Public Service Company of New Mexico officially announced its intention Monday to exit the coal-fired Four Corners Generating Station in 2024 after transferring its stake in the plant to the Navajo Transitional Energy Co.
The utility said last week it was negotiating with NTEC to acquire its 13% share in Four Corners, potentially cutting seven years off PNM’s planned departure in 2031, when the plant’s current coal contract with the NTEC-owned Navajo Mine concludes.
Now, under a newly signed agreement with NTEC that PNM executives discussed in an online conference call Monday morning, the Navajo firm will waive PNM’s coal-purchasing obligations in exchange for a $75 million payment from PNM Resources, the utility’s parent firm.
Shareholders will pay the bill, not customers, said PNM Senior Vice President for Public Policy Ron Darnell.
“PNM and NTEC have reached a mutually-beneficial solution that will allow PNM to be coal-free by 2024,” Darnell told conference participants. “… Under the agreement, shareholders will take full responsibility to relieve customers of the coal contract obligation.”
PNM shareholders will also pay for an estimated $22 million in Navajo Mine reclamation obligations. And that, combined with savings from replacing expensive Four Corners electricity with cheaper renewable resources, could collectively shave up to $100 million from customers’ bills over the next 25 years, Darnell said.
Still, PNM will charge customers at least $250 million to recover previous investments in the Four Corners plant. That’s allowed under the state’s Energy Transition Act, which authorizes PNM to recoup such expenses through bonds that customers repay through a monthly charge on their bills, although the utility must forego any profit on its investments.
The bonds will also raise about $16 million for local economic development programs and assistance for plant and coal-mine workers impacted by Four Corners closure in 2031.
If approved by the state Public Regulation Commission, the deal means PNM will completely withdraw from coal by 2024, since the PRC already approved its exit from the nearby San Juan Generating Station in 2022.
Some environmentalists, however, criticize the deal, since PNM is only transferring its ownership stake to NTEC, increasing the Navajo Nation’s reliance on coal.
In addition, Santa Fe-based New Energy Economy filed a complaint with the PRC last Friday that claims PNM’s past decisions to remain in Four Corners was “imprudent,” resulting in “unfair, unreasonable and unjust” costs for customers. The group has appealed to the state Supreme Court to roll back the Energy Transition Act’s bond authorization as an unconstitutional intrusion on PRC authority to deny utility recovery for imprudent investments.