Governors' Wind Energy Coalition

A power line (green) in central New Mexico would link wind turbines on land owned by drought-stricken ranchers to Albuquerque and eventually to booming power markets in the West. Click the map for a larger version. Map courtesy of the New Mexico Renewable Energy Transmission Authority.

PASTURA, N.M. — Twelve dusty miles separate lucky rancher from unlucky in this state’s parched northeast corner.

Lucky is Steve Tapia and his neighbors who collect $450,000 a year by leasing space on their sprawling ranches to an Australian wind developer that’s planted 90 turbines there.

“It does make your life better,” the 78-year-old Tapia said of the royalties. “It’s a lot easier than herding sheep.”

Down the road is unlucky Max Tenorio, who bet heavily on federal regulators approving a high-voltage power line to link his land to booming power markets on the West Coast.

He lost.

In renewable energy, just as in real estate, the game is “location, location, location.” And Tenorio and his neighbors found themselves in the wrong place at the wrong time.

Their efforts to secure a link to the electric grid fizzled this year when the Federal Energy Regulatory Commission in Washington, D.C., ruled that the proposed line they needed couldn’t proceed until other projects were built.

A power line (green) in central New Mexico would link wind turbines on land owned by drought-stricken ranchers to Albuquerque and eventually to booming power markets in the West. Click the map for a larger version. Map courtesy of the New Mexico Renewable Energy Transmission Authority.

The agency was responding in part to big wind companies pushing to use the existing grid to ship power out of state.

Now Tenorio’s livelihood and dreams are withering. “If we don’t have any water from above, and we don’t have any water on the ground, we’re done,” he said.

Tenorio, 62, was forced to sell a swath of ranchland outside Santa Rosa that he had been saving for retirement and reduced his herd of Angus cattle by 40 percent during the past two years. His fields are also parched and brown and watering holes almost dry.

Such misery is not uncommon across New Mexico and West Texas as desperate landowners’ efforts to tap booming clean energy markets stumble on financial, political and regulatory hurdles.

“A lot of ranchers are being forced to sell off their herds early,” said Paul Stout, chairman of the Coalition of Renewable Energy Landowners Association. “A wind or solar project combined with gas would provide steady, consistent income to help these operations weather out these hard times and provide dollars that they could bring back to a lender to help service debt.”

Transmission developers are keenly aware of their projects’ ripple effects in local economies. But they are also facing daunting market and policy shifts.

“It’s a challenge,” said Kathryn Patton, an attorney for the power line developer Clean Line Energy Partners LLC. “I think eventually these projects will be built, but the market has to be just right.”

‘It’s in your blood’

Ranchers know their calling is a gamble and nature holds all the cards.

The game of late hasn’t been treating Tenorio well

Rancher Steve Tapia at home in Pastura, N.M. Tapia and his neighbors lease a portion of their land to a wind developer and collect the royalties, which buffer financial losses from the drought. Photo by Hannah Northey.

Tenorio was a full-time middle and high school teacher 15 years ago, when he bought a 4,000-acre ranch. The move let Tenorio follow in the footsteps of his father, who raised cattle in Anton Chico, N.M., about 100 miles east of Albuquerque. Back then, you could buy an acre for about $200.

“It’s in your blood, and when you have an opportunity, you get back into it,” he said, “because you love the life.”

Tenorio and his wife, Yolanda, supplemented income from the ranch with teaching jobs and had 105 head of cattle. Between teaching and ranching, the Tenorios paid off their mortgage and put four kids — three girls and one boy — through college.

Then came the drought.

Fuel and feed prices shot up. Tenorio was forced to sell a big chunk of his ranch, land that also serves as his retirement plan.

“When times are bad, it’s throwing money in a hole,” he said. “You still have to feed your cows, you have to do everything a big rancher does but it’s just not enough return.”

What used to be fields of knee-high blue grama grass are now yellow, shriveled ankle-high plants that fail to feed his cattle. Cows mill around dry earthen tanks that used to be filled with water.

Guadalupe County, one of the poorest counties in New Mexico, has been the site of federal drought emergency declarations for years now.

Although the land could support up to 125 cows, Tenorio said he is down to 65. He guesses that three-quarters of New Mexico’s cattle have been sent to market because there is no longer enough grass and water for the animals

Rancher Max Tenorio points to plants on his neighbor’s ranch in Pastura, N.M., that have been damaged by the drought. Turbines in the background provide a revenue stream that is helping landowners survive. Photo by Hannah Northey.

But he insists he’s not giving up.

Tenorio said he is not going to sell his remaining cattle now in hopes the animals will fetch a higher price after the drought. And he doesn’t have the luxury at 62 years of age to breed a herd of Angus cattle again, which could take more than two decades.

Tenorio, who is also chairman of the Guadalupe County Livestock Producers Organization, is also banding together with neighboring landowners like Don Thompson, 77, to try to recharge the water table. Thompson has worked his ranch for almost 50 years and has no other source of income.

Together, the ranchers are enlisting their neighbors to dig up juniper bushes and place felled trees in dry stream beds or “arroyos” to slow erosion during downpours. In some spots, tufts of blue grama grass have grown back along the dirt ditches that crosscut their land.

“I will hold on as long as I can,” Tenorio said.

What went wrong?

Tenorio thought he had found a lifeline for his ailing ranch when the state began pursuing a power line that promised to attract wind developers.

He began to learn the jargon of transmission policy. He familiarized himself with wind developers, quickly learning which proposals are solid and which are more likely “speculators” trying to lease his land for later sale.

But Tenorio quickly learned that the power business can be as fickle as the weather.

Tenorio had pinned his hopes on a proposed 345-kilovolt power line that would stretch 200 miles from Guadalupe County to a switching station near Albuquerque.

The $400 million line would eventually move 1,200 megawatts to the Four Corners — which comprises the southwestern corner of Colorado, northwestern corner of New Mexico, northeastern corner of Arizona and southeastern corner of Utah — and into Arizona, Nevada and California.

Tenorio and his neighbors thought it promising that the project was being championed by the New Mexico Renewable Energy Transmission Authority (RETA). The state created the board in 2007 to bolster in-state renewable power generation. RETA entered into a partnership with Goldman Sachs Global Infrastructure Partners II, a $3.1 billion fund, to build the line.

Then came political reality. The Federal Energy Regulatory Commission, FERC, denied the state’s request to fast-track the power line.

RETA was one of many projects trying to move power from Guadalupe County to the Four Corners, an area seen by many as the “Holy Grail” for peddling clean power to the West Coast. Federal regulators said the project had to wait its turn at the bottom of a long list of applicants seeking approval for transmission lines.

The decision disappointed the ranchers, who had assumed they had it made. They had, after all, secured the backing of Rep. Steve Pearce (R-N.M.), chairman of the Congressional Western Caucus, and Gov. Susana Martinez (R)

Rancher Max Tenorio examines a tuft of blue grama grass needed to feed his cattle outside Santa Rosa, N.M. The plants are usually knee-high in October, but dry conditions have left them stunted and dry. Photo by Hannah Northey.

Now, they are worried their project will spend a decade at the back of the line as entities with deeper pockets can buy and sell their place in line and tie up the process without intending to build transmission projects, they say.

Others blame the utility, PNM Resources Inc., which oversees the process.

The power trading arm of the agribusiness giant Cargill Inc. sits near the top of the transmission project queue and has been waiting for years to secure capacity on the transmission system to ship clean power to the West Coast, said Robert Walker, a power trader with Cargill. But the utility has moved slowly because of ongoing debates stemming from ownership issues and queue positions, he said.

“It’s taking PNM forever to process their queue,” Walker said. “We’re not sitting in the queue blocking anyone. We’ve been sitting, waiting for years.”

Tenorio and his neighbors are still struggling to understand what went wrong.

They blame Patrick Lyons, the Republican chairman of the New Mexico Public Regulatory Commission — whose district includes Guadalupe County — for not backing their project. Lyons wrote FERC directly to warn that RETA would give Goldman Sachs a “virtual monopoly” over power exports from New Mexico.

The Wall Street giant is an easy target, Tenorio said, given distrust of big banks in the wake of the 2008 financial meltdown. But what’s the alternative, he asked, given the amount of cash needed for such massive projects?

Thompson said, “When they denied our request, they denied an increased tax base — not just for Max and me, for the entire county.”

‘New frontier’

There are no easy answers for ranchers searching for a financial boost from clean power projects.

It’s unclear what other power lines will benefit Tenorio and his neighbors. It would be extremely expensive — up to $1 million per mile — for developers on Tenorio’s land to connect to the Tres Amigas LLC interconnect being built near Clovis, N.M.

And there’s still no route for the proposed Centennial West Clean Line that could link Guadalupe County to the West Coast.

“Our project will have a converter station where wind farms will tie in. If you’re next to our convertor station, then your cost to connect is low,” said Michael Skelly, Clean Line’s president. “If you’re 20 miles away, it’s higher but manageable. If you’re 100 miles away, that’s an issue.”

The most pressing issue for the region is the potential phaseout of RETA, which has supported power line construction in New Mexico and could draw up to $6 billion and thousands of jobs into the state. Jeremy Turner, RETA’s executive director, said the board is asking the Legislature for $393,200 in the coming year.

“If we don’t get that, then RETA will be closing its doors,” Turner said. “If RETA goes away, if we don’t get our funding, that will take away another entity that’s trying to help the landowners.”

It’s also unclear just how many wind turbines will be built in the years to come. The biggest question mark is whether Congress will extend the federal production tax credit for wind energy, which the industry says has helped spur record growth. If Congress fails to act, the credit expires Dec. 31.

What’s a rancher supposed to do

Tenorio admits he’s not sure, acknowledging ranchers’ relationships with environmental groups are far from friendly and focus mainly on controversial protections for endangered species

Robert Martin, a Nature Conservancy ecologist who owns a ranch near Tenorio, said the region is sparsely populated and most conservation groups are located in bigger cities like Santa Fe and Albuquerque.

“It’s kind of new frontier out there in a lot of ways,” he said.