AG questions PRC policies and decisions - Albuquerque Journal

AG questions PRC policies and decisions

A PNM substation in Downtown Albuquerque. New Mexico Attorney General Hector Balderas put the state Public Regulation Commission on notice Tuesday that his office will examine PRC decisions and policies after Public Service Company of New Mexico warned last week that its customers could face rolling blackouts this summer. (Roberto E. Rosales/Albuquerque Journal)

Copyright © 2022 Albuquerque Journal

New Mexico Attorney General Hector Balderas put the state Public Regulation Commission on notice Tuesday that his office will examine PRC decisions and policies after Public Service Company of New Mexico warned last week that its customers could face rolling blackouts this summer.

PNM said it won’t have enough generating capacity on its system to meet peak demand in July and August, when consumers collectively blast their air conditioners to deal with intense summer heat. That’s because four solar plants being built by contract developers to replace power from the coal-fired San Juan Generating System won’t be ready when PNM abandons the coal plant on June 30.

Supply chain problems caused by the global pandemic have delayed construction at all four solar projects. And those same issues are creating grid reliability challenges as well for other utilities across the state, because many can’t get the equipment and materials they need for maintenance and repairs on their electric systems.

But while the pandemic caused the supply chain problems, PNM says delays by the PRC in originally approving PNM’s new solar power contracts created a construction time crunch that made it difficult from the start to get those facilities up and running in time for the San Juan shutdown, and then impossible to meet the deadline when pandemic-induced supply problems hit in spring 2021.

In addition, the commission rejected a PNM request to construct a new “peaking” natural gas plant – which rapidly ramps up and down as needed to provide backup generation alongside intermittent solar facilities – forcing the utility to instead rely on wholesale power markets to make up for potential electric shortages.

And now, with extreme weather events such as summer heat waves, drought and wildfires stressing grids throughout the western U.S., very little, if any, wholesale power will be available for purchase this summer if PNM faces shortfalls, potentially leading to rolling blackouts.

As the state official charged with protecting consumer interests, Balderas said he’s disturbed by what appears to be adverse decisions and lack of prompt action by the PRC.

“I am highly concerned that recent decisions have produced a disturbing pattern of inaction contrary to the interests of New Mexicans,” Balderas said in a letter sent Tuesday to the PRC and obtained by the Journal. “Most troubling has been the commission’s failure to act in a timely fashion to approve additional electric generation capacity that would serve New Mexico customers, including during recent and upcoming summer peaking periods. Biased and narrow agendas have taken focus away from critical issues of health and safety and have led us to this brink.”

The Attorney General’s Office is now evaluating the proper legal path to investigate the commission’s recent actions, while simultaneously considering emergency measures to deal with the looming summer energy crisis, Balderas added.

“While my office will be working with state and federal legislators and regulators to undertake a broad investigation into the policy failures at the genesis of this inaction, my staff has begun meeting with experts to bring interests together so that as we get close to the summer heat, we have a clear plan to protect our most vulnerable,” Balderas said in his letter.

Escalating controversy

The prospect of blackouts is generating debate about who, and what, is to blame for the current situation.

Commissioners say there’s blame to go around if PNM and others want to assign responsibility. According to Commissioner Stephen Fischmann, PNM had a long list of bids from energy developers to build replacement resources 18 months before it actually asked the PRC to approve new solar facilities and battery storage systems, along with the backup gas plant it wanted to build.

“PNM sat on those bids for 18 months before presenting them to the commission,” Fischmann told the Journal. “That 18-month delay had far more impact on getting replacement resources in place than any decision by the commission to deny building a new gas plant. … Let’s stop the blaming and start fixing the problem.”

Noah Long of the Natural Resources Defense Council – which played a critical role in getting the San Juan plant closed as part of the state’s transition from fossil fuels to renewable energy – said he’s tired of the finger pointing.

“The PRC isn’t blameless – they have made some bad decisions,” Long said. “But the critical issue creating the problems we’re facing is the supply-chain disruptions.”

Still, the current crisis raises fundamental questions about the most prudent path forward in transforming the grid to renewable generation under the state’s Energy Transition Act, which requires PNM and other local utilities to convert their electric systems to 50% renewables by 2030, 80% by 2040, and 100% non-carbon generation by 2045.

Paradigm shift

It’s not just a question of whether peaking gas plants or other types of backup resources should be considered to support the energy transition, said Doug Howe, a 35-year industry executive who previously served as a PRC commissioner. Rather, there’s a need for paradigm change in the way utilities and regulators in New Mexico and elsewhere approach long-term planning to transform the grid away from fossil fuels.

As states across the West replace 24/7 coal and natural gas plants with intermittent solar and wind energy, utility regulators need to carefully plan for backup generation when the sun doesn’t shine and the wind doesn’t blow, Howe said. That means significantly raising the “reserve margin” of internal generation available for emergency situations as wholesale markets become less and less reliable for backup power.

“It’s a pervasive planning problem now,” Howe told the Journal. “Regulatory bodies, in my opinion, haven’t caught up yet. They’re still counting on old reserve margins and wholesale markets from when fossil fuels were predominant.”

It also means relying on the expertise of utility professionals when deciding on the energy resources needed to maintain around-the-clock system reliability.

“With the PRC, I generally agree that PNM got backed into a corner when the commission chose a 100% renewable replacement plan for San Juan,” Howe said. “I think the PRC kind of overstepped a bit in this case by imposing its own view of what the system needs for reliability over the utility’s view. I always think it’s a bit dangerous when commissions start making management decisions for utilities.”

Regulators must also be more open to adding additional backup resources to the grid to ensure reliability, said Tom Fallgren, PNM’s vice president for generation.

“It’s not just a New Mexico issue,” Fallgren told the Journal. “It seems like everyone is afraid to build 1 megawatt of power too soon. The idea that you can’t err on the side of a few more resources is a detriment to progress.”

Emergency preparedness

Prompt, responsive regulatory oversight in today’s energy transition is a fundamental public safety issue, Balderas said.

“Facing a summer without power during our hottest months endangers lives and damages our economy, making it imperative that the commission immediately and properly balance the interests required to keep utilities and consumers healthy,” Balderas said in his letter to the PRC.

That includes emergency preparedness to handle rolling blackouts, including reaching out to the New Mexico Department of Homeland Security and Emergency Management to ensure vulnerable citizens have immediate assistance if needed, Balderas said.

“This situation demands an all-of-government approach,” Balderas said. “… My office will be coordinating with our sister agencies to ensure that there are plans to care for our elderly and children in the event of extreme heat and no power. … New Mexico must take steps now to avoid risk to New Mexican families and our economy this summer, and the time to act is now.”

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