Aztec weighs multi‑million‑dollar options to reduce outages as transmission rules change

John Wheeler, the city’s electric director, told the City of Aztec commission at a March 24 workshop that the city faces a choice among several costly strategies to reduce the recent string of total‑community outages.

“We have funds in the electric repair and replacement fund of about 5,300,000,” Wheeler said, noting that using those reserves carries a lost‑opportunity cost for city investments. He outlined four broad options: continue current contracts with Guzman Electric; build a new transmission line from Bloomfield (which he estimated at roughly $10,000,000 in capital and about $793,000 a year in 5% debt service); install local generation and island from the regional grid; or build 2 MW of solar with 4 MWh of batteries (Wheeler gave a rough cost of $11.6 million for that option).

Wheeler said Guzman’s contract has kept Aztec’s historical supply costs low compared with earlier PNM pricing and that Guzman’s price is fixed through December of the contract year, with gradual increases projected through the contract term. He also warned that the Southwest Power Pool (SPP) will assume new transmission responsibilities and impose a resource‑adequacy (capacity) allocation, a structural change that affects how Aztec’s share of transmission and capacity costs will be calculated.

“We’re looking at transmission and resource adequacy requirements that will add costs unless we secure our own reserves,” Wheeler said, adding the city could avoid some capacity charges by building local reserve generation but would take on capital, operating and fuel costs and the need for certified operators and facilities that meet environmental requirements.

Commissioners and participants pressed staff on tradeoffs. One commissioner warned that repeated outages disproportionately affect older residents and other vulnerable customers, and asked how each option would change bill structures or base fees. Wheeler said detailed cost‑of‑service studies would be needed after the commission chooses a direction to determine how decisions would change rate design.

On timing, staff said some transition documents related to SPP and Farmington must be signed and that the SPP changes go into effect April 1; Wheeler described the numbers as “fluid” and said staff and city attorneys had been reviewing agreements.

Wheeler noted operational urgency: Aztec has logged multiple full‑system outages, including one lasting eight hours. He said replacing aging substation switches and other capital work would require planned outages and that continuing short‑term patching would leave Aztec vulnerable to recurring, longer outages.

Wheeler also described the islanding scenario as operationally feasible but costly: to meet Aztec’s summer peak he estimated the city would need multiple generators (three to five units) installed, plus building enclosures, emissions and permitting compliance and year‑round operator availability. He flagged fuel‑price risk and supply logistics as major uncertainties.

The commission did not take a formal vote during the workshop; staff recommended that commissioners decide a strategy so the city can begin financing and grant‑seeking work, undertake cost‑of‑service modeling, and, if pursued, accelerate grant applications or competitive procurement. Wheeler and other staff cautioned that grant availability and federal/state incentives have changed recently, reducing some solar incentives and affecting the economics of large renewable projects.

Next steps described to the commission included legal review of the transmission documents on the regular agenda and follow‑up financial analysis to quantify rate impacts and project timelines.

(Attribution note: all direct quotes and technical estimates are attributed to on‑record speakers at the March 24 Aztec workshop; quotations and attributions in this article refer to speakers listed in the meeting transcript.)