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Senate committee passes bill to eliminate carbon-based energy

The San Juan Generating Station and San Juan Mine.

Copyright © 2019 Albuquerque Journal

A bill to make New Mexico’s electricity generation 100 percent carbon-free by 2045 is headed to the Senate floor following a “do-pass” vote Monday in the eight-member Corporations and Transportation Committee.

The committee voted 5-2 along party lines to support the bill, with two Republican senators opposing. Sen. Pat Woods, R-Broadview, recused himself from the vote.

The committee’s approval followed a half day of public comment on Saturday, and nearly three hours of passionate, and at times contentious, debate Monday afternoon.

In fact, two of the senators who supported the legislation said they did so “reluctantly” because of lingering concerns about the bill, a massive piece of legislation that would fundamentally transform the way New Mexico generates and consumes electricity.

Some criticized the legislation for “log rolling,” whereby lawmakers pack a huge array of measures into a single bill, forcing legislators to vote on things they don’t like to approve the things they do want.

“This is a very difficult bill with a lot of stuff in it,” said committee Chair Sen. Clemente Sanchez, D-Grants. “… I hope I don’t regret my vote later.”

Senate Bill 489, known as the Energy Transition Act, would require the state’s public utilities to derive 50 percent of their electricity from renewable resources like solar and wind by 2030 and 80 percent by 2040. After that, the state’s remaining electricity would come only from non-carbon-emitting sources, such as battery storage systems or natural gas generation equipped with carbon sequestration technology.

The bill also includes a new financial mechanism known as “securitization” to help Public Service Co. of New Mexico cover the costs for shutting down the coal-fired San Juan Generating Station near Farmington by 2022 and pulling out of the nearby Four Corners Power Plant by 2031. Under securitization, PNM would be authorized to sell AAA-rated bonds to recover its lost, or “stranded,” investments in the coal plants, which consumers would repay through a surcharge on their bills.

The bill is supported by a broad coalition of main stream environmental organizations, and by PNM, the state’s largest utility. It’s priority legislation for Gov. Michelle Lujan Grisham, who campaigned on promises for a clean energy economy, and for many of the legislators in the Democratic majority that controls both the House and Senate.

Senate Corporations is the second one to pass the bill following the Conservation Committee, which approved it on Feb. 23. It now goes to the full Senate.

PNM spokesman Raymond Sandoval praised bill supporters following Monday’s vote.

“New Mexico’s cleaner energy future is one step closer to being realized,” Sandoval said in an email to the Journal. “… It is clear that our customers, communities, and state want reliable, affordable, and environmentally friendly energy and this energy policy will give them that.”

Still, the bill drew sharp criticism from San Juan County and city of Farmington officials, who want to keep San Juan running after 2022, when PNM and other plant co-owners abandon the facility. Farmington is now negotiating with a New York investor, Acme Equities LLC, to take over San Juan and install carbon capture and sequestration technology.

To help facilitate that deal, Sen. William Sharer, R-Farmington, proposed an amendment in the Corporations Committee to delay new emissions standards contained in SB 489 until 2030 to allow Acme time to first upgrade San Juan with new carbon controls. But the committee rejected Sharer’s amendment in a 5-3 vote.

The committee did approve a separate amendment that will allow the Albuquerque Bernalillo County Water Utility Authority and the University of New Mexico to continue receiving credit from PNM for renewable generation that those institutions own and operate, offsetting fuel charges on their PNM bills for every megawatt hour of renewable electricity they produce. The amendment allows the Water Utility to also get credit for generation from a combined methane and natural gas plant that provides power to its Southwest Wastewater Reclamation Plant.

Some environmentalists are opposed to SB 489, most notably Santa Fe-based New Energy Economy, which supports the bill’s clean energy goals but rejects securitization as a “bail out” for PNM that sidesteps Public Regulation Commission authority. Without securitization, the PRC could force the utility to write off some of its lost investments in San Juan rather than recover all costs through ratepayers.

Those arguments influenced some committee members who voted in favor of SB 489, such as Sen. Bill Tallman, D-Albuquerque.

“I don’t believe PNM should fully recover its costs,” Tallman said after the vote. “And I’m not happy the PRC got compromised and circumvented.”

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