New Mexico Community Solar Program Finally Launches and Finds its Footing
In New Mexico, the new community solar program has finally launched after years of deliberation to set up the program and decide on the Community Solar Bill Credit (SBC) that is rewarded to subscribers of community solar projects. The program offers a competitive rate for participating solar projects within the state. In September, the first community solar project in the state achieved commercial operation, and the next tranche of projects should be selected in the coming year(s).
Legislative and Regulatory History
The Community Solar Act (CSA), Senate Bill 84 (SB84), was passed and signed into law in April 2021, requiring the New Mexico Public Regulation Commission (PRC) to administer and establish the rules for a community solar program (see Figure 1 for the full legislative and regulatory timeline following the CSA). Under CSA, community solar facilities can have a maximum capacity of 5 MWAC, the program was initially capped at a total of 200 MWAC across the state’s three investor-owned utilities and 30% of each community solar facility's capacity must be reserved for low-income customers. The CSA requires that the SBC rate for subscribers is “derived from the qualifying utility's total aggregate retail rate (TARR) on a per-customer class basis, less the commission-approved distribution cost components, and identify all proposed rules, fees and charges”. The PRC was tasked with providing a full SBC rate mechanism. In July 2022, the PRC issued Community Solar Rule 573 (Rule 573) establishing the definitions and components of the SBC rate.
From the outset of the rulemaking, the SBC rate methodology was highly contentious. The three investor-owned utilities – Public Service Company of New Mexico (PNM), Xcel’s Southwest Public Service Company (SPS) and El Paso Electric (EPE) – raised concerns on the methodology for calculating bill credits. The utilities opposed the regulations outlining the SBC in the July 2022 Rule 573 and subsequently filed a legal appeal against the PRC’s Orders adopting the rule to the New Mexico Supreme Court.
Simultaneously, the PRC opened Docket 23-00071-UT for a two-phase proceeding regarding the implementation of utility tariffs for the SBC. The more significant Phase II focused on specific tariffs and implementation details such as the payment and calculation of the SBC and rate riders for various costs. The two most disputed components of the SBC methodology were whether:
In November 2024, the PRC issued the Phase II Final Order, wherein they rejected the SBC tariffs proposed by the utilities and provided a final methodology for the calculation of the SBC and tariff requirements. The PRC methodology states that the utility shall not subtract any transmission from the SBC rate calculation and that the customer cost component of the rates should be subtracted from rates. Generally, this was viewed as a win for subscribers and community solar projects that, as a result, would receive higher compensation through the SBC. The PRC ordered the utilities to refile all tariffs by mid-December 2024, and the approved tariffs became final in March 2025.
In March 2024, the Supreme Court issued an order rejecting the utilities’ argument that the PRC Rule violates the CSA, confirming the PRC’s authority in establishing the SBC rate. The Supreme Court released an opinion in January 2025 affirming the decision in the case of SPS, EPE, and PNM v. New Mexico PRC. As a result, the SBC methodology according to the PRC Phase II Final Order and resulting compliance filings by the state utilities would be the effective SBC rate for the program.
Community Solar Bill Credit Rate
What is the SBC that was finally confirmed? The SBC has several primary components (Figure 2):
The Fixed CSP Credit is calculated by converting each component of a utility’s base rate (costs and sales per customer class) in each utility’s active rate filing to volumetric (per kWh) values using the methodology outlined by the PRC.
The Fixed CSP is based on the revenue requirements (i.e., TARR) of the most recent and active rate base case and is provided for each customer class (residential, small general service, large power service, city and county service, etc.) through community solar tariffs. The two adders are the FPPCAC and RPS Rider. The FPPCAC enables utilities to recover costs associated with the purchase of fuel and power costs at a per kWh rate. This rate is updated regularly, either quarterly or monthly depending on the utility. Following the PRC’s Rule 573, the utility purchasing electricity from a community solar facility must compensate the owner for the value of the environmental attributes of renewable energy certificates (RECs). The PRC chose an interim methodology to value the environmental attributes by using the utility’s average cost of meeting its RPS requirement. As such, the RPS Rider is updated annually as utilities must comply with the annual RPS requirement. The PRC has stated that it plans to consider whether to adopt a replacement methodology in future proceedings. To date, this approach to calculating the RPS Rider with compliance costs has led to a wide and uneven range of rates, from EPE’s $0.016/kWh to SPS’ $0.001/kWh, which is a factor of 16 times higher.
The current SBC is an attractive offtake price for small commercial solar projects. Currently, PNM has the highest SBC, followed by SPS then EPE. This is in part due to recently high FPPCAC charges by PNM. The Fixed CSP is actually highest for SPS, demonstrating that SPS has the highest floor for a SBC given the FPPCAC and RPS Rider can fluctuate. EPE’s SBC has the lowest Fixed CSP and represents the least value in the short term. However, an increase in the EPE rate base would alter the Fixed CSP. Table 1 below provides the December 2025 SBC, including the several components, for residential customers by each utility.
Power Advisory has been tracking the SBC rates since they were established in March and forecasts their future value based on the utility and market dynamics in New Mexico. See Figure 3 for the monthly residential SBC rates in 2025. There is significant value in the SBC given the average cost to serve customers for New Mexico utilities is likely to increase due to generation and transmission investments.
Program Status
The first bid window for the initial 200 MW of the program opened in December 2022 and projects were selected through a competitive solicitation process. Bid awards were announced in May 2023. There was an overwhelming response, with 1.7 GW of projects submitting bids. Due to the initial 200 MW cap, only 45 projects were selected for the program. The remaining bidders are on a waitlist in case any of the initially selected projects drop out. The selected and waitlisted projects can be found on the New Mexico Community Solar Program webpage. More recently, a coalition of petitioners filed a request to the PRC to allow an additional 100 MW of solar projects on the waitlist to be added to the first tranche selection in Docket No. 25-00070-UT.
In November 2024, a second tranche cap of 300 MWAC was announced by the PRC as the commission is permitted to amend the annual statewide capacity cap of the program. Utility allocations for the second tranche are as follows: PNM (185 MW), SPS (70 MW), EPE (45 MW). A timeline for the solicitation of the new 300 MW block has not been set. In the PRC’s Report to the Legislature on the Status of the Community Solar Program in November 2024, the PRC stated that there currently is no funding available to hold a new solicitation and the PRC will need to work with the Legislature to determine an appropriate budget and funding source for on-going program administration. The PRC opened Docket No. 24-00258-UT to consider potential amendments to the Rule 573 to be implemented in the second tranche and solicitation. This includes assessing proposed changes to how the community solar facilities are rewarded for the value of their environmental attributes; yet nothing material has been progressed or selected.
Table 2 contains some program highlights.
Andrew Kinross, Director, can be reached at akinross@poweradvisoryllc.com
Andrew Bracken, Senior Consultant, can be reached at abracken@poweradvisoryllc.com
Sources
1 Coalition for Community Solar Access, “New Mexico’s First-Ever Community Solar Project Will Offset Energy Usage of 2,000 Homes”, 2025, Sep 30. https://communitysolaraccess.org/news/new-mexicos-first-ever-community-solar-project-will-offset-energy-usage-of-2000-homes
2 Community Solar Act, S.B. 84 (N.M. 2021)
3 Community Solar, 17.9.573 NMAC (New Mexico Public Regulation Commission, effective July 12, 2022).
4 NM PRC, Docket No. 21-00112-UT, In The Matter Of The Commission’s Adoption Of Rules Pursuant To The Community Solar Act
5 Supreme Court of New Mexico, Southwestern Public Service Company, Appellant, El Paso Electric Company, Public Service Company of New Mexico, Intervenors-Appellants, v. New Mexico Public Regulation Commission, Appellee. And; No. S-1-SC-39432, Consolidated With Nos. S-1-SC-39558, S-1-SC-39611, S-1-SC-39678.
6 NM PRC, Docket No. 23-00071-UT, In The Matter Of The Tariffs, Agreements And Forms Proposed By The Qualifying Utilities For The Community Solar Program
7 NM PRC, PHASE II FINAL ORDER, Docket No. 23-00071-UT, https://edocket.prc.nm.gov/AspSoft/HandlerDocument.ashx?document_id=1236526
8 Id. at 6
9 Id. at 5
10 Id. at 3
11 “2023 Bid Selection Information”, NM PRC, New Mexico Community Solar Program, https://csnewmexico.com/resources/2023-bid-selection-information/
12 “Project Selection and Waitlists”, NM PRC, New Mexico Community Solar Program, https://csnewmexico.com/subscriber-organizations/project-selection-and-waitlists/
13 NM PRC, Docket No. 25-00070-UT, In The Matter Of The Petition Of The Coalition For Community Solar Access, New Mexico Energy, Minerals, And Natural Resources Department, Prosperity Works, Coalition Of Sustainable Communities New Mexico, Grid Alternatives, And Vote Solar For Variance From Rule 17.9.573.11 NMAC
14 NM PRC, PRC Report to the Legislature on the Status of the Community Solar Program November 1, 2024, https://www.prc.nm.gov/wp-content/uploads/2024/11/Legislative-Report-on-Community-Solar-Program-Status-11012024-1.pdf
15 NM PRC, Docket No. 24-00258-UT, In The Matter Of Potential Amendments To Rule 17.9.573, Community Solar