Public Regulation Commission Hearing Examiners Recommend 100% Renewable Energy Replacement Power

From New Energy Economy:

SANTA FE — The Public Regulation Commission (PRC) hearing examiners have issued their Recommended Decision on the issue of what power generation resources PNM should utilize when it shuts down its San Juan Generating Station in 2022.

In their Recommended Decision, the Hearing Examiners adopted NEE’s requested approach to replacement resources and rejected PNM’s.

PNM had requested PRC approve its Scenario 1, which consisted of PNM-owned 280 MW of new gas, 350 MW of solar and 60 MW of storage built, operated and owned by independent renewable energy companies, and PNM-owned 130 MW of batteries.

NEE argued that the PRC should reject PNM’s plan because it replaces polluting coal with less-polluting gas and privileged monopoly ownership over more affordable independently produced energy. NEE argued successfully that PNM’s plan should be rejected because there was no technical or economic reason to continue to rely on any fossil fuels, including gas, when there are non-polluting alternatives that are fully adequate to provide the replacement power needed, including solar, wind and battery storage. 

PNM tried to force interveners and regulators to go along with their preferred replacement power scenario 1; PNM manipulated the timing and procedural schedule to leave only one scenario that could actually be implemented … theirs. But it was rejected! “PNM was successful in putting the Commission in the ‘box’ that NEE, CFRE (Citizens For Fair Rates and the Environment) and others refer to.” (RD, p. 148)

After affirming PNM’s attempt to manipulate the process the Hearing Examiners stated that was not the reason for the rejection of the Affordable Solar/PNM battery storage projects.

“The Hearing Examiners, however, do not base their decision to omit the PNM-owned resources on PNM’s manipulation of the timing of the RFP process. They recommend a portfolio of resources that best achieves the purposes of the ETA – a portfolio that includes the solar/battery hybrid resources located in and near the CCSD (Central Consolidated School District).” (RD, p. 149) 

Consistent with New Energy Economy’s position in the case, the Hearing Examiners made the following findings: 

  • PNM’s requests for approval of the 300 MW Arroyo PPA, 40 MW Arroyo Energy Storage Agreement, 50 MW Jicarilla PPA, and 20 MW Jicarilla Energy Storage Agreement are GRANTED. (RD, p. 174.) 
  •  PNM’s requests for the issuance of CCNs for the Piñon gas plant is DENIED. (RD, p. 174.) This is the third case which PNM has rigged the bid to own a gas plant for replacement power. New Energy Economy has won each case against PNM. (15-00205- UT and 16-00105-UT) 
  • PNM’s requests for the PNM-owned Sandia battery project and the Zamora battery project located near Albuquerque are DENIED. (RD, p. 174.) 

The Hearing Examiners Recommended Decision in Case 19-00195-UT, this case, will go before the full five-person Commission in the next few weeks for approval, rejection, or modification. Automatic approval of PNM’s CCN requests will occur Oct. 1, 2020 absent a Commission order denying them. 

Important facts: 

  • The solar projects that were approved by the Hearing Examiners are some of the lowest cost solar plus storage projects ever approved in the United States. These projects will not be owned by PNM. They are low-cost because they will be built, managed and owned by Independent Power Producers. PNM will serve transmission and distribution functions only. 
  • A twenty-year PPA and energy storage agreement (“ESA”) for the output from a 50 MW solar facility located on Jicarilla Apache tribal lands combined with a 20 MW battery enery storage agreement (“Jicarilla PPA”). The Solar Energy Output Payment Rate over the twenty- year fixed term of the PPA is $19.73/MWhAc. The Jicarilla Storage 1 ESA has a monthly capacity payment over the twenty-year term of the ESA of $9.97/kw-mo, which includes payment for Energy Storage Capacity, Ancillary Services, and Environmental Attributes. This price will remain fixed over the term of the ESA with no escalations and; 
  • The output from a 300 MW solar facility located in McKinley County combined with a 40 MW battery energy storage agreement (“Arroyo PPA”). 300MW Arroyo Solar PPA fixed twenty-year term of the PPA is $18.65/MWhAc. The Arroyo Storage ESA has a monthly capacity payment over the twenty-year term of the ESA of $7.46/kw-mo, which includes payment for Energy Storage Capacity, Ancillary Services, and Environmental Attributes. This price will remain fixed over the term of the ESA with no escalations. 
  • One of the most significant public benefits for PNM customers, including low-income consumers and small business proprietors, is a hedge against rising utility rates, when PPA contracts guarantee a flat electric rate, in this case, for twenty years. Another actual public benefit for PNM customers is low cost, and the lowest cost among feasible alternatives in a highly efficient solar location, near low-cost transmission. Further, and equally significant is, in addition to its relative quantifiable financial benefit, the regenerative economic and health benefit of investing renewable energy development in an Indigenous and rural area. 
  • PNM’s 280 megawatt gas plant which was sited to be located at the San Juan Generating Station was opposed by the local community – the plant would have provided a total of 5 permanent jobs for the area and continue to harm the health of the local community, land, air, and water. 
  • The gas plant would’ve required the construction of a gas pipeline into the area, exposing residents to risk of spill. 
  • The proposed plant would use 191,625 gal of potable water and 103,005,000 gal of other water annually. 
  • We know that renewables plus storage outcompete fossil fuels and nuclear on price — they are also the only responsible option given the climate emergency and environmental justice crisis we face. The gas was inconsistent with the Renewable Portfolio Standard increase contained in the ETA. 

Who was PNM set to partner with for its natural gas supply & pipeline for its gas plant? El Paso Natural Gas. Here is a brief of El Paso Natural Gas’ History of Accidents & Violations 

  • Aug. 19, 2000 pipeline rupture and fire near Carlsbad, New Mexico killed 12 family members, incinerated them while they were camping. The only amount disclosed was a $14 million settlement for one of the victims.1 El Paso Natural Gas paid $15.5 million fine as part of a settlement with the Department of Justice and pipeline safety regulators.2 Safety violations including: failing to ensure qualified personnel performed corrosion control procedures; transporting corrosive gas on numerous occasions without taking proper and mitigative steps; failing to follow procedures for surveillance of its facilities, and more.
  • March 23, 2003 a 24-inch El Paso Natural Gas pipeline near Eaton, Colorado exploded. The explosion sent flames 160 meters in the air, forcing evacuations. The heat from the flames melted the siding of two nearby homes and started many smaller grass fires.
  • June 28, 2006 El Paso Natural Gas agreed to pay $225,000 in settlement of allegations it failed to comply with state and federal air quality regulations governing the removal and replacement of asbestos-coated pipeline.
  • Nov. 5, 2009 Bushland, Texas — Two people were hurt when an El Paso Natural Gas pipeline exploded in the Texas Panhandle. The explosion left a hole about 30 yards by 20 yards and close to 15 feet (4.6 m) deep. The blast shook homes, melted window blinds and shot flames hundreds of feet into the air. The home nearest the blast — about 100 yards away- was destroyed, and 3 residents from those homes were injured. About 200 residents in the area were evacuated.
  • Aug. 1, 2018 explosion occurred along lines that supplied gas to plants. The El Paso Natural Gas pipeline failed causing explosions.7 One person died,8 five people were sent to hospital with critical burn injuries.

1 https://www.bizjournals.com/albuquerque/stories/2002/09/16/story3.html

2 https://www.chron.com/business/energy/article/El-Paso-agrees-to-fine-settling-explosion-case-1820725.php; https://violationtracker.goodjobsfirst.org/violation-tracker/-el-paso-natural-gas-company

3 https://www.bizjournals.com/albuquerque/stories/2002/09/16/story3.html

4 “Re: CPF No, 5-2003-1002H” (PDF). Archived (PDF) from the original Oct. 28, 2013.

5 https://web.archive.org/web/20070418182524/http://www.azag.gov/press_releases/june/2006/ElPasoAgreement.pdf

6 https://www.nytimes.com/2009/11/06/us/06brfs-PIPELINEEXPL_BRF.html

7 https://www.reuters.com/article/us-texas-pipeline-fire/texas-investigators-probe-pipeline-blaze-that-injured-seven- idUSKBN1KN21R

8 https://www.cbs7.com/content/news/Officials-responding-to-major-fire-east-of-Midland-489779741.html

9 https://www.reuters.com/article/us-texas-pipeline-fire/natural-gas-pipeline-explosion-in-texas-critically-injures-five- idUSKBN1KM64N

Editors note: New Energy Economy was founded in 2004 to build a sustainable, carbon and pollution-free energy future for health and the environment.