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State regulators declined on Wednesday to say whether they will apply New Mexico’s Energy Transition Act in proceedings to shut down the coal-fired San Juan Generating Station.
The environmental group Western Resource Advocates asked the commission in July to “clarify” whether the law would apply in the San Juan case, and, if not, to “reconsider” that position.
But PRC Chairwoman Theresa Becenti-Aguilar single-handedly rejected WRA’s request, and on Wednesday, the full commission voted 5-0 to uphold the chairwoman’s decision.
That means hearing examiners rather than commissioners will review the law’s applicability as case proceedings move forward in the coming months.
The commissioners did offer an option to expedite hearings on the issue. To do that, PNM must agree by this Friday to “stop the clock” on most proceedings in the San Juan case to allow examiners to immediately review the law’s applicability before hearings move on to other issues.
‘Need due process’
Wednesday’s order rejecting WRA’s request for clarification says the legal issue must be addressed in a fair process that allows both supporters and opponents of applying the law to be heard, said PRC General Counsel Michael Smith, who read the order aloud before commissioners approved it.
“Some believe the commission must make an off-the-cuff ruling today,” Smith said. “But we need due process to give all parties an opportunity to be heard.”
It is unclear whether PNM or WRA could even support expedited hearings on the issue, because modifying, or “stopping the clock,” on timelines in the case is legally problematic.
Under the energy law, once a filing for a coal plant abandonment and replacement resources is submitted to the PRC, the commission must make final decisions on it within nine months, or by April 30 in this case.
Altering that timeline could put contracts for new solar and wind plants to replace San Juan in jeopardy, because, in some cases, contractors must begin work on the facilities this year to receive federal tax credits for those projects. In addition, PNM needs to issue and sell bonds to finance the San Juan shutdown in a timely manner.
The bonds, authorized by the new energy law, would raise about $360 million to pay for plant closure and decommissioning costs, plus $40 million in assistance for laid-off workers and local economic development programs.
The timelines also represent statutory mandates in the energy law that PNM might not have the legal authority to alter, WRA attorney Steve Michel said. In fact, hearing examiners in the case offered in July to expedite review of the energy law’s applicability if PNM agreed to change the timelines, but the utility rejected it then.
“It’s a mistaken belief that PNM could give its authorization for the commission to violate statutory deadlines even if it wanted to,” Michel said. “… It’s not PNM’s prerogative.”
Rather than expedited hearings, PNM and WRA may now seek state Supreme Court intervention.
“We’re looking closely at that,” Michel said. “It certainly seems like the path we have to consider. If we make a decision to go to the court, it will be soon.”
PNM representatives were not immediately available for comment.
Questions about the law’s applicability have been debated since January, when the PRC first opened a case docket to review San Juan’s closure and replacement power. At the time, PNM, WRA and some other environmental groups said the commission opened the docket to prevent the new law’s applicability, because newly passed legislation cannot be retroactively applied to an existing case.
In March, the Supreme Court granted PNM an emergency stay on the PRC’s review, allowing time for the Legislature and the governor to approve the new law, which took effect June 14. PNM then filed its case for San Juan closure and new energy resources on July 1.
But on July 10, the PRC decided to place the issue of San Juan closure into the previous, existing document, throwing into question whether it intends to apply the new law in the case, because that docket precedes the Energy Transition Act.
The big issue in the case is the law’s authorization for bond money to close the plant, which customers would pay for through a surcharge on their bills. The bonds would allow PNM to recover all of its lost investments in San Juan.
Without the law, the PRC could force PNM to write off some of those lost investments, which some commissioners have said they would like to consider to better balance the interests of ratepayers and the utility.