Legislative session could impact fate of generating station, community transition

County commissioners fret over impact of potential changes

Hannah Grover
Farmington Daily Times
A pump jack and the San Juan Generating Station are pictured Friday from Twin Peaks in Kirtland.

AZTEC — The state Legislature likely will consider several bills next session related to the pending closure of the San Juan Generating Station and the development of renewable energy.

Those measures have members of the San Juan County Commission concerned about potential local impacts.

“If you want to make a transition to renewable energy, there has to be a plan,” San Juan County Commissioner Jim Crowley said during a commission meeting Thursday evening.

The Public Service Company of New Mexico, which is the majority owner of the San Juan Generating Station, is pushing for a financing tool known as securitization that will help the company borrow money with a lower interest rate. PNM needs the Legislature to pass a bill allowing for securitization.

In addition, there has been a push for the state to increase its renewable portfolio standards. Those standards dictate how much of a utility’s electricity must be generated through renewable sources such as wind or solar. The current mandate is 20 percent by 2025.

The San Juan County Commission unanimously passed a resolution asking the state to delay increasing the renewable portfolio standards and to include requirements in the securitization bill that will help smooth the transition for San Juan County as the generating station closes.

That includes postponing the closure of the generating station from 2022 until 2027, providing San Juan County with $50 million to help diversify the economy and requiring PNM to build its replacement generation operation in the Central Consolidated School District in San Juan County. That would replace the property tax revenue the school district will lose when the generating station closes.

Germaine Chappelle, a lawyer based in Santa Fe, has been working with local entities to offer input to the New Mexico Public Regulation Commission. She has also been representing the local entities as the Legislature has contemplated these topics.

Chappelle attended the meeting Thursday to present information on what will occur if the generating station closes and the renewable energy requirements increase in New Mexico.

The San Juan Generating Station is scheduled to close in 2022, a move that could have a dire economic impact on San Juan County.

“So what we want to do is understand what those actions, what the consequences of those actions are from a state and local perspective,” Chappelle said. “At the end of the day, the real question is how much this is going to cost our state, our region and who’s going to pay for it. And the bottom line answer ... to that is we all are, and it’s going to be expensive.”

Closing generating station will impact both state, county

Chappelle cited lost tax revenue and potential increased electricity rates as ways the closure of the power plant and the increase in renewable requirements could impact both San Juan County and the state.

PNM provides electricity to Albuquerque, Santa Fe and other communities throughout New Mexico. The San Juan Generating Station is its largest single generation source. Once the generating station closes, PNM will have to replace the 847 megawatts of generation it gets from the power plant.

The city of Farmington is also a partial owner of the San Juan Generating Station and will have to either buy power from the grid or build a replacement generation source for the 43 megawatts it owns in the power plant. The Farmington Electric Utility System serves most of San Juan County, with the exception of the area served by the city of Aztec.

Germaine Chappelle, a Santa Fe lawyer working with local entities to offer input to the New Mexico Public Regulation Commission on the closure of the San Juan Generating Station, says the move could cost the state more than $50 million annually in lost tax revenue.

Chappelle said ratepayers could have to pay for a new generation source to be built while also paying for recent investments into the San Juan Generating Station that have yet been recuperated. Those investments include multimillion-dollar pollution-control technology that recently was installed.

At the same time, Chappelle said the state could lose more than $50 million annually in tax revenue.

About five years ago, local entities including San Juan County supported PNM when it reached an agreement with the U.S. Environmental Protection Agency to close two of the four units and install pollution controls on the other two units. That was done to comply with emissions regulations, and the county supported it with the understanding that it would enable the generating station to remain in operation until 2032.

Last year, PNM released an integrated resource plan that set the utility on the course of closing the generating station in 2022.

“The community with 15 years can potentially pivot and diversify,” Chappelle said. “But the community can’t really pivot and diversify if it’s five years, and that’s really what’s at stake.”

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