Interstate Transfer of a DSM Resource: New Mexico DSM as an Alternative to Power from Mohave Generating Station

Synapse analyzed a novel DSM-procurement alternative to replace power flowing to Southern California Edison from the coal-fired Mohave Generating Station in southern Nevada. At the direction of the CPUC, a team of researchers analyzed a set of supply alternatives to replace Mohave’s output; Synapse examined the technical, commercial and institutional/regulatory aspects of an alternative comprised of DSM procurement in New Mexico coupled with a power purchase of “freed up” supply imported into California. The analysis focused on the commercial terms likely to allow such a transaction, the regulatory constraints associated with interstate DSM transfers, and the overall feasibility of the approach. The analysis found that net benefits result from DSM procurement result even with interstate transfers of the resource “output”, but the allocation of these benefits among stakeholders – California and New Mexico ratepayers and utility company shareholders – can be complex and has a direct impact on the ultimate feasibility of the procurement. Also, the analysis found that allowing peak period DSM savings to effectively stay in New Mexico while flowing “baseload” power to California from New Mexico’s share of “freed up” supply resources at Palo Verde simplifies the pricing arrangements.