PNM gets OK to abandon San Juan - Albuquerque Journal

PNM gets OK to abandon San Juan

The San Juan Generating Station operating west of Farmington Monday November 25, 2019. (Eddie Moore/ Albuquerque Journal)

Copyright © 2020 Albuquerque Journal

The state Public Regulation Commission during an online meeting Wednesday unanimously approved Public Service Company of New Mexico’s request to abandon the coal-fired San Juan Generating Station near Farmington in 2022, and to recover its lost investments in the plant with low-cost bonds paid for by ratepayers.

The meeting, however, was initially derailed by a group of people listening in who interrupted proceedings by playing rap music laden with racial epithets and posting derogatory messages.

The commission was virtually hosting the meeting, which began at 9:30 a.m., through conferencing platform Zoom, in response to state mandates to conduct business online to slow the coronavirus pandemic through social distancing.

In a process called “zoom-bombing,” the disrupters cut PRC Chairwoman Theresa Becenti Aguilar off midsentence as she spoke about the need to protect the rights of PNM customers in commission decisions.

One person yelled that “minorities have no rights,” which was followed by a cacophony of insults and noise that forced the PRC to pull the plug on the meeting.

It’s unclear whether it was a random attack by anonymous instigators, or a coordinated protest action. But the commission managed to restart the hearing at midday after taking precautions to block any further online interference.

Lengthy battle over

The commission’s decision on San Juan ends a lengthy, contentious process that began in July when PNM requested authorization to depart from the coal plant under terms and conditions contained in the state’s Energy Transition Act, which requires New Mexico’s public utilities to derive 50% of their electricity from renewable resources by 2030 and achieve 100% carbon-free generation by 2045. The new law, which took effect in June, authorizes PNM to use bonds to cover the costs for departing from San Juan and charge customers a monthly fee to repay them over 25 years, something some commissioners were reluctant to approve.

But a Supreme Court order in late January upholding the new law’s applicability in PRC proceedings resolved the issue, encouraging hearing examiners to recommend that commissioners approve both the plant abandonment and PNM’s bond financing, known as securitization, which the commission supported 5-0.

“We are pleased with the decision by the commission and the hearing examiners’ recommended decisions to approve the abandonment and securitization of San Juan,” PNM Resources Chairman, President and CEO Pat Vincent-Collawn said in a statement. “Our customers, communities, and environment will benefit as we move to exit all of our coal-fired generation and replace it with lower-cost, clean energy resources.”

Replacing coal

The PRC must still decide on new resources to replace lost San Juan electricity, which the commission is examining separately from the issues of abandonment and bond financing. PNM has proposed a mix of solar facilities with backup battery storage, wind energy and new natural gas generation as replacements, something hearing examiners reviewed with other parties in the case in January.

The examiners, Anthony Medeiros and Ashley Schannauer, released a partial recommendation on replacement power last Friday, advising commissioners to immediately approve two solar facilities with battery storage to provide nearly 500 megawatts of new renewable resources costing $430 million. The facilities, one of which will produce power at $18.65 per megawatt hour and the other at $19.73, reflect some of the lowest-cost contracts for solar energy to date in the nation.

But the contracts will expire on April 30, making a PRC decision on approval this month urgent, according to the examiners. They recommend making a decision on other proposed replacement resources at a later date.

Customer funding

PNM is now authorized to raise $361 million in securitization bonds to recover its lost investments in San Juan, pay for plant decommissioning and reclamation costs, and provide $40 million in assistance for laid-off workers and for economic development initiatives in the area. PNM customers will repay the bonds through a new surcharge on their bills, which amounts to an extra $1.90 per month for consumers who use below 900 kilowatt hours of electricity, and $4.97 per month for those who consume above 900 kWh.

Those additional monthly charges, however, will be more than offset by the savings from abandoning San Juan and replacing it with cheaper alternative energy, according to PNM.

For an average residential customer who uses 600 kWh per month, their current monthly bill of about $73.25 will actually drop by $6.87, despite the new rate rider, PNM says. For those consuming an average of 1,000 kWh per month and paying about $129.03, their monthly bills would drop by about $9.65, since they consume more electricity from San Juan and will save more when it’s replaced with cheaper energy resources.

San Juan’s future

PNM and three other utilities who co-own San Juan will abandon the plant in 2022, at which time the city of Farmington, which owns a 5% stake in the plant, will become the sole owner. Farmington wants to turn it into a carbon capture plant to continue generating electricity, allowing it to retain the current workforce at the plant and the nearby San Juan Coal Mine while still generating local taxes from those operations, which are critical for San Juan County. The city has signed an agreement with private company Enchant Energy Corp. to pursue that project.

PRC legal counsel Michael Smith told commissioners Wednesday that approving PNM’s abandonment of San Juan will not affect Farmington and Enchant Energy’s plans.

“This order doesn’t address closure of the plant, nor the ability of Farmington to continue its efforts to operate it as a merchant plant,” Smith said.

Environmental groups that support San Juan’s replacement with renewable energy praised the commission’s actions.

“The PRC’s decision to exit the San Juan coal plant is welcome news for New Mexicans’ health and hopes for a safe climate,” said Chuck Noble, attorney for the Coalition for Clean Affordable Energy. “With this move we are closing our state’s biggest single source of carbon-dioxide emissions while setting the stage for a just transition to the cheap, clean, renewable energy that is so abundant in New Mexico.”

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