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PRC splits consideration of PNM San Juan closure plan

The San Juan Generating Station (Farmington Daily Times)

ALBUQUERQUE, N.M. — The Public Regulation Commission on Wednesday voted to split Public Service Company of New Mexico’s plan to close its San Juan coal plant into two parts: one for the closure and financing of the shutdown and the other to consider the replacement power and its costs.

All the elements of PNM’s filing – including financing the closure, providing benefits and training to displaced workers, and paying for some San Juan replacement power – hinge on the state’s new Energy Transition Act.

That law, which took effect on July 1, authorizes the utility to recover its lost investments in the coal plant by selling bonds that PNM customers would pay off through a surcharge on their bills. Bond proceeds would help pay for worker assistance and economic development programs to buffer the impact of San Juan’s shutdown on the local community. It would also provide initial funding for some of the renewable energy expected to replace coal.

The PRC, however, voted to incorporate PNM’s new filing to close San Juan into an ongoing case the commission had previously opened to oversee San Juan’s shutdown. That raised questions about whether the commission will apply the state’s new Energy Transition Act and bond financing to PRC decision-making on the coal plant, because the existing case docket was opened before the new law took effect.

Environmentalists say tens of millions of dollars in severance pay and job re-training for power plant and mine workers could be compromised if the energy law is ignored.

Utility spokesman Ray Sandoval, however, said PNM is confident the new law applies to its filing.

“We were surprised by the PRC’s decision to consolidate our July 1 comprehensive abandonment, replacement and finance filing with the limited docket the PRC opened back in January,” Sandoval said in an email to the Journal. “However, we do not believe this changes anything and are confident that the provisions of the Energy Transition Act…applies to our comprehensive July 1 filing.”

The PRC also voted to extend the timelines for considering PNM’s coal abandonment and replacement power proposals. It could take about nine months before a final ruling is issued related to the closure and financing, and several months more to settle on which mix of solar, natural gas or battery storage will be tapped for generation going forward.

“Since the issues are critical to New Mexico’s future, and since the replacement resources will be long lasting, perhaps 20 or 30 years, and the costs are going to be significant, I think it’s imperative for the commission to have as complete and comprehensive an understanding as possible,” said Commissioner Valerie Espinoza.

PNM plans to shutter the plant in 2022 as part of its plans to drop coal-fired generation. It plans to make its grid emissions free by 2040, five years ahead of the deadline for 100 percent carbon-free generation set by the Energy Transition Act.