There is a great deal of controversy regarding electricity generation in the PNM service area. Much of it has been in process for years, but as it hits the current news, tempers are flaring and inaccurate information is flying.
The underlying cause of much of the controversy clearly goes back to overzealous environmental initiatives and it’s important to understand why.
Today, the New Mexico Public Regulation Commission will open a public hearing on a plan requiring PNM to shut down two coal-fired units at San Juan Generating Station and retrofit the remaining two units with equipment meant to improve visibility in the Four Corners region.
To be clear, the Environmental Protection Agency mandate that started this process is about visibility – not health. Fortunately, through PNM’s diligence, there has been a historic collaboration between the company, the New Mexico Environment Department and the EPA, which also addressed greenhouse gas emissions.
A diverse group of interested parties also agreed that this is the most cost-effective plan to comply with current and proposed federal environmental regulations. Ratepayers will pay a hefty price. It is estimated the shutdown will cost about $5.25 per month for average residential customers (600 kilowatt-hours per month).
PNM plans to replace lost power generation with cleaner energy sources and significantly less coal. Those costs will be filed with the PRC later, and that increase would take effect in 2018.
The New Mexico Utility Shareholders Alliance urges the PRC to approve the plan as submitted.
Unfortunately, there are some parties who are asking for the two remaining units to be shut down with all replacement power coming from renewable sources. It would cost approximately $1.5 billion to replace all of the retired San Juan power with solar. Since we do not know the full impact of current replacement power costs, this discussion is premature and wrong for New Mexico.
No one would deny that clean air and water are important. The question is how much of the environmental initiatives are necessary and what price are we willing to pay?
PNM recently filed its first rate increase in almost five years. Beyond the need to maintain system integrity, the biggest driving force behind the increases is environmental initiatives.
Compliance costs for the Renewable Portfolio Standard, passed by the state Legislature in 2004, and the Efficient Use of Energy Act, passed in 2008, cost the average residential PNM ratepayer $2.76 per month in 2014.
PNM is on track to meet or exceed the requirements of both laws, but it is reviewing changes to its rooftop solar program. Customers with these systems are not currently paying their entire share of the system’s fixed costs.
To address this, PNM has proposed a fee to better allocate infrastructure costs among customers. The charge will only apply to new rooftop solar customers after Jan. 1, 2016.
The proposed rate plan also has an economic development component that may help New Mexico attract companies that create jobs. Other states have mechanisms tied to utility usage to spur economic development; New Mexico needs to move in that direction, too.
No one likes to pay more, but businesses must continue to invest in infrastructure, especially when delivering a critical service like electricity. It’s important to note that PNM has held its operating costs virtually flat since its last increase.
The Utility Shareholders Alliance urges individuals to focus on the important facts, not on inaccurate, emotional hyperbole of a few overzealous environmentalists. Then let elected officials who make decisions affecting your rates know how you feel. You can do this by contacting PRC commissioners who will soon decide the fate of the San Juan Generating Station as well as lawmakers who pass mandated environmental measures.
Producing affordable electricity while protecting the environment is achievable, but following a radical environmental agenda at any cost is neither productive nor sustainable.
New Mexico’s utility ratepayers need an honest dialogue focused on facts. We also need healthy, viable utility companies that can provide reliable electric service to our homes and businesses.