Dive Brief:

  • A recent decision by New Mexico regulators could impact how Public Service Co. of New Mexico (PNM) retires its San Juan Generating Station.
  • The state’s Public Regulation Commission (PRC) on Wednesday voted 4-1 to focus on the abandonment portion of PNM’s plan to retire the coal-fired plant. The move effectively circumvents the Energy Transition Act (ETA), which would secure a previously approved $320 million in capital costs that need to be paid off for the plant’s early retirement.
  • The ETA became law June 14 and includes provisions for getting the state to 100% carbon-free energy by 2045, as well as applying securitization to help retire the 847-MW coal plant’s assets. Savings from the use of securitization will free up around $40 million for worker release and economic development for the San Juan community and will save customers hundreds of millions of dollars, say stakeholders.

Dive Insight:

The Energy Transition Act was widely accepted by stakeholders, including the state’s largest utility, environment and labor groups. Securitization was widely seen by those groups as one of the keys to transitioning the state’s coal-heavy economy toward clean energy sources.

PNM filed its plans for closure to regulators July 1, but on Wednesday, the commission surprised the utility by splitting the replacement and abandonment portions of its filing, and placing the abandonment proceeding into a January docket originally intended to address that provision. The commission said the move would give regulators more time to decide on the abandonment process, but stakeholders say it’s an attempt to overthrow the securitization provisions of the ETA.

The idea was “to take advantage of a constitutional provision that says new laws can’t affect pending litigation,” Deputy Director of Western Resource Advocates’ Clean Energy Program, Steve Michel, told Utility Dive.

The pending litigation would have been the docket, but the Supreme Court stayed that case until after the ETA was passed, making it unlikely the commission’s move would hold up in court, say stakeholders.

“The discussion was was that ‘Well, we’ll just take PNM’s application, at least related to financing and securitization, and we’ll take it out of the new document and put it into the old docket,” said Michel. “And then the old docket predated the ETA, so the ETA won’t apply. And that’s the logic, which, it’s pretty screwy, frankly.”

“This is an intentional action by a regulatory agency to disrupt a legislative process, which is inappropriate and not legally sound,” Director of the Interior West and Northwest’s Climate and Clean Energy program at the Natural Resources Defense Council Noah Long, who worked closely on the bill, told Utility Dive. “My hope is out of this stew we will get the commission and officers to realize it’s not their role to undermine a law that has been enacted, but if that’s not the case then clearly judicial review will be necessary.”

The utility said it was “surprised” by the PRC’s decision, but does “not believe this changes anything and [is] confident that the provisions of the Energy Transition Act, that went into law on June 14, [apply] to our comprehensive July 1 filing.”

The commission did not respond to multiple requests for comment.