State regulators don't let legislators intervene in northwestern NM energy conflict; school district enters fray

New Mexico Public Regulation Commission members unanimously rejected motions to rehear a case decried by some state lawmakers and a school district in northwest New Mexico.

A dozen state legislators, from both parties, pushed for a rehearing on the decision to approve a Public Service Company of New Mexico project after a statement from a PRC staffer in May suggested that a Rio Rancho renewable energy project could replace a failed solar and energy storage project in San Juan County. PNM is required by law to replace energy production capacity lost in the area after closing the coal-fired San Juan Generating Station, which employed hundreds in the region. A PNM spokesperson said it did not consider the Rio Rancho project to be a substitute.

The Central Consolidated School District announced Thursday it would be filing similar motions.

The utility is moving toward a portfolio powered by renewable energy.

The Energy Transition Act, or ETA, attempted to soften job and tax revenue loss in the region by requiring energy resource replacements be located in the Central Consolidated School District, which covers Naschitti, Newcomb, Kirtland, Ojo Amarillo and Shiprock.

One of those projects, the Rockmont Solar Project, defaulted and fell through. The project would have been 130 megawatts of solar energy and storage.

Some say PNM still owes the region for that shortfall. However, the utility disagrees.

PNM said it has already met ETA obligations in the Central Consolidated School District, but wants to see more economic development in the region, in excess of the act’s requirements, a spokesperson said.

That included a request for proposals for energy resources that could be available in 2026, which included a “location preference” for projects in the school district or on Navajo Nation lands.

But PNM spokesperson Kelly-Renae Huber said there were no submitted projects on Navajo Nation land, and the submissions within the school district were rejected because they did not meet commercial requirements or had non-competitive project costs.

“In regard to location preference, PNM remains fully supportive and compliant with the Energy Transition Act and would also like to see more projects developed in the Central Consolidated School District,” Huber said in an email to the Journal. “... PNM’s request for proposals also asked for resources that could be available for 2028 and are working through those proposals this year.”

But state Rep. Rod Montoya, R-Farmington, said this approach goes against the “legislative intent” of the ETA — to place replacement energy in the San Juan area. Projects in the school district, which is largely located on Navajo Nation, would bring back a taxable source.

“PNM is basically saying all they have to do is include a potential project in their portfolio … and that it’s up to the PRC to accept or reject it,” Montoya said. “It’s essentially going to be rejected every single time.”

Montoya said he anticipates the PRC’s dismissal of the motions will be appealed to the New Mexico Supreme Court for a final decision.

Six replacement resource projects have been approved for McKinley, Rio Arriba and San Juan counties. By the time all are in service in 2026, PNM anticipates three-quarters of its portfolio will be carbon-free. PNM plans to bring on three more solar projects in August to fulfill ETA requirements.

Stephen Fischmann, a former chair of the PRC, said he was concerned about the PRC decision Thursday. The closure of the San Juan plant represented not just job loss, he said, but also the end of some of the highest-paying jobs in the region.

He said future commitments from PNM aren’t enough.

“(With) the economic damage that’s been happening ever since the plant closed down, them approving a plant that comes up six, seven, eight, maybe 10 years later — it’s too late,” Fischmann said.

Central Consolidated School District school board member Gary Montoya said the district is still suffering from the “unintended consequences” of the closure.

Montoya said in the past few years, enrollment has dropped by more than 2,000 students. The board is considering, but has not made a final decision on, consolidating approximately four of the 15 schools in the district, he said.

Montoya attributes the declining enrollment to the closure of the San Juan Generating Station.

“If there’s no place for these families to work to generate income, and they have to go and chase the jobs … then we lose students,” Montoya said.

Education has a “symbiotic relationship” with economic development, Montoya said; fewer students mean less funding. Coupled with a smaller tax base — taxes from the San Juan plant made up a large portion of the tax base — he said aging schools in the district are still awaiting major infrastructure improvements.

Montoya also said the number of students classified as homeless by the McKinney-Vento Homeless Assistance Act has increased significantly in the years since the closure.

“What do we do?” Montoya said. “Who do we turn to?”

PRC Commissioner Gabriel Aguilera said the denial of the motions was “strictly procedural” and does not get into any of the “substantive issues.”

Aguilera said he was concerned that legislators are not “working with a full and accurate picture of the issue” and urged PNM to meet with legislators and explain their commitment to location preferences within the Central Consolidated School District.

Likewise, Commissioner James Ellison said there would be procedural issues in accepting the motions.

“It would be highly problematic for us to consider this motion when the parties bringing it up were not interveners in the case and given that they are asking to intervene after a final order has been adopted,” Ellison said. “Procedurally, I simply do not see how it would be possible to grant that, even if we were sympathetic.”

It's lights out at the San Juan Generating Station

However, Ellison said legislators had valid concerns that might warrant an inquiry to clarify the issues raised.