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San Juan plant hearings begin

Copyright © 2019 Albuquerque Journal

Peshway Ben of Shiprock writes what he wants to say during a PRC meeting on Monday. The PRC is holding hearings on PNM’s proposal to shut down the San Juan Generating Station. (Eddie Moore/Albuquerque Journal)

State regulators started two weeks of public hearings Monday with an open mic for people to comment on the future of the coal-fired San Juan Generating Station.

About 100 people lined up to voice opinions for and against Public Service Company of New Mexico’s plans to shut the power plant in 2022 and replace it with a mix of renewable resources and natural gas.

At stake in the current hearings is a pending Public Regulation Commission decision on whether to allow PNM to abandon the facility, and whether ratepayers should pick up the full tab for plant closure. A separate round of hearings is scheduled for January to decide what generation resources would replace San Juan if it is shut down.

Those issues have become extremely contentious since July, when PNM asked for commission approval to close the facility under terms and conditions of the state’s new Energy Transition Act, which requires local utilities to replace fossil fuels with alternative, carbon-free generation over the next 25 years.

PNM proposes to recover all its lost, or “stranded,” investments in the plant and pay for decommissioning costs with $360 million in bonds that would be paid off by utility customers, something explicitly authorized by the ETA. The bonds would also provide about $40 million for local economic development programs and assistance for workers laid off at the plant and nearby San Juan Coal Mine.

But some commissioners may want to better balance costs between PNM and ratepayers by requiring the utility to absorb some of the shutdown expenses. The PRC opened the door for that by incorporating the plant closure and financing issues into an old case docket that predates the ETA, raising legal questions about whether the new law applies. The commission also asked hearing examiners to review the issue, allowing intervenors to provide testimony for and against bond financing over the next two weeks.

That’s created a head-on conflict with the state Legislature and the Governor’s Office, which say the PRC is overstepping its authority. PNM and its supporters, which include most mainstream environmental groups, challenged the PRC’s position in a petition to the Supreme Court in August, although the court declined to hear that case.

Now, the Governor’s Office, Legislature leaders, and the Navajo Nation have united behind a new petition to the Supreme Court, filed late Monday, to force the PRC to apply the ETA in the San Juan case. The petition calls the PRC actions “a significant and persistent encroachment on the authority of the Legislature and the governor” that threatens to cause “irreparable harm” to New Mexico.

At Monday’s open public comment session, commission Chairwoman Theresa Becenti Aguilar said the issues will be carefully reviewed in the hearings.

“We will not be rushed, nor take hasty decisions,” Becenti Aguilar said before opening the meeting for speakers to voice their opinions. “We will give every opportunity to every individual to have their voice heard today.”

Monday’s public comments won’t actually be included as evidence in the case, which will be based on testimony from intervening parties over the next two weeks, said co-hearing examiner Anthony Medeiros.

“The evidentiary hearings begin tomorrow (Tuesday),” Medeiros told the crowd Monday morning. “The hearings will run through Dec. 19, with 33 witnesses scheduled to testify.”

Still, speakers made passionate appeals to commissioners for and against ETA applicability in the case.

Cristy Holden, an environmental activist from Taos, called it a “bail out” for PNM that “enriches shareholders” at ratepayers’ expense.

Santa Fe resident Mick Nickel called the ETA a “deceptive” law that forces consumers to pay for PNM’s poor past decision to continue investing in the coal plant.

“Don’t give up the authority you have,” Nickel told the PRC. “Retire the generating station, but make them (PNM) pay for it.”

Those positions reflect the stance taken by one environmental organization in the case, New Energy Economy, which says the ETA is unconstitutional because it deprives the PRC of its regulatory oversight of PNM.

“The ETA reduces the PRC to an administrative clerk by imposing conditions on how it can regulate the utility,” NEE Executive Director Mariel Nanasi told the Journal. “It takes away the PRC’s discretion to protect the public.”

Other environmental activists, however, were just as passionate in supporting the ETA.

“The constitution gives the Legislature the authority to direct how the PRC conducts its affairs,” said Jim Mackenzie of Albuquerque. “It’s essential that the ETA apply in this case. It’s a ground-breaking piece of legislation.”

Apart from NEE, all other environmental organizations in the case support the ETA and bond financing as a way to help PNM transition out of coal and into renewables, while also providing $40 million in assistance for laid-off workers and local communities in San Juan County.

PNM and its supporters say average residential customers would actually save about $80 in the first year after shutting San Juan, even with the additional bond surcharge on their bills. That’s because all San Juan costs would immediately be eliminated from bills after the shutdown and replaced with much cheaper renewable fuels.

“There’s a false impression that somehow customers will be hurt by the ETA,” Sierra Club Rio Grande Chapter Director Camilla Feibelman told the Journal. “But closing the coal plant will make costs much cheaper for ratepayers, and the (bonds) will generate $40 million to help workers and the local community in the transition.”

Despite disagreements over financing, all the environmentalists support closing San Juan, including NEE.

But many from the Four Corners Area support a plan by the city of Farmington and a private partner, Enchant Energy Corp., to convert San Juan to carbon capture and sequestration technology, turning it into a clean-burning coal plant that could keep producing electricity while saving jobs and maintaining local taxes from plant operations.

Coal miners told commissioners that carbon capture could bring security to hundreds of workers and their families.

“We need to give Farmington and Enchant Energy a fair shot,” said third-generation coal miner Joseph Lee.

However, virtually all intervenors in the San Juan case say carbon capture is an uneconomic, risky option that neither PNM nor Farmington should pursue.

Given the controversy over the ETA, Commissioner Cynthia Hall said any final decision by the PRC on the ETA will likely be appealed at the Supreme Court.

“I look forward to reaching a decision,” Hall told the Journal. “But I expect whatever we decide will be appealed.”

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