A $350 million transmission project aimed at funneling renewable energy from eastern and central New Mexico to other Western markets could be in jeopardy due to a decision by federal regulators.

The Federal Energy Regulatory Commission has denied a request by New Mexico's Renewable Energy Transmission Authority and others that sought a one-time change in the way requests for transmission access are processed so the Power Network Project could be expedited.

The commission said it had concerns about the waiver opening up the potential for discrimination when it comes to customers accessing the proposed transmission line.

Other critics, including developers who are in line for transmission access, questioned whether the project is commercially viable and ready to move forward.

Jeremy Turner, executive director of the Renewable Energy Transmission Authority, said Wednesday that supporters are very disappointed with FERC's decision.

"That, in my opinion, is the true tragedy here, that because of this decision we're now faced with the possibility of being in the same situation we've been in for the last several years, which is we have all of this potential but we have no way to get it out of the state," Turner said.

New Mexico is not alone. The capacity of the nation's transmission lines — which span some 200,000 miles — is nearly tapped out and pressures continue to mount as state mandates call for new power plants that are fueled by renewable energy.

Public Service Company of New Mexico, the state's largest electric utility, added five new solar arrays in 2011 and plans to expand those plants this year, but development of large utility-scale solar and wind projects has been hampered due to the lack of transmission, Turner said.

Supporters of the Power Network Project argue that it would resolve a backlog of requests in PNM's transmission queue.

The utility owns and maintains more than 17,000 miles of power lines in New Mexico. It currently has requests from six customers seeking rights to deliver as much as 8,400 megawatts of electricity through its transmission system.

The new line would be capable of delivering 1,500 megawatts of electricity. That's about three-quarters of peak demand from PNM's 500,000 customers.

PNM, RETA and developers of the Power Network Project argued in their request to FERC that the backlog presents a "major impediment" to development of renewable energy in New Mexico.

The project has had the support of Republican Gov. Susana Martinez's administration as well as a bipartisan contingent of New Mexico's congressional delegation. However, the chairman of the state Public Regulation Commission and other transmission and energy developers voiced concerned when the request was first made to bump the Power Network Project to the front of the waiting list.

In its order, FERC rejected the claim that the project would result in new transmission infrastructure that would allow ready renewable projects to move forward.

Pointing to other transmission projects pending in New Mexico, the commission said customers — some of whom have been awaiting access to transmission service for years — would face financial uncertainty if they were pushed further down the list to make room for the Power Network Project.

PNM is required to accommodate transmission service requests on a first-come, first-serve basis. The request called for that requirement to be waved.

The utility plans on proposing reforms for the process, but that could take years before any changes are implemented, said Jeff Mechenbier, director of transmission planning for PNM.

Building more transmission lines also requires time, Mechenbier said.

Despite FERC's decision, Turner said RETA isn't giving up on the project.

"The economics, the routing, the environmental issues, all the things that were positive for the project to begin with, all of those fundamental things still remain," he said.


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