New Mexico Regulators Delay Final Ruling On PNM Plan To Continue Burning Coal

PRC News:
 
ALBUQUERQUE  The New Mexico Public Regulation Commission (PRC) announced plans to postpone a final ruling on PNM’s proposal to continue burning coal at the San Juan Generating Station until the utility is able to secure final coal supply and ownership agreements.
 
Earlier this month, PNM filed draft, non-binding contracts with the PRC that threatens to lock the utility into burning coal at the aging San Juan Generating Station for the foreseeable future. As support for the San Juan Generating Station continues to plummet, PNM is looking to fill the ownership void left by groups exiting the plant, becoming the perpetual owner of last resort and jeopardizing the financial security of New Mexico families for years to come.
 
In response, Nellis Kennedy-Howard, Senior Representative for the Sierra Club’s Beyond Coal campaign, issued the following statement:
 
“New Mexico families and communities across the state deserve clear and decisive action to protect ratepayers from the enormous risks of PNM’s plan to continue burning coal at the San Juan Generating Station. PNM’s draft proposals will increase the risks and liabilities to New Mexico families by positioning the utility as the owner of last resort for the outdated, expensive San Juan Generating Station. PNM’s statements on their new draft agreements do nothing to address the already enormous cost increases of the plan, the plummeting support for their proposal, or resolve question over who will even own the plant after 2022. 
 
Rather than delaying this important decision any further, it’s time for the PRC to act and reject PNM’s risky plan for the San Juan Generating Station and demand that PNM create a sustainable plan to transition to clean energy that will create long-term certainty and spur economic development for the Four Corners region.”
 
BACKGROUND
 
Support for continued burning of coal at the San Juan Generating Station has fallen as admissions by the company have revealed serious financial risks for the future of the plant, including the uncertainty of where the plant will get its coal after 2017.
 
Earlier this year, the home city of the plant, Farmington, New Mexico, announced it would not acquire an increased stake in the plant due to reliability concerns and the huge costs that would be passed on to the community. Other New Mexico stakeholders have also pulled away from an agreement that would continue PNM’s use of coal at the plant, citing the overall uncertainty about San Juan’s operations. The Albuquerque City Council passed a resolution on April 6 formally opposing PNM’s plans and urging the New Mexico Industrial Energy Consumers, of which the City of Albuquerque is a member, to withdraw its support.
 
In addition, PNM announced that due to a cost accounting error, the total bill for their plan to increase reliance on dirty coal and other expensive fuels had jumped by over $1 billion, with those costs likely being passed onto local ratepayers. This comes just weeks after PNM introduced a rate proposal that if approved would result in nearly a $10 month increase to the average residential home bill due to utility’s plans to continue burning coal at the plant for the foreseeable future.
 
The New Mexico Public Regulation Commission (PRC) recently rejected PNM’s rate hike proposal, which would have required New Mexico families to cover tens of million of dollars in costs for the coal-fired San Juan Generating Station and added a tax for rooftop solar owners in the state.
 
In his recommendation to the PRC commissioners, Ashley Schannauer, the independent hearing examiner overseeing PNM’s request to the Commission, also expressed his concern that customers would be harmed by PNM’s plan. “The stipulation as a whole does not produce net benefits to the public,” said Schannauer. “The dollar impact of the risks, however, appears to significantly exceed the dollars saved.”
 
The recommendation highlighted the risk that customers may be left holding the bag for a plant that is proving to be a far greater liability than previously disclosed. “PNM’s increasing ownership and responsibility for San Juan may pressure PNM to continue to act as the owner of last resort, absorbing exiting owners’ shares to protect its investment even if the plant has become uneconomicin a version of the ‘too big to fail’ syndrome,” Schannauer continued.
 
A copy of that recommendation can be found here.
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