kit carson electric cooperative,...

KCEC Solar Plan March 2017

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Kit Carson Electric Cooperative, Inc.

Kit Carson Electric Cooperative (KCEC) was formed in 1944. KCEC serves customers in Taos,

Colfax and Rio Arriba Counties in North Central New Mexico. KCEC is a diversified

cooperative offering electric, propane and telecommunication services to its members. KCEC

currently serves approximately 29,000 electric members, 3,200 propane customers and

4,928 telecommunications customers. KCEC’s membership consists primarily of

residential and commercial customers.

KCEC operates an electric system of approximately 2,800 miles of overhead and

underground transmission and distribution lines. KCEC also operates a

telecommunications network consisting of approximately 2,500 miles of fiber-optic cable.

The telecommunications network is being connected to homes and businesses for basic

communications using the Internet. It will also assist in modernizing the regional electric

grid. Integrating telecommunications and electric networks will enable future electric

services like demand management and improve electrical reliability and efficiency.


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Table of Contents

Executive Summary .................................................................................................................. 5 Introduction ............................................................................................................................... 8 Solar Plan Goals and Objectives .............................................................................................. 8 Solar Development Benefits ................................................................................................... 12 Strategy .................................................................................................................................. 16 Risks and Opportunities .......................................................................................................... 16

Risks ................................................................................................................................... 16 Opportunities ...................................................................................................................... 19

Interconnection Standards ...................................................................................................... 22 Strategic Partners ................................................................................................................... 22 KCEC Solar Assets ................................................................................................................. 24

Existing Locations and Solar Generation (2016) ................................................................ 24 Proposed Solar Project Priorities and Locations ................................................................. 26

Power Supply Impacts ............................................................................................................ 33 Base Assumptions .............................................................................................................. 33 Solar Production Effect on Transmission Costs .................................................................. 33 Solar Production Effect on Composite KCEC Rates ........................................................... 33 Overall Electric Rate Impact ............................................................................................... 34

Transmission Impacts ............................................................................................................. 34 Planning and Operational Requirements ............................................................................ 34 Transmission Fixed-Cost Impacts ....................................................................................... 35 Transmission Energy Losses Impacts ................................................................................ 35 Intermittent Solar Production-Following Requirements ....................................................... 36

Solar Power Export Options .................................................................................................... 36 Timelines................................................................................................................................. 37 Conclusions ............................................................................................................................ 37 – Appendix A – ........................................................................................................................ 39 - Appendix B - ......................................................................................................................... 43 1. Small Residential and Commercial Solar Arrays ................................................................. 43


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Executive Summary – A Plan to Provide 100% Solar Energy on Sunny Days Kit Carson Electric Cooperative, Inc. (KCEC) and Guzman Renewable Energy Partners

(GREP) have entered into an agreement to develop 35 megawatts of solar arrays over

the next 6 years. Each array will be approximately 1-MW and will be connected to the

KCEC distribution grid. GREP is KCEC’s wholesale energy provider and will own the

arrays, and KCEC will execute Purchase Power Agreements for the energy they produce.

By the end of the project every KCEC member will be powered by 100% solar energy on

sunny days.

This document presents the six-year plan for solar power development beginning in 2017.

The schedule for developing the arrays will take advantage of declining prices and the

Federal Investment Tax Credit (ITC) which will expire in 2023. During the final years of

the project battery storage will be added to new arrays to store energy generated in excess

of KCEC’s load during the day.

Local generation of energy connected to Kit Carson’s distribution grid is a central feature

of this plan. It will produce benefits ranging from new construction and maintenance jobs,

local property tax revenues, long-term stability in energy prices, and savings on

transmission and distribution equipment. By the project’s completion locally produced

clean solar energy will be available to every Kit Carson member during day-light hours.

KCEC Solar Project – Table I Year 2017 2018 2019 2020 2021 2022

1-Megawatt Projects

7 4 4 4 8 8

KCEC Total Solar PV – Table II Year 2017 2018 2019 2020 2021 2022

Total Solar Installed

11 MW (5 Existing

plus 6 new MWs)

14 MW 17 MW 20 MW 27 MW 35 MW


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Solar photovoltaic (PV) facilities are easy to build and bring new power online quickly.

They are also easy to maintain and can be readily expanded with more solar panels and

battery storage. As the cost of batteries declines and battery systems are added to solar

arrays, power can be readily dispatched during evenings and on cloudy days.

The project is designed to be flexible enough to take advantage of new technology and

regulatory developments. Continued improvements in energy efficiency may be offset by

new demand from population growth, in-migration of businesses, growth in Electric

Vehicles (EVs), and increased market share in home heating and cooking. That would

allow more arrays to fill the additional load.

By partnering with Guzman Renewable Energy Partners (GREP), the Solar Project will

not consist of debt for KCEC. GREP and its partners will finance and manage the projects.

KCEC will commit to Purchase Power Agreements that guarantee solar energy at a price

competitive with the fossil fuel prices. The term of the PPAs will be 20 years thereby

guaranteeing stable, low cost clean energy to power our community for decades.

Local economic development is another benefit of the Solar Project. The availability of

renewable energy is a selling-point for recruiting light industry and environmentally

conscious businesses. Also, if available in sufficient quantities, excess power generation

from solar arrays can be sold to customers elsewhere on the regional grid.

Solar power provides many environmental benefits. It is largely free of greenhouse gases

and other polluting emissions. Its land-use footprint is small by comparison with other

power sources. Solar power requires very little water, an important plus in our arid region.

Solar power development places KCEC in a leadership position in local, regional and

national partnerships. KCEC and its strategic partners influence regional trends in

renewable energy development, policy, legal issues, and environmental care.


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In developing this plan KCEC reviewed several development options. (See Appendix A

for a discussion.) These include small residential and commercial arrays, community solar

arrays, and utility-scale arrays in three increasing size ranges. We determined that arrays

of about 1.0 MW represent the best solution for our situation. Such arrays avoid costly

system upgrades and technical issues. Very importantly, they avoid conflicts with entities

having oversight of regional electric issues such as load balancing. These arrays are less

expensive to install and operate than an equivalent collection of smaller arrays. They can

adapt to battery energy storage which will augment KCEC’s power supply as storage costs

decline. Also, they can be located near points of use in the large area serviced by KCEC.

KCEC assessed a host of risks and opportunities for solar power development. Technical

risks such as system reliability and stability will be assessed using a system impact study.

Financial risks such as changes to tax incentives can be avoided by completing planned

arrays before 2022. Opportunities include decreasing reliance on fossil fuels thereby

contributing to a healthier environment, establishing stable and predictable electric rates,

and marketing our region to businesses seeking clean energy supplies.

KCEC has experience with solar arrays of this size. Our first solar development was in

2005. The plan describes KCEC’s current assets. It lists assumptions including the effects

of solar production on transmission costs, and the impact on electric rates. The plan

assesses impacts on regional electric transmission delivery, costs, line losses, and solar

power intermittency issues. KCEC acknowledges that the future may include local

construction of much larger arrays designed to generate energy for customers elsewhere

on the Western Grid. Nonetheless, the KCEC Solar Plan is the cornerstone for supplying

clean, locally produced solar energy to our members.

Kit Carson Electric Cooperative urges members to review and comment on the plan. The

plan offers a major transformation to local control of renewable energy generation and

distribution. It offers access to clean energy for every member, with predictable and stable

electric rates far into the future.


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Please take the time to study the Kit Carson Electric Solar Deployment Plan 2017. We welcome your comments at:

Kit Carson Electric Cooperative, Inc.

Attn: Luis A. Reyes, CEO

Mailing Address: P.O. Box 578 • Taos, NM 87571

Physical Address:

118 Cruz Alta Road • Taos, NM 87571

Telephone: 575 758-2258

1-800 688-6780


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Introduction

This KCEC Solar Plan outlines the actions required to meet the goal of providing 100% solar

energy for the peak summer daytime electric demands of Kit Carson Electric Cooperative

(KCEC) members by 2022. The plan identifies several alternative strategies and deployment

options to meet this goal and recommends a clear course of action.

The Solar Plan calls for construction of 35 one megawatt solar arrays throughout the KCEC

service area. Each array will occupy around six acres and will be tied directly to the KCEC

distribution grid. This level of construction needs widespread community support, and

community participation in siting.

KCEC solicits member input to the plan throughout its development. Community input will

ensure transparency and produce results that meet community needs. A series of public

meetings and other outreach efforts are being organized with local governments, businesses,

environmental organizations and citizens to provide input for the project.

KCEC and its strategic partners recognize longer-term needs for renewable energy for heating,

cooling, and transportation. To this end, this plan lays a foundation to go beyond installing

multiple small solar arrays. The plan focuses on the near-term, but it offers flexibility in selecting

avenues to the future.


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Solar Plan Goals and Objectives

1) Installation of thirty-five 1 MW solar arrays by 2022 sited around the Kit Carson Service Area providing 100% of peak demand during the day year-round. KCEC plans to

work with partners to develop several solar arrays each year beginning in 2017. Each array will

produce about 1 megawatts (MW) of power during sunny days. During the longer days of

summer, the arrays will produce more electric than they will during the shorter days of winter.

For our region, the solar generation output is an average of 6.5 hours per day. Since we average

more than 300 low humidity days of sunshine yearly, the output from our arrays will be

outstanding both in quality and quantity.

Kit Carson currently operates on a year-round average electrical load of about 36 megawatts

(MW). Lowest demand of less than 30 MW occurs during summer. Peak demand during the

summer is around 35 MWs. Highest demand of more than 60 MW occurs during winter evening

hours in late December – early January (Figure I, p. 11).

KCEC currently owns or controls about 5 MW of solar facilities. This means KCEC would need

to contract for building an additional 35 MW to meet its solar deployment goals. This number

translates into constructing an average of about 6 MW per year for the next six years. The

actual schedule of development will vary depending on a variety of circumstances.

2) Construction with no KCEC debt accomplished with Purchase Power Agreements (PPAs) from development partners. KCEC has entered into an agreement with GREP to

develop the 35 arrays. GREP will own the arrays and KCEC will execute Power Purchase

Agreements (PPAs) for the energy they produce. The term of the PPAs will be in the range of

20 to 25 years. This ensures that the cost of solar electric delivered will not change during that

time. KCEC and GREP are currently working on projects scheduled for 2017.

3) PPAs at or below wholesale price from coal and gas generation (4 to 5 cents /kWh) providing stable energy prices for 20 to 25 years. Current PPA proposals for solar arrays

are in the mid-4 to 5 cents per kWh range. The price trends for solar are on a steep downward


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trend, so meeting the goal of acquiring solar power at or below fossil fuel prices seems assured.

Accounting for stand-by power and storage means that blended prices based on solar

deployment in the 35 MWh range will meet this goal.

4) Minimum upgrades to the KCEC distribution grid, and 5) Improved system reliability. The array size of 1 MW meets four strategic requirements.

• First, these arrays have a land-use footprint suitable for serving neighborhoods and

communities of approximately 300 homes.

• Second, arrays sited throughout KCEC’s service area will better distribute solar energy

which improves system reliability. The widespread array distribution will also ensure that

all KCEC customers – regardless of income or other factors – have access to solar

energy.

• Third, installing these arrays in appropriate locations requires little in the way of costly

electric distribution system upgrades.

• Fourth, installing arrays larger than 1 MW would require oversight and approvals by

Public Service Company of New Mexico (PNM) and Tri-State Generation and

Transmission Association, Inc. (Tri-State) because these entities own and govern the

larger electric transmission grid to which KCEC is connected.

6) Flexible development schedule to take advantage of opportunities as they present themselves. The plan prioritizes installing many small solar arrays throughout the KCEC

service area. However, there may be other opportunities for increasing the amounts of

renewable energy provided to KCEC customers. The plan therefore discusses options including

residential and small commercial solar arrays, community solar arrays, utility-scale solar arrays,

and energy storage.

7) Set-asides at sites for future battery storage installations. Battery grid storage is also

on steeply declining price curve. It has the best potential for storing large amounts of energy

and addressing intermittency related issues. Each solar array site will include an area set aside

for storage facilities. Current storage facilities are housed in 40-60 foot trailers and provide

about 1 MWh each.


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8) Community input on siting and environmental impact. For the past several years, KCEC

has enlisted advice and support from a network of stakeholders. The network includes Guzman

Renewable Energy Partners (GREP), Rocky Mountain Institute, New Mexico Rural Electric

Cooperative Association, National Rural Electric Cooperative Association, Renewable Taos,

Inc., and twelve county, town, village and tribal governments. The community organizations in

this network with input from local environmental groups will help guide siting and any technology

issues that arise during the project.

9) Low to no water requirements. Solar PV Arrays have virtually zero water requirements

and will displace fossil-fuel generation that requires massive water resources.

Kit Carson System Load and Peak Demand

Figure I – Kit Carson Electric Cooperative Total System Electric Consumption in

Megawatt-Hours (MWh)


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Caption: During 2015, KCEC’s total system electric supplied to our customers ranged from a

low of about 19,000 megawatt-hours (MWh) in September to a high of more than 32,600 MWh

in December. The shape of this curve is typical of KCEC’s electric supplied over many years.

Figure II – Kit Carson Electric Cooperative 2015 Peak Electric Demand in Megawatts (MW)

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

Total System MWh - 2015

Total


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59.754

49.953

47.79

36.191

35.366 35.561

35.094

35.271

33.366

37.937

50.424

60.144

0.0

10.0

20.0

30.0

40.0

50.0

60.0

70.0Kit Carson Demand (MW)


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Caption: During 2015, KCEC’s peak electric demand ranged from a low of 33.4 MW in early

September to a high of 60.1 megawatts in late December. The shape of this curve is typical of

KCEC’s electric demand experience over many years.


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Solar Development Benefits

KCEC’s plan for solar development derives in part from our member’s strong support

for a transition to cleaner energy. The plan will also produce good financial returns for the

Cooperative and members. Fortunately, solar power development has many associated

benefits and opportunities.

1) Clean solar energy will be cheaper than energy generated by fossil fuel combustion before the project is completed. KCEC is building solar arrays since

they are now cost competitive with fossil fuels, even without considering the external

benefits of clean energy. For example, the total installed costs of solar arrays have

fallen by as much as 70 percent since 2009 and prices are continuing to fall rapidly.

The economics of solar create opportunities for growth and profit in many areas of local

society.

2) Local energy generation retains tax revenues and improves system reliability .

The solar arrays in this plan will be built within the KCEC service area and connected

directly to the Kit Carson distribution grid. Property, business and other taxes may be

retained within the community. Distributed energy resources also have technical

benefits including lowering the frequency and impact of outages.

3) Stable energy prices for members for 20 to 25 years. Solar benefits to our

citizens include stable and predictable energy costs. There are no marginal costs

associated with solar energy. Sunlight is free, so solar energy is not subject to market

variations in commodity prices for fuels. PPAs for solar are written for 20 to 25 years

with fixed per kWh prices.

4) Addition of new construction and maintenance jobs. The solar arrays will be

constructed using the local work force as much as possible. There will be maintenance

jobs attached to the arrays. Revenues for new employment have a multiplier effect in

the local economy and will lead to additional economic development.


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5) Leadership in grid battery storage. Kit Carson will also deploy battery storage

along with the solar arrays especially as battery prices continue their rapid decline in

price. Partnership with Sandia National Laboratory and their battery storage initiative

is being explored. Space for battery storage will be set aside at each site. This

technology is the ideal complement to solar energy and will provide clean energy when

the sun is not shining.

6) Clean energy for all Kit Carson members regardless of economic status. As

solar becomes a greater part of KCEC’s energy mix, all Kit Carson members --

regardless of income level – will receive renewable energy. Each advantage of clean

solar energy will benefit every Kit Carson member.

7) Stronger relationships with clean energy partners. A further benefit of KCEC’s

solar development planning is strengthening old and creating new partnerships locally

and regionally. Those include GREP, Rocky Mountain Institute (RMI), and local

environmental groups and solar companies. KCEC and other New Mexico Rural

Electric Cooperatives (RECs), in collaboration with RMI, are engaged in aggregate

purchasing of smaller solar arrays. This arrangement reduces unit costs to about half

of what RECs would pay if they purchased the arrays individually.

8) Renewable energy leadership in rural America. KCEC’s leadership in promoting

and developing solar power has attracted the attention of RECs and other small utilities

throughout the country. Kit Carson has received national recognition, and it is providing

a model that rural cooperatives can follow. There are many complex technical, legal,

and regulatory issues that Kit Carson has addressed in the process. While solutions

Kit Carson arrives at may not be easily duplicated by other rural utilities, most of the

problems Kit Carson has overcome are common ones.

9) Mastery of technical, financial, and business issues involved with battery electric storage and dispatch. Batteries tied to the grid are a promising long-term

solution to the problem of intermittency shared by solar and wind energy. Managing

storage and dispatch of energy from battery storage will resolve several issues

including excess energy from solar arrays and limiting peak charges for periods of high


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demand. Learning how to effectively use batteries tied to the grid will allow Kit Carson

to serve its members efficiently at low cost.

10) A boost to local economic development. More and more businesses are

demanding that all their energy come from solar and wind generators. Kit Carson’s

solar plan and broadband network will make North Central New Mexico a highly

attractive location for energy conscious business. Clean energy and broadband attract

low-impact, light industries such as information technology (IT) companies. Our

infrastructure and our beautiful landscape and climate should be aggressively

advertised by all local governments as inducements to businesses.

11) Quick, flexible response to new demands and opportunities. Solar photovoltaic

(PV) plants are not as complex to build as other types of power plants. They can be built very

quickly and bring new power online within a few months of the start of construction. Depending

upon siting, solar plants can be readily expanded to meet new demand. Completed solar

projects are attractive for investors seeking dependable long-term cash flows.

12) A clean transportation system based on electric vehicles charged by solar energy. As electric vehicles (EVs) become more economical and widely used, they

can be charged using solar energy. The large EV batteries can be charged with excess

energy from our solar arrays during the day and accessed during periods of peak

demand in the evening to provide lighting and home energy. This may turn out to be

the cheapest form of storage if the percentage of EVs grows rapidly. EVs plus solar

plus access to EVs for home energy would be a powerful combination.

13) Numerous health and environmental benefits. Solar energy has many environ-

mental benefits including offsetting demand for fossil fuel and nuclear power. KCEC

currently derives more than 90 percent of its electrical power from coal- and natural-

gas fired power plants in the Four Corners region of New Mexico. Solar photovoltaic

arrays produce no greenhouse gases and other polluting emissions while producing

electric. The land-use footprint of solar power is extremely small when compared with

the land uses required for mining, transporting, storing and burning fossil fuels. Solar


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PV notably requires very little water, with water consumption almost zero gallons per

megawatt-hour (gal/MWh) compared with about 600 to 800 gal/MWh for coal, natural

gas and nuclear power plants.


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Strategy Beginning in 2017, KCEC intends to place new solar arrays throughout its service area

with a focus on close proximity to existing electrical substations. This will offset the

need for substantial and costly system upgrades such as new line connections to the

arrays or hardware to manage voltage issues. KCEC has determined that widely

distributing these new facilities will enhance overall system reliability. Also, this is a first

step to ensuring that all parts of the service area are served in part by solar energy.

KCEC is taking advantage of trends favoring continued growth of solar power in sunny

New Mexico. These include falling costs, improving technology, environmental care,

and policies favoring renewable energy.

KCEC and its strategic partners see solar PV becoming one of the cheapest and most

environmentally friendly sources of electrical power. This plan focuses on bringing

these benefits and opportunities to our community.


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Risks and Opportunities

There are risks and opportunities associated with all elements of this plan. KCEC’s

goals are to negate or mitigate impacts of risks, and optimize or enhance the

opportunities.

Risks

1) Changes to clean energy incentives. The renewable energy investment tax credit

(ITC) reduction in 2023 means that investment in solar facilities will lose some padding.

The ITC rate will remain at 20% or above throughout the KCEC Solar Project. This risk

is substantially mitigated by the steady reduction in solar prices, around 50% reduction

every 2-1/2 years.

Federal Investment Tax Schedule – Table III

Federal Tax Credit* Year 30% Present - 2019

22% 2020

20% 2021 - 2022

10% 2023 - indefinite *https://energy.gov/savings/business-energy-investment-tax-credit-itc

2) Disruption of Distribution and Transmission Grids. There will be potential

impacts on KCEC’s distribution network at and around the points where concentrations

of solar arrays are being installed. PNM and Tri-State might require system upgrades

or protection schemes at some cost to KCEC. We can mitigate this risk through formal

System Impact Study.


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3) Intermittency Related Issues. Fast-moving cloud cover may cause brief

interruptions in energy flow from solar arrays. The Kit Carson design with many 1-MW

arrays spread over a very large service area will mitigate this issue. Also, grid battery

storage will counteract this problem. Lengthy periods of cloud cover, although rare in

our area, require another solution. Effective forecasting is the primary method for

limiting the impact of this problem. Weather forecasting allows GREP, KCEC’S

wholesale provider and partner in the Solar Project, to reserve backup power at

reasonable prices.

GREP will adjust its hourly schedules to deliver power during periods of intermittent

solar power production. GREP has the option to procure power as needed in the short-

term market, or pre-purchase power in the long-term market. GREP and KCEC will

work together to limit stand-by expenses.

GREP likely has established financial hedges to cover the energy requirements of its

power supply contract with KCEC. The breakdown of these hedges could produce

either a cost or a benefit to GREP depending upon market conditions.

4) Increases in Stand-by and Ramping Charges, and 5) Increases in Line-loss and Transport Charges. Solar energy generated locally will not be subject to transmission

line losses for either PNM or Tri-State. However, any solar installations over 1-MW will

be included in the calculation for peak system loads on the transmission system.

Distribution system peak loads coincident with transmission system peak loads are

subject to Network Integration Transmission Service (NITS) charges for PNM. All

installations are required to provide meter data for inclusion in Tri-State’s system

coincident peak calculation. Regardless of Kit Carson’s transmission load,

transmission companies must cover their fixed costs. This means that we may expect

additional charges as our load declines.

To avoid substantial increases in transmission charges, KCEC desires to purchase Tri-

State’s 345-kV transmission line running from the Ojo Caliente Electrical Substation to

the Los Cordovas Electrical Substation (figure XX). When this purchase is complete,

the Tri-State NITS Agreement will be cancelled and replaced by a small capacity Point


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to Point (P2P) transmission agreement. KCEC will then need to ensure that it reserves

and schedules use of the Ojo Caliente to Los Cordovas line within the limits of the P2P

agreement.

Each of the risks described above can be mitigated with effective solar energy

storage. Estimating the costs of these risks will help identify savings associated with

energy storage.

Opportunities

1) Low-cost Solar Locked in for 20 Years. The Solar Plan will solidify more than 1/3

of Kit Carson’s power supply at $45 per Megawatt Hour for 25 years. That is below the

current wholesale price for Coal-fired or Natural Gas generation. There is a realistic

chance that this block of KCEC’s power supply will come in at an even better margin

against power from fossil fuel generation. The economic opportunity is complemented

by solar’s small footprint and extremely light water demands. Moreover, by displacing

fossil fuel generation, solar contributes to community health by not releasing

greenhouse gases that harm the climate and result in respiratory illness.

2) Capitalizing on North Central New Mexico’s Extraordinary Solar Resource .

The high average sunshine and altitude of North Central New Mexico means that the

power output of solar arrays is extremely high. The Solar Plan arrays will produce

approximately 100% of the day-time electrical load in the KCEC service area. As the

Solar Project nears completion excess energy can be stored in batteries and

dispatched in the evening or on cloudy days. The Solar Project lays a solid foundation

for powering our community with clean energy. Toward the end of the project new

phases focused on batteries, Electric Vehicles, and generation of energy for other

areas may be feasible.

3) Attracting Environmentally Conscious Enterprises. The Solar Project will

become a core component of the identity of our broader community. A clean energy


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grid and a world class fiber-optic communication network can help attract

environmentally conscious businesses and non-profits to our beautiful community. To

take full advantage of this opportunity the governments of local communities should

cooperate with KCEC to promote the progressive image of the Solar Project. The

economics of solar energy are also favorable, as solar PV is quickly becoming the

lowest cost of all available power sources. KCEC can market itself as a cooperative

that can service businesses seeking renewable energy supplies, a growing trend

among environmentally conscious businesses.

4) Purchase and Upgrade of the Los Cordovas to Ojo Caliente 345kv Transmission Line. KCEC’s desire to facilitate the purchase of the Ojo Caliente-Los

Cordovas 345-kV transmission line would open a potential for large-scale solar arrays

and sale of the power they generate to areas connected to the Western grid. Upgrading

the transmission line and facilitating the interconnection of solar generation facilities

might open an entirely new opportunity for local economic development.

5) Reducing Transmission Costs from the Black Lake Substation. Adding

significant solar power generation and energy storage in areas served by the Black

Lake Electrical Substation can provide important benefits. A firm solar energy resource

in the Black Lake area would reduce the amounts of energy to as little as 10% of total

energy transmitted from Hernandez to Black Lake. Under a P2P agreement with the

owner, KCEC could thereby reduce its transmission costs by as much as 50 percent

overall.

6) Acquisition of Solar Arrays with Lower lnterest Rates. The federal Investment

Tax Credit (ITC) for solar installations is significantly reduced by 2023 (Table III). This

means all solar development for which KCEC commits under Power Purchase

Agreements (PPAs) prior to 2023 will enjoy the most significant ITC benefit embedded

within the agreements. Additionally, the PPAs can be structured to include a project

purchase option after 2023. To the extent that KCEC’s borrowing rate is lower than the

solar plant developer’s, additional cost savings become available for the life of the

projects.


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Declining costs of solar PV will offset reductions in the ITC. These costs are cut in half

every 2 to 3 years. If this trend continues. the cost of solar arrays in 2020 will be half

today’s costs and the cost in 2022 will be half the 2020 cost.

7) Balancing Declining Costs Against Reductions in the ITC. The staged

reductions in the ITC will pressure developers to reduce other costs on the one hand.

On the other the remarkable decline in Solar PV and Battery Storage costs will allow

reductions in the wholesale price of solar power. GREP and KCEC will work with their

partners to optimize this financial balancing act.


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Interconnection Standards

KCEC will use interconnection standards currently on file with the New Mexico Public

Regulation Commission (NMPRC). KCEC will follow all applicable codes specified by

the Rural Utilities Service (RUS), National Electric Code (NEC), and others that apply

to different types and sizes of interconnections. To meet code requirements, KCEC will

conduct system impact studies, load impact studies, and system improvement studies

based on the size and locations of solar arrays.

Strategic Partners

North Central New Mexico benefits from a network of community stakeholders that has

been in existence for many years. These stakeholders demonstrate alliances and

partnerships with other energy, sustainability and economic development stakeholders

throughout New Mexico and the nation. These stakeholders represent the most

effective strategic partners to drive the growth of solar and other renewable energy in

KCEC’s service territory.

Our strategic partners provide a variety of functions and services relevant to KCEC’s

Solar Deployment Plan:

• Guzman Renewable Energy Partners (GREP) is KCEC’s current wholesale

electric supplier, and will finance and own all of KCEC’s solar plan installations.

GREP will act as partner in the Solar Project.

• The Rocky Mountain Institute (RMI) is an independent, non-partisan nonprofit that

advances market-based solutions, engaging businesses, communities, and institutions

to cost-effectively shift to energy efficiency and renewables.

• The New Mexico Rural Electric Cooperative Association (NMRECA) is a

statewide association responsible for legislative, regulatory, and policy issues

affecting renewable energy development.


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• The National Rural Electric Cooperative Association (NRECA) represents

Rural Electric Cooperatives (RECs) nationwide for legislative, regulatory, and

policy issues affecting renewable energy development.

• Renewable Taos, Inc. is a regional nonprofit targeting 100 percent renewable

energy for KCEC’s service area and New Mexico.

• Local Governments Local governments in the KCEC service area typically operate solar power

generation facilities, mandate energy-efficient government buildings, have solar

installations for schools, and/or have energy-efficiency building codes for

business and residential construction.

• Town of Taos

• Town of Red River

• Village of Questa

• Village of Eagle Nest

• Village of Angel Fire

• Village of Taos Ski Valley

• Taos County

• Rio Arriba County

• Colfax County

• Taos Pueblo and Picuris Pueblos are independent governments that

may allow solar development on their lands.


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KCEC Solar Assets

Existing Locations and Solar Generation (2016) KCEC has been involved in solar facility development since 2005. KCEC currently

owns and operates several facilities in its service area. They include – Amalia I, a 1.5

MW array in Northern Taos County; Questa Chevron, a 1.25 MW array near Questa;

Blue Sky Energy, a 1.5 MW array on the North side of US 64 near the Taos Airport;

KTAO Radio, a 43 kW array on highway 150 near the intersection with US 64 and NM

522; 100 kW array covering the parking lot of the KCEC Headquarters; Town of Taos

Eco Park, a 79 kW array on Salazar Road; and, the UNM Taos Array, a 500 kW array

on the UNM Taos Campus. See Figure I on page 25.


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Figure 3 – Kit Carson Solar Arrays


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Proposed Solar Project Priorities and Locations

The plan calls for construction of 7 arrays during 2017. The projects being

considered for this year include the following.

1. Picuris Pueblo Solar Array – 1 MW

2. Village of Angel Fire Waste Water Treatment Facility

3. Eagle Nest Lake

4. Tres Piedras Solar Array

5. Tarleton Solar Array

6. Town of Taos Solar

Each of the projects is described below:

1) Picuris Pueblo Solar Array. Picuris Pueblo is a Northern New Mexico Indian Pueblo nestled

in a setting of serene beauty in what is known as the “Hidden Valley” of the Sangre de Christo

Mountains in Northern New Mexico. It is located 60 miles north of Santa Fe and 24 miles

southeast of Taos on Highway 76. Picuris is proposing a 1 MW solar array in the Vadito, New

Mexico area approximately 1 mile north of the Kit Carson Electric substation (Penasco

Substation) with a capacity of 7.5 MVA. The interconnection will be connected via a 3 phase

25kV underground feeder that will connect to an existing 3 phase overhead electric lines 25kV.

The underground conductor is being proposed to be 1/0 URD and the existing overhead

conductor is 477 mcm. There will also be fiber connectivity at both at the 1 MW site and

Penasco Substation both for monitoring and control. Picuris Pueblo own the property. This

array will be designed with the capability of storage integration in the future.


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2) Village of Angel Fire Waste Water Treatment Facility. This project involves

the Village of Angel Fire which owns the property. It is a Brownfield to Greenfield

project as the land adjacent to the waste water treatment plant cannot be used

for any other purpose to our knowledge without some remediation work. The

location is approximately 1 mile east of a Kit Carson Electric Substation (Angel

Fire Substation) with a capacity of 20 MVA. The interconnection will occur at the

property located at the waste water treatment plant and will be 1/0 12.5 kV 3

phase underground feeder that will interconnect into a 1/0 12.5 kV 3 phase

overhead electric feeder. The project will be a 1 MW solar array may be converted

community solar and will be have a set-aside for battery storage.


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3) Eagle Nest Lake. This project includes a third party solar developer and a private property

owner in close proximity of the Eagle Nest Lake. The location is approximately ½ mile north of

a Kit Carson Electric Substation (Eagle Nest Substation) with a capacity of 7.5 MVA. The

Interconnection will be a 1/0 15kV 3 phase underground electric feeder which will connect to a

#2 15kV 3 phase overhead electric feeder. The project will be a 1 MW solar array. This array

will be designed with the capability of storage integration in the future.

4) Tres Piedras Solar Array. This project involves a private property owner in Tres Piedras,

New Mexico located 40 miles west of Taos. It is located approximately 1,5 miles south of a Kit

Carson Electric Substation (No Agua Substation) with a capacity of 7.5 MVA. The


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Interconnection will be a 1/0 15kV 3 phase underground electric feeder which will connect to a

#2 15kV 3 phase overhead electric feeder. The project will be a 1 MW solar array. This array

will be designed with the capability of storage integration in the future.

5) Tarleton Solar Array. This is a project involves a private owner. The location is

approximately 2.5 mile south of a Kit Carson Electric Substation (Los Cordovas #1 Substation)

with a capacity of 20 MVA. The interconnection will occur at the private property located at the

solar facility and will be 1/0 24.94 kV 3 phase underground feeder that will interconnect into a

1/0 24.94 kV 3 phase overhead electric feeder. The project will be a 1.2 MW and 1.3 MW solar

array. This array will be designed with the capability of storage integration in the future.


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6) Town of Taos Solar. This project involves the Town of Taos which owns the property. The

location is approximately 1 mile south of a Kit Carson Electric Substation (Los Cordovas #1

Substation) with a capacity of 20 MVA. The interconnection will occur at the property located

at the waste water treatment plant and will be 1/0 24.94 kV 3 phase underground feeder that

will interconnect into a 1/0 24.94 kV 3 phase overhead electric feeder. The project will be a 1

MW solar array. This array will be designed with the capability of storage integration in the

future.


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Power Supply Impacts

Base Assumptions KCEC used its electrical load forecast of October 2016. This forecast provided

slightly lower load than that originally used as the basis for developing Power

Purchase Agreements (PPAs). The analysis assumed solar resources could be

procured at $45/MWh under a 25-year power supply contract. Solar energy was

assumed to be available 25 percent of annual daylight hours. Solar energy output

was computed for 10-MW, 20-MW and 30-MW implementation scenarios.

Solar Production Effect on Transmission Costs Transmission costs are only affected by the amount by which solar production would

reduce transmission losses. Whereas there is a rate benefit to reducing transmission

losses, this benefit is minor, with a savings of less than $0.20 per MWh on an annual

basis.

Solar Production Effect on Composite KCEC Rates Solar production results in a beneficial impact on KCEC’s blended PPA and solar

resource costs. This rate reduction is more pronounced in years when the solar rate is

less than the PPA rate. Based on a ramped implementation schedule or “true-up”

mechanism, rate impacts are negligible in the first few years, but rates are reduced by

up to $4 per MWh in the 6th year of the PPA.

Overall Electric Rate Impact Generally, electric rate reductions resulting from solar production offset rate increases

as a result of the PPA true-up mechanism. This results in negligible impacts on

composite rates.


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Transmission Impacts Planning and Operational Requirements KCEC is obligated by industry reliability standards to coordinate any generation

resource additions with adjacent transmission providers. KCEC’s power supply is

delivered by two sequential electric providers, PNM and Tri-State. Delivery structures

are referred to as Network Integration Transmission Service Agreements (NITSA). The

coordination requirement is applicable to both the planning and operational phases of

any new generation resource, including solar.

During the planning phase, KCEC will be required to invite participation by PNM and

Tri-State in KCEC’s formal system impact studies. PNM and Tri-State will not

participate in system assessments if total KCEC solar production is relatively low

compared to total load. However, as total solar production begins to approach KCEC’s

hourly load, PNM and Tri-State would likely participate in the interconnection studies.

They would want to ensure solar production would not negatively affect PNM and Tri-

State facilities during electrical outages. Such outages could impose flow of solar

power into these facilities. KCEC also has contractual commitments to provide its

system impact study reports to PNM and Tri-State regardless of their participation in

the studies.

During the operational phase of a new solar facility, KCEC is obligated to provide real-

time and/or after-the-fact production data to PNM and Tri-State. Data recording devices

and telecommunications requirements affect the solar facility costs. PNM and Tri-State

will use the data to determine the cost of energy they deliver to KCEC. Both PNM and

Tri-State require real-time solar production data for each solar facility rated at 1 MW or

greater for system reliability and safety monitoring.

Transmission Fixed-Cost Impacts


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KCEC is provided NITSA energy delivery service that is regulated by Federal Energy

Regulatory Commission (FERC) policy. Fundamentally, NITSA service charges are

based on the amount of electric needed for stand-by readiness to be transmitted to

customers. This readiness allows for conditions when solar facilities interconnected to

the KCEC distribution system are unavailable. Consequently, additions of solar

facilities will not affect KCEC’s transmissions cost obligations. PNM and Tri-State will

use solar production data recorded during the billing period to add to the billing unit

recorded by transmission delivery meters, which is consistent with FERC policy.

PNM has a self-imposed restriction to add solar production to the transmission billing

unit when the solar facility is designed as 1 MW or larger. This restriction potentially

reduces KCEC’s transmission costs. Tri-State imposes data reporting requirements on

any solar facility interconnected to the KCEC distribution system. Data from facilities

rated at less than 1 MW can be provided after the billing period.

Transmission Energy Losses Impacts

KCEC is subject to an energy loss charge based on percentage of energy delivered

across PNM and Tri-State systems. Solar production would reduce the energy delivery

requirements, thereby reducing energy loss charges as described under Power Supply

Impacts (page 34.)

Intermittent Solar Production-Following Requirements

The North American Electric Reliability Council (NERC) requires the local Balancing

Authority (BA) to maintain a zero-balance energy exchange between adjoining BAs to

facilitate system reliability. KCEC is a utility in the PNM BA. PNM is authorized to

require KCEC’s power supplier, Guzman Renewable Energy Partners (GREP), to

maintain small hourly deviations in scheduled-to-actual energy delivery to meet

KCEC’s load. As the BA, PNM is allowed to charge for any hourly deviations. The BA

is ultimately responsible for maintaining its energy balance obligations. Balancing

requirements impose additional costs on the BA if a utility within its purview is not in


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hourly compliance. Currently, GREP is responsible for any energy imbalance costs

charged by PNM. Increasing magnitudes of solar production will create higher cost

exposure to GREP due to an increasing difficulty in maintaining scheduled-to-actual

energy balances. As described in the Power Supply Impacts section (p. 34), GREP will

require compensation for this additional risk to energy imbalance charges.

Solar Power Export Options The KCEC Solar Plan contemplates production levels approximating 2015 summer

average daily electric load. Realizing this production level creates a potential for

exceeding KCEC’s service area load. By FERC policy, NITSA arrangements only

provide for delivery of resources to meet load. Therefore, any solar production in

excess of KCEC’s demand would need to be managed through alternative mechanisms.

These include introduction of storage, acquisition of transmission capacity to export

excess power, acquisition of customers for excess power sales, and managed

reduction of solar production.

Timelines

The KCEC Solar Project is scheduled for six years beginning in 2017. A total of around 35 1-

Megawatt Solar Arrays will be installed around the KCEC service area and connected to the

KCEC Distribution Grid. During 2017 seven new arrays will be constructed. Four new arrays

will be constructed each year in 2018, 2019 and 2020. Eight new arrays will be installed in

2021, and 8 new arrays in 2022.

The production schedule is projected in a U-shape with a larger 6-7 array buildout in 2017

followed by 3 arrays per year through 2020. Then production picks up in the final years of the

project, 2021 and 2022, when fifteen will be built.

There are two reasons for designing construction in this manner.


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1) We will arrive at a point where solar production exceeds the projected hourly load

sometime in 2020 and 2021. We plan to begin installing battery storage capacity to

absorb excess production in connection with the new arrays that will allow us to

exceed that limit. There are technical and engineering issues that need preparation,

and the new storage capacity will also pose management and scheduling issues.

2) The price of solar and batteries are on a steep downward curve and we plan to take

advantage of lower prices. In the case of batteries, we expect prices to reach a point

where combining battery storage with solar will be cost-effective when compared with

wholesale fossil-fuel prices.

2017 is an important year for rolling out the first step of this project. Our partners are

engaged in discussions concerning the 6 projects currently under consideration. We’ll update

this section based on decisions as they become available.

Conclusions

KCEC and GREP are embarking on a ground-breaking project that will provide all the energy

consumed by Kit Carson members during day-light hours from locally sited solar arrays.

There will be 35 1-Megawatt solar arrays constructed over the next six years and connected

directly to the KCEC distribution grid. The labor for the construction and maintenance of the

solar arrays will come from local businesses and building and electrical professionals as

much as possible.

The plan outlined here is flexible and will be adjusted to take advantage of new opportunities

and address challenges. Full community support for the effort is one of the most important

factors to guarantee its success. To that end KCEC and GREP are meeting with different

sectors of the community to obtain input and address issues.


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The KCEC Solar Project will contribute to the ensemble of qualities that makes our area an

ideal spot for environmentally minded businesses and residents. Together with the KCEC

fiber-optic network it provides the infrastructure for a sustainable, economically diverse, and

healthy community.

We plan to keep the local community and the broader community of rural America updated on

our progress, our successes, and the problems we encounter during the course of this

project. That will be our contribution to the transition to clean, locally produced energy over

the next couple of decades.


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Appendix A - Solar Deployment Options KCEC considered five different solar deployment options in developing this plan.

While the options are not mutually exclusive, this plan will lay the cornerstone for

KCEC’s solar power supply distributed to its members. Small residential and

commercial arrays already exist in our service area, and we anticipate that more will

be built. Our Charter School Array is the only Community Solar installation in New

Mexico. The New Mexico Public Regulatory Commission (NMPRC) has raised issues

concerning the legality of community solar, and bills are in the legislative process

now.

Small and large utility scale arrays face several constraints which may be overcome

during course of the Solar Project. Arrays on this scale would focus on sales of

power to remote customers and have the advantage of generating sales tax revenue

for the areas where they are sited. Access to reliable transmission must be available,

however. A developer who would obtain financing and a site, design the facility,

manage its construction, engineer its interconnection to the transmission grid, and

obtain Purchase Power Agreements for generation is needed for projects on this

scale. Financing will run in the hundreds of millions of dollars. All these constraints

must be overcome, but our area would make an ideal site for such a facility if the

obstacles can be addressed. Our combination of sunny days and high altitude will

certainly allow generation that would be competitive with almost any other area in the

U.S.

The options that we selected for the Solar Project are the Kit Carson scale solar

arrays of around 1 Megawatt coupled with battery storage for energy that exceeds

the Kit Carson day-time load.


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1. Small Residential and Commercial Solar Arrays As of the beginning of 2017, there are approximately 300 small residential and

commercial arrays installed through the KCEC service area. These arrays are

classified as “behind-the-meter” facilities because they produce power for individual

homes and businesses that is not delivered by KCEC. Excess power production from

these systems flows into the KCEC distribution system. KCEC purchases the excess

or “net” power at prices approved by the New Mexico Public Regulation Commission

(NMPRC). The process of compensating owners of small on-site arrays is known as

“net metering.” The combined output of these arrays is less than 1.5 MW, or about 4

percent of KCEC’s average electric demand.

KCEC does not see widespread deployment of residential and small commercial solar

as a preferred solution to system-wide energy demands. The costs of these systems

remain out of range for purchase by most KCEC customers. The costs and benefits of

“net metering” will change over time depending on the depth of penetration of Solar

and Wind resources within the system. Also, the rate of installation of these systems

is slow compared with that of larger solar systems. Factors such as building orientation

and vegetation limit the applicability of these systems. Although prices are steadily

coming down, roof-top systems are typically not accessible to low-income members.

The most significant constraint on these systems is financial. From the standpoint of

the system as a whole they cost twice as much as the 1 MW size arrays that are the

focus of this proposal.


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2. Community Solar Arrays

Community solar arrays allow more members of KCEC to participate in solar energy

purchases. The concept is to construct solar arrays on properties owned by public

entities such as schools, municipalities and counties. The panels on these arrays are

sold or rented individually; that is, a KCEC member may purchase one or more solar

panels. Members who purchase or lease panels will be credited on their bills based on

the electrical output of the panels, much like the “net metering” customers.

As solar prices decline, a greater percentage of KCEC customers will be able to afford

the purchase of community solar panels. Community solar replicates small residential

and commercial solar systems in that customers can own or rent solar panels without

having them installed on their properties. For example, Community solar might be

preferable for renters or for owners whose properties are otherwise not well suited for

solar arrays.

KCEC currently operates a community solar array at the Taos Charter School with 100%

of the panels sold to members. As with standard small residential and commercial solar

systems, the rate of installation of these systems is slow compared with that of larger

solar systems. Community solar arrays can be larger – in the range of 100 kilowatts to

1 megawatt, for example – but they also have limited potential to contribute a significant

portion of KCEC’s power demands.

While community solar arrays have many benefits the overall cost of installation,

maintenance, operation, and accounting are significantly higher than the proposed

solution.


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3. “Kit Carson” Scale Solar Arrays

KCEC is focusing on solar generators in the range of about 1.0 to 1.5 MW. KCEC sees

arrays of this size as the best current solution for meeting its goal of 100% of peak

daily demand during the summer. Based on existing electrical system design and

operation, arrays of about 1.0 MW integrate most easily into our distribution system.

Such arrays would not require major system upgrades or cause technical issues. Our

primary transmission provider, PNM, would not require additional specialized metering

by KCEC. Further, this array size is very cost competitive and much less expensive to

install than smaller arrays.

4. Small Utility-Scale Solar Arrays

For this plan, KCEC defines small utility scale solar arrays as those with output in the

range of 1.5 MW to 20 MW. These arrays could be built within the KCEC distribution

system, but would require major, costly system upgrades. Again, arrays of these sizes

must adhere to requirements imposed by PNM, especially if connected to KCEC’s 69

kV distribution lines.

5. Large Utility-Scale Solar

For this plan, KCEC defines large utility-scale solar arrays as those with output in the

range of 20 MW to greater than 100 MW. These arrays would not integrate easily into

KCEC’s distribution grid unless connected to either KCEC’s 115-kV transmission lines

or Tri-State’s 345-kV line in the area between Carson and Ojo Caliente. The current

capacity of the Ojo Caliente Electrical Substation is 7.5 MVA, and its power transformer

would need to be upgraded to accommodate larger arrays.


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Currently, there are two large-capacity transmission lines that pass through or

terminate in the KCEC service area. These lines are owned by Tri-State Generation

and Transmission Association, Inc. (Tri-State).

Tri-State owns and operates a 115-kV transmission line that originates in Hernandez,

NM. This line passes through the Los Cordovas Electrical Substation near the south

end of Blueberry Hill Road near Taos. The line then continues through Taos and Taos

Canyon, passing through the Black Lake Electrical Substation just south of Angel Fire,

and terminating in eastern NM near the community of Gladstone.

Tri-State also owns and operates a 345-kV transmission line that originates at PNM’s

Ojo Caliente Electrical Substation near Chili, NM. The Ojo Caliente Substation is a

major connector for large-capacity transmission lines running between the Four

Corners region and the large population centers of Santa Fe and Albuquerque. Tri -

State’s 345-kV line from Ojo Caliente Substation to Taos carries mainly coal- and

natural-gas fired power to serve the KCEC distribution area.

Any solar project with an output above 20 MW located along the Tri-State 115-kV and

345-kV transmission lines would require oversight and approvals by both PNM and

Tri-State. However, large utility-scale solar arrays connected to these lines could

supply KCEC with power for its local customers, and excess power could be

marketed to customers elsewhere in the regional transmission grid or all the power

could be sold to remote customers. Practical sale of excess power from solar

generation requires the availability of large blocks of energy on a reliable schedule.

6. Solar Energy Storage

Energy storage will become an integral element of KCEC’s power supply as battery

storage costs continue to decline. Storing solar energy generated during daytime hours

for use during cloudy periods or at night will augment KCEC’s renewable energy

supplies. With sufficient storage, KCEC may be able to reclassify its solar resources


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from “intermittent” to “firm.” Firm resources should help KCEC’s position in selling

excess power to third parties, and lower the costs of reserving transmission capacity.

Battery energy storage is the most likely opportunity for KCEC in the near future.

However, we are also exploring other storage technologies that might be better fits for

our system requirements.


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Appendix B – Standard Interconnection Agreement

KIT CARSON ELECTRIC COOPERATIVE, INC.

STANDARD INTERCONNECTION AGREEMENT FOR

QUALIFYING FACILITIES 10 kW OR LESS

_____________________________ (Customer) and Kit Carson Electric Cooperative, Inc. (Utility), referred to collectively as parties and individually as party, agree as follows: 1. QUALIFYING FACILITY 10 kW OR LESS:

Customer's electric service account number _______________________________ Type of generating facility (solar, wind, etc. ______________________________ Rated generating capacity ______________________________ Customer and facility address ______________________________ ______________________________ ______________________________ Facility will be ready for operation on or about _________________ (date) Operating option: Customer has elected to operate its Qualifying Facility (QF) in parallel with Utility's system. Customer understands that if this agreement is accepted, connection and operation of customer's QF must meet, at all times, all applicable, safety and performance standards, including those established by the National Electric Code, the Institute of Electrical and Electronics Engineers, Underwriters Laboratories, and all additional safety and performance standards of Utility or adopted by the Commission pursuant to this rule that are necessary to protect public safety and system reliability. Customer shall be subject to the terms and conditions set forth in 17 NMAC 10.571, a copy of which is attached to this agreement, Customer, hereby acknowledges, that

Customer has read 17 NMAC 10.571.

2. CREDIT FOR NET ENERGY: Credit for net energy shall be in accordance with 17 NMAC 10.571.11. 3. INTERRUPTION OR REDUCTION OF DELIVERIES:


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Utility shall not be obligated to accept or pay for and may require Customer to interrupt or reduce deliveries of available energy: When necessary, in order to construct, install, maintain, repair, replace, remove, investigate, or inspect any of its equipment or part of its system; or if it reasonably determines that curtailment, interruption, or reduction is necessary because of emergencies, forced outages, forced majeure, or compliance with prudent electrical practices. Whenever possible, Utility shall give Customer reasonable notice of the possibility that interruption or reduction of deliveries may be required. Notwithstanding any other provision of this agreement, if at any time, Utility reasonably determines that either: The facility may endanger Utility personnel or other persons or property, or The continued operation of Customer's facility may endanger the integrity or safety of Utility's electric system, Utility shall have the right to disconnect and lock out Customer's facility from Utility's electric system. Customer's facility shall remain disconnected until Utility is reasonably satisfied that the conditions referenced, in this section, have been corrected. 4. INTERCONNECTION:

Customer shall deliver the as-available energy to Utility at the Utility's meter. Customer shall pay for designing, installing, operating, and maintaining the electric generating facility in accordance with all applicable laws and regulations. Utility shall furnish and install a standard kilowatt-hour meter. Customer shall provide and install a meter socket and any related interconnection equipment per Utility's requirements. Utility may meter the customer's usage, using two meters for measurement of energy flows, in each direction, at the point of delivery. Additional metering shall be at the expense of the party choosing to install additional meters, unless net metering cannot be accomplished otherwise; provided, however, that Customer's and Utility's responsibility for metering costs will be in accordance with the provisions of 17 NMAC 10.571.10.6. Customer shall provide a clearly understandable sketch or one-line diagram showing the Qualifying Facility, the interconnection equipment, breaker panel(s), disconnect switches, and metering; attached to this agreement. Customer shall not commence parallel operation of the generating facility until written approval of the interconnection facilities has been given by Utility. Such approval shall not be


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unreasonably withheld or delayed. Notwithstanding the foregoing, Utility approval to operate Customer's Qualifying Facility in parallel with Utility's electrical system should not be construed as an endorsement, confirmation, warranty, guarantee or representation concerning the safety, operating characteristics, durability, or reliability of Customer's Qualifying Facility. Utility shall have the right to have its representatives present at the initial testing of Customer’s protective apparatus. 5. MAINTENANCE AND PERMITS: Customer shall: Maintain the generating facility and interconnection facilities in a safe and prudent manner and in conformance with all applicable laws and regulations including, but not limited to, Utility's interconnection requirements as set out in Appendix A to this agreement, and Obtain any governmental authorizations and permits required for the construction and operation of the electric generating facility and interconnection facilities. 6. ACCESS TO PREMISES: Utility may enter Customer's premises: To inspect at all reasonable hours Customer's protective devices and read or test meter, and To disconnect, without notice, the interconnection facilities if Utility reasonably believes a hazardous condition exists and such immediate action is necessary to protect persons, or Utility's facilities or property of others, from damage or interference caused by Customer's facilities or lack of properly operating protective devices. 7. INDEMNITY AND LIABILITY:

Each party shall indemnify the other party, its directors, officers, agents and employees against all loss, damages, expense and liability to third persons for injury to, or death of persons or injury to property caused by the indemnifying party's engineering design, construction, ownership or operations of, or the making of replacements, additions or betterment to, or by failure of, any such party's works or facilities used in connection with this agreement by reason of omission or negligence, whether, active or passive. The indemnifying party shall, on the other party's request, defend any suit asserting a claim covered by this indemnity. The indemnifying party shall pay all costs that may be incurred by the other partying enforcing this indemnity. It is the intent of the parties hereto that, where negligence is determined to have been contributory, principles of comparative negligence will be followed and each party shall bear the proportionate cost of any loss, damage, expense and liability attributable to that party's negligence. Nothing in this agreement shall be construed to create any duty to any standard of care, with reference to or any liability, to any person not to a party to this agreement. Neither, Utility, its officers, agents, or employees shall be liable for any claims, demands, costs, losses, causes of action, or any other liability of any nature or kind, arising out of the engineering, design, construction, ownership, maintenance or operation of, or making of replacements, additions or betterment to customer's facilities, by customer or any other person or entity. Neither, Utility, its officers, agents or employees, shall be liable for damages to the electrical


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generating equipment caused by an electrical disturbance on the Utility system or on the system of another, whether or not the electrical disturbance results from the negligence of Utility. 8. GOVERNING LAW:

This agreement shall be interpreted, governed, and construed under the laws of the state of New Mexico as executed and to be performed wholly within the state of New Mexico. 9. AMENDMENT, MODIFICATIONS OR WAIVER:

Any amendments or modifications to this agreement shall be in writing and agreed to, by both parties. The failure of any party at any time or times to require performance of any provision hereof shall in no manner affect the right at a later time to enforce the same. No waiver by any party of the breach of any term or covenant contained in this agreement, whether by conduct or otherwise, shall be deemed to be construed as a further or continuing waiver of any such breach or a waiver of the breach of any other term or covenant unless such waiver is in writing. 10. NOTICES: All written notices shall be directed as follows: Attention: Kit Carson Electric Cooperative Kit Carson Electric Cooperative 118 Cruz Alta Road P.O. Box 578 Taos, N.M. 87571 Attention: CUSTOMER (Mailing Address)


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Figure 3. – Kit Carson Electric Cooperative Service Area showing electric

transmission and distribution lines and electrical substations.

kit carson electric cooperative,...

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