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The Energy Transition Act needs fixing

We supported the Energy Transition Act (ETA) because it would transition PNM’s reliance on polluting coal plants to renewables. This was a crucial step in moving to clean energy. We are thrilled that the ETA has begun the important work of transitioning our state from fossil fuels to renewable energy and we are pleased and committed to continue to support that process. Now, we are seeking surgical amendments to protect ratepayers. Why?

1) to remove the guarantee that PNM gets 100% costs from ratepayers whenever it closes a plant or its portion of a plant;

2) to reinstate New Mexico Public Regulation Commission (PRC) oversight for utility plant closures; and

3) to reinstate conforming legal deadlines consistent with New Mexico court rules.

The ETA’s principal accomplishments were the closure of PNM’s coal-fired San Juan Generating Station, and updating the Renewable Energy Act and the Air Quality Control Act to make needed progress on our climate crisis. How this affected ratepayers was a legitimate subject of debate. However, we and the governor believed that this was a way to expedite the closing of the coal(-fired plant). …

We were unaware that the ETA, in language tucked into the 82-page bill, effectively removed PRC authority to oversee the amount of compensation PNM would receive from its customers when it closes its old plants, and that this deregulation provision may apply not only to its coal plants but to its gas and nuclear plants as well.

The costs imposed on ratepayers for all plants will be substantial, but the costs associated with the Palo Verde Nuclear Generating Station could be astronomical. Nuclear energy has become very expensive when compared with the cost of renewable energy, therefore Palo Verde’s closure may be imminent.

Whatever PNM decides to claim as the “value” it will lose when Palo Verde closes, and, more ominously, all of its decommissioning/clean-up costs, the ETA may shift them to the ratepayers, and if so this amount cannot be modified whatsoever. This puts PNM in charge of setting its own rates, without PRC ability to adjust those charges even if they are not fair, just or reasonable.

The PRC’s history of supervising plant closures is one of striking a balance between a utility’s desires and the interests of ratepayers. With the ETA, PNM escaped this balancing process and may get another one-sided deal when Palo Verde closes. This could easily result in an unfair, multi-billion dollar impact on ratepayers.

PNM apparently is interpreting the ETA to be expansively interpreted. PNM stated in a recent PRC hearing that the ETA’s language applies to nuclear and gas as it does to coal. That was news to us.

Under Article IV, Sec. 16 of our Constitution, the title of the ETA should have provided notice of the inclusion of nuclear and gas facilities. … The ETA’s title was almost two pages long, and referred to coal-fired facilities six times, but neither its title nor its text made any mention of nuclear or gas. Yet at Section 31C, the bill categorically forbids the PRC from “disallowing” PNM from recovering what it claims as any costs in PNM’s rate base prior to 2015.

A dozen consumer, environmental justice, faith and health organizations support an amendment to the ETA to return authority to the PRC to determine how much money would be fair for PNM to receive from ratepayers when it closes plants.

The ETA should provide both environmental protection and consumer protection; it succeeds in the former and fails on the latter. The ETA is the only securitization law in the country that forbids regulatory oversight. The PRC has the history and expertise to examine the value of utility investments and whether outstanding costs should be absorbed by the shareholders or paid by the ratepayers or shared. Removing PRC supervision to protect the public in all plant closings was not in the title of the bill, and we did not understand this when we voted for the ETA.

We believe that the authority should be returned to the PRC, and that is what our bill does. The economic tool of securitization is maintained, the renewable portfolio standards are maintained, and consumer protections are upheld. Please support corporate accountability and ratepayer relief and contact your representatives to ask them to support needed amendments to the ETA.




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