Copyright © 2022 Albuquerque Journal
Public Service Company of New Mexico will extend operations at the coal-fired San Juan Generating Station to avoid blackouts this summer, after state regulators said Wednesday that the utility doesn’t need their permission to continue operating the plant.
PNM had requested state Public Regulation Commission approval last week to keep one of San Juan’s two generating units running through Sept. 30 – three months longer than expected – because of delays in bringing four new solar facilities online to replace power from the coal plant. PNM and other plant co-owners had planned to shut down San Juan on June 30, when their joint ownership agreement expires. But without the solar replacement power in place, the utility would face energy shortages this summer, likely leading to rolling blackouts.
The PRC originally approved PNM’s request to abandon San Juan in 2020 to comply with the state’s Energy Transition Act, which requires local utilities to convert their grids from fossil fuels to 100% carbon-free generation by 2045. That approval, however, never set a specific date for abandonment, meaning it’s up to PNM when it actually shuts down the facility, the commission said at Wednesday’s open public meeting.
“The ball is in PNM’s court,” said Commissioner Cynthia Hall.
In response, PNM will now definitely extend operations at San Juan’s generating unit No. 4, which it co-owns with three other utilities, said PNM Vice President for Generation Tom Fallgren. That should allow PNM to meet peak summer demand in July and August – the hottest months of the year when consumers collectively blast their air conditioners.
San Juan’s generating unit No. 1, the only other unit currently operating at San Juan, will shut down on June 30 as planned, followed by the full closure of unit 4 on Oct. 1.
“Sept. 30 will now be the definitive, full abandonment date for San Juan,” Fallgren told the Journal.
The PRC, meanwhile, will examine any additional utility costs incurred by extending San Juan operations to evaluate the “prudence” of PNM’s actions and decide on the amount it can recover from ratepayers.
Stop-gap solution
San Juan’s three-month extension should resolve PNM’s electric supply problems this summer. But the threat of blackouts still looms for summer 2023.
That’s because two leases that currently provide PNM with power from the Palo Verde Nuclear Generating Station in Arizona will expire next year. And although commissioners approved new solar projects last week for PNM to replace Palo Verde power, the utility says delays in getting that approval have made it impossible to bring the new facilities online in time for summer 2023.
In addition, PNM and other utilities still face chronic problems that are making resource-adequacy planning extremely difficult going forward. That includes critical supply-chain shortages due to the global pandemic – which caused the delays in getting the San Juan solar replacement power online – plus the threat of extreme weather events from climate change.
Supply-chain shortages will eventually end. But climate-related challenges, such as intense summer heat waves, now represent a chronic problem, raising difficult questions about how to ensure grid reliability in the transition from fossil fuels to renewables.
“We need real facts on resource adequacy going forward, because this is not a short-term circumstance,” Commissioner Hall said Wednesday. “We’ll have climate disruptions in the future, and supply-chain issues. PNM bears the burden to make sure they secure more resources in advance of next year.”
Testy exchanges
Although this summer’s energy shortages may be resolved, the prospect of blackouts, whether this year or in 2023, has generated heated controversy between PNM and the PRC, igniting a tirade of mutual criticism about who is to blame.
PNM says the PRC has downplayed grid reliability issues in the transition to renewables. It rejected, for example, a utility request for a new “peaking” gas plant that can rapidly ramp up and down to provide backup electricity for intermittent solar facilities after San Juan closes. And lengthy PRC delays in approving solar replacement projects for both San Juan and Palo Verde exacerbated pandemic-related supply-chain issues, according to PNM.
In fact, Attorney General Hector Balderas told the PRC last week that his office is now examining the prudence of PRC decisions and policies given the threat of blackouts.
Those allegations have incited sharp responses from some PRC commissioners.
At Wednesday’s meeting, Hall and Commissioner Stephen Fischmann both blasted PNM for sending mixed messages about the problems it faces.
According to Fischmann, PNM Chairman, President and CEO Pat Vincent-Collawn told investors in a Feb. 3 earnings call that the company had adequate resources to cover summertime needs, but at the same time it told the media that blackouts were likely this summer.
“We’re getting different messages for different audiences, purposes and agendas,” Fischmann said. “… In terms of communication, PNM has been awful on transparency and clarity.”
Commissioner Hall suggested that PNM is manipulating information.
“I do feel there’s been some fear mongering going on with warnings about blackouts,” she said.
PNM spokesman Ray Sandoval said Vincent-Collawn had the San Juan extension plan in mind when she spoke with investors, but negotiations with plant co-owners were still underway, so she couldn’t disclose that to them.
In addition, when it became clear last summer that the companies contracted to build the San Juan solar replacement facilities couldn’t complete the plants in time for summer 2022, PNM immediately made a presentation about the problems to the PRC, Sandoval said. But the PRC has been slow to react, and PNM needed to inform customers about the pending risks.
“It’s unfortunate that it took going to the public to get the PRC to really focus on this problem,” Sandoval said.
The PRC’s “action and inaction” has put the utility in a “tough position,” Vincent-Collawn added.
“As PNM puts its solution into action for this summer, challenges remain on ensuring customer needs are met in summer 2023 due to regulatory delays that have created yet another obstacle for reliability,” Vincent-Collawn said in a statement Wednesday.
