commission) (defendant) with adopting rules implementing the act, including a rule establishing the bill-credit rate. The commission established a credit that would effectively reduce a residential subscriber’s rate by approximately 70 percent per credit-eligible kilowatt hour. The rule stated that a utility could not subtract transmission costs from the bill-credit rate. Multiple utilities (defendants) sued to challenge the transmission-cost prohibition. They argued that it violated the act because it effectively required nonsubscribers to subsidize subscribers’ transmission costs. The commission argued that (1) transmission costs were inapplicable because the generated solar electricity was distributed within a utility’s local distribution system that the solar project was already connected to and (2) the act’s express reference to the exclusion of distribution costs from the bill-credit rate, but failure to mention transmission costs, reflected legislative intent that transmission costs not be subtractable. The New Mexico Supreme Court considered the arguments.