Environmental group raises doubts about owner's solvency

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FARMINGTON — An environmental advocacy group is questioning whether Westmoreland Coal’s financial condition could lead to the San Juan Mine closing and impacting rates for Public Service Company of New Mexico customers.

New Energy Economy is asking the New Mexico Public Regulation Commission to investigate what contingency plans PNM has if Westmoreland Coal enters bankruptcy.

Westmoreland Coal did not respond to requests for comment.

New Energy Economy and the commission staff filed responses this week to a PRC order asking for additional input from New Energy Economy and information from the staff regarding Westmoreland repaying the loan it took out to purchase the San Juan Mine.

Westmoreland sent out a press release in May announcing it had secured $110 million in new financing that it would use to pay off the loan.

According to the PRC documents filed this week, Westmoreland San Juan, a subsidiary of Westmoreland Coal, which owns the San Juan Mine, made a payment of $50.6 million on May 22, 2018, to the lender. That paid off the outstanding principal and interest on the loan.

The PRC does not regulate Westmoreland, but it does regulate PNM and the rates that PNM charges its customers.

The docket dates back to 2016, shortly after Westmoreland Coal purchased the San Juan Mine.

New Energy Economy executive director Mariel Nanasi said she questioned Westmoreland’s financial condition years ago when she first filed a motion asking for an investigation into the company’s finances and how that could impact PNM.

When she saw Westmoreland’s stock was quickly declining in value, Nanasi said that prompted her to file another motion in January asking for an investigation. This is the third time New Energy Economy has asked the PRC to investigate PNM’s contingency plans if Westmoreland enters bankruptcy.

Since January, the stock prices have continued to decline. Nasdaq delisted the company in April when it was unable to sell stock for $1 a share. The company's stock was trading at 14 cents a share today.

In addition to its declining stock values, Nanasi said analysts have concluded Westmoreland Coal is on the verge of bankruptcy.

The San Juan Mine is the sole supplier of coal to the San Juan Generating Station. PNM is the majority owner of the generating station, which it plans to shutter in 2022. The city of Farmington also owns a portion of the generating station.

PNM filed a response to the motion in February stating that Westmoreland San Juan and the San Juan Mine would be shielded from bankruptcy if Westmoreland does file bankruptcy.

In addition, PNM stated there is a stockpile of coal that would last nine months if the San Juan Mine stopped supplying the generating station with coal.

“Bankruptcy doesn’t mean necessarily the closure of the plant, but it could,” Nanasi said.

She said Westmoreland could decide during a restructuring process that the San Juan Mine is not profitable and could choose to close it. She said if the mine closes, it would impact both PNM customers and San Juan County residents. She wondered if the closure of the mine would mean the closure of the San Juan Generating Station before 2022. In addition, Nanasi said she wants to know what would happen to the people who work at the mine and the generating station.

“There’s a lot of questions here,” Nanasi said.

Hannah Grover covers government for The Daily Times. She can be reached at 505-564-4652 or via email at hgrover@daily-times.com.

 

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