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San Juan shutdown dispute heads to state Supreme Court

JOURNAL FILE PHOTO
The San Juan Generating Station is at the center of an ongoing dispute between the Public Regulation Commission and PNM, as well as lawmakers and environmental groups.

Copyright © 2019 Albuquerque Journal

The dispute over whether state regulators must apply New Mexico’s new energy law in deliberations to shut the coal-fired San Juan Generating Station is headed to the state Supreme Court.

Public Service Company of New Mexico and five environmental groups filed a joint emergency petition late Thursday afternoon asking the court to force the PRC to abide by the state’s Energy Transition Act.

The petitioners said the PRC has used “procedural tactics” to deliberately evade applying the ETA to the San Juan case, constituting an “affront” to the power of the Legislature to set energy policy and raising “fundamental constitutional questions” that require immediate, emergency intervention by the court.

“By failing to clearly apply the laws enacted by the Legislature and signed into law by the governor, the (commissioners) are violating the separation of powers among the branches of government,” the petition says. “… The (commissioners’) ongoing procedural maneuvers, and repeated delays and refusals to definitively apply the ETA confirm that the PRC is attempting to undermine the Legislature’s role in setting energy policy for the state.”

Groups joining petition

Apart from PNM, Thursday’s Supreme Court petition includes some mainstream environmental organizations, such as Western Resource Advocates, the Coalition for Clean Affordable Energy and the Sierra Club. The International Brotherhood of Electrical Workers Local 611 also joined.

The petitioners say it’s the second time parties in the dispute have had to seek Supreme Court intervention to stop commissioners from undermining legislative authority.

In February, PNM asked the court for an emergency stay on a PRC decision in January to immediately open a docket on the San Juan shutdown and force the utility to file an application to abandon the coal plant before it was ready to do so.

At the time, PNM said commissioners were deliberately trying to disrupt the legislative process by beginning regulatory deliberations on San Juan before the new energy law could be approved and take effect. By starting the regulatory process then, the PRC could later ignore the ETA when reviewing San Juan because the new law could not be applied retroactively to an existing case.

The court granted PNM’s request for a stay in March. The Legislature and governor subsequently approved the law, which took effect June 14.

The Supreme Court then lifted its stay and dismissed the case on June 26, paving the way for PNM to officially file on July 1 for PRC approval to abandon San Juan under the new legislation.

Docket maneuver

But on July 10, the PRC decided to incorporate PNM’s application into the existing docket that regulators themselves opened in January, raising questions about whether commissioners intend to abide by the ETA or instead review the San Juan case under old laws.

Since then, the commission has refused to clarify whether it will apply the ETA, despite motions by intervenors in the case for explicit PRC clarification of its intentions.

In Thursday’s filing, the petitioners asked the Supreme Court to either issue a writ of mandamus to enforce PRC compliance with the law or provide official court clarification that when it dismissed PNM’s previous request for an emergency stay in June, it did so because the issue was resolved by virtue of the ETA’s becoming law. They asked that the clarification include a definitive statement that the ETA applies to any application submitted to the PRC under the new law since June.

The court did not provide an explanation for its actions in June, but the petitioners say the court’s docket in the case included a notation that the matter was “moot.”

The bond issue

At issue is whether the PRC will allow PNM to use low-cost bonds to finance the San Juan shutdown, which is explicitly authorized by the ETA.

The bonds, which would be paid off by utility customers, would generate about $360 million, allowing PNM to recover about $290 million in lost investments it made in San Juan, pay for decommissioning costs and provide $40 million for severance pay and assistance for laid-off workers and local economic development programs.

Without the ETA, however, commissioners could instead force PNM to absorb a lot of those costs, something some commissioners have said they would like to consider free from constraints under the new law. They have left it to hearing examiners in the case to review the issue of ETA applicability, allowing all parties to weigh in for and against bond financing.

Some parties, such as the Santa Fe environmental group New Energy Economy, oppose the bonds, arguing that PNM shareholders should shoulder their fair share of costs for the San Juan shutdown, not just ratepayers.

In fact, New Energy Economy filed its own petition with the Supreme Court on Monday to challenge ETA authorization of bond financing as unconstitutional, because it takes away PRC authority to effectively balance the interests of PNM and ratepayers.

Legislative issue

Petitioners say the issues at stake go beyond the immediate impacts of undermining the ETA and upholding due process for those who support its applicability at the PRC.

“If this action by the (commissioners) is validated, then any state agency, in anticipation of pending legislation with which it may disagree, can open a docket by its own motion, populate the scope of that docket with whatever issues it wants to prevent the Legislature from acting upon, and thereby divest the Legislature of its law and policy-making authority,” the petition says.

PNM said the ETA provides a path forward for New Mexico’s transition to carbon-free generation.

“It is unfortunate that the PRC won’t tell stakeholders that the law will be applied,” PNM spokeswoman Kelly-Renae Huber told the Journal in an email. “We are hopeful that the Supreme Court will act quickly and give straightforward direction on this issue so that we can move forward as a community.”

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