Advocacy groups say ratepayers shouldn't pay for imprudent investments into power plant
AZTEC — Environmental and consumer advocacy groups like the Sierra Club and New Energy Economy say the New Mexico Public Regulation Commission should examine whether investments Public Service Company of New Mexico made into the Four Corners Power Plant were prudent.
Some commissioners agreed that the issues those groups raised are substantial and merit thorough review, but at a different hearing,
This comes as PNM seeks to transfer its 13% ownership share in the power plant to Navajo Transitional Energy Company. This would allow PNM to end its reliance on coal-fired generation in 2024.
Not the right time, yet
The Sierra Club filed a motion in the 2016 rate case asking for the prudence of the investments to be considered. Meanwhile, New Energy Economy filed in a separate docket that was opened in 2020 asking for a hearing to decide if the investments were prudent.
But the PRC chose not to grant either request when it met on Feb. 10 via Zoom. General Counsel Michael Smith presented a proposed order rejecting those requests.
Smith said the matter should be discussed while hearing PNM’s application to abandon the Four Corners Power Plant, which is the term that the PRC uses when a utility exits its ownership of an asset. This can be achieved through transferring ownership or closing a facility.
The prudence of its past investments matters as PNM is asking to refinance its past investments into the Four Corners Power Plant through the securitization mechanism set up in the Energy Transition Act.
PNM previously used that method to refinance past investments into the San Juan Generating Station, where it plans to end operations next year. Unlike the San Juan Generating Station, PNM is not the majority owner of the Four Corners Power Plant. Instead it is operated by Arizona Public Service Company.
Payments on the low-interest bonds available through securitization would be passed on to customers in the form of a non-bypassable energy transition charge on their utility bills.
The advocacy groups say customers should not pay for imprudent undepreciated investments into the power plant and highlight questions about investments that were brought up in the 2016 rate case.
The final order in the 2016 rate case allowed the prudence of the investments to be discussed in the next rate case that PNM files. However, that will likely be after the PRC makes a decision on the abandonment and financing application PNM filed for the Four Corners Power Plant.
None of the parties involved in the 2016 case could have anticipated the passage of the Energy Transition Act, Smith said while presenting the arguments. However, he had some legal concerns about addressing the topic in a docket separate from the abandonment case since it will have a direct impact on the PRC’s decision regarding securitization.
Two commissioners say activists make valid points
The commission agreed with Smith, although the commissioners said they want to thoroughly investigate the matter in the abandonment case.
Commissioner Jefferson Byrd said he agreed with New Energy Economy’s arguments. Byrd is a conservative member of the commission and his views rarely overlap with New Energy Economy’s, a fact that he noted in his comments.
"I don't know who's more surprised, but I generally find myself in principle agreeing with New Energy Economy and their arguments," Byrd said.
While he supported New Energy Economy's position, he expressed concerns about the legality of having the conversations in a docket other than the abandonment docket.
"If I felt like we could be supportive in a matter that would uphold law and the ratepayers, I would be pushing to go ahead and open this case up, but I don't think we would be," Byrd said.
Byrd also offered some words of encouragement to New Energy Economy's Executive Director Mariel Nanasi.
"I just wanted to tell New Energy Economy to keep up the fight. We won't always agree, but I appreciate her being out there and doing the work that she does," he said.
Commission Chairman Stephen Fischmann also expressed support for investigating the prudence of past investments into the Four Corners Power Plant. He thanked Sierra Club and New Energy Economy from raising the issues.
"The issues raised by Sierra Club and by NEE deserve thorough, thorough vetting when we go through the abandonment case," Fischmann said
Hannah Grover covers government for The Daily Times. She can be reached at 505-564-4652 or via email at email@example.com.
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