Public Service Co. of New Mexico must provide more information about its investments in the Four Corners Generating Station and its plan for the Navajo Nation to buy its share of the coal plant before state regulators will evaluate its request to abandon the facility in 2024.
Public Regulation Commission hearing examiner Anthony Medeiros ordered PNM on Friday to re-file its abandonment application by March 15 before hearings proceed. PNM filed in January for PRC approval to relinquish its 13% stake in the plant in December 2024 – nearly seven years ahead of schedule – to comply with the state’s Energy Transition Act.
That law requires PNM and other public utilities to transition their grids to 50% renewables by 2030, 80% by 2040, and 100% carbon-free generation by 2045.
But PNM’s January filing never asked the PRC to approve PNM’s plan to sell its share in Four Corners to the Navajo Nation, which would continue operating the plant with other utilities through 2031.
Now, PNM must include that request in its new application, and explain how its deal with the Navajo Nation would benefit the public. It must also provide additional information on the “prudence” of its past investments in the plant – plus about $73 million more it plans to invest through 2024 – before the PRC rules on PNM’s eligibility to recover about $300 million from ratepayers.
Those issues have been controversial from the start.
PNM believes the energy law guarantees full recovery of its investments through bonds paid off by ratepayers through a monthly charge on their bills.
But about half of the $300 million PNM seeks to recover come from pollution controls installed to keep Four Corners running through 2031. The PRC allowed PNM in 2015 to include those expenses in its base rates under condition that the prudence of the investments would be examined in PNM’s next rate case.
But PNM now says the new energy law, which took effect in 2019, makes that prudence review moot by guaranteeing cost recovery.
New Energy Economy Executive Director Mariel Nanasi said no significant financial analysis was done to justify PNM’s past investments, and now it plans to shed a “toxic liability” onto the Navajos and have ratepayers pick up the tab.
Western Resource Advocates Attorney Steve Michel said PNM must address those issues.
“The commission can and should look at that,” Michel said.
PNM will provide additional information as ordered, but it stands by its past investments and its right to recover those costs under the energy law, said PNM spokesman Ray Sandoval.
In any case, ratepayers could actually save up to $300 million over time by using the low-cost bonds authorized by the energy law to recover investments, and by replacing Four Corners generation with cheaper renewable resources, Sandoval said.