Does NM's new energy law apply to San Juan Generating Station? That depends on who you ask
The PRC staff argue that a pending case prevents the Energy Transition Act from applying to the San Juan Generating Station case, but several environmental advocacy groups and PNM disagree
FARMINGTON — As Public Service Company of New Mexico continues down the path to close the San Juan Generating Station in 2022, the question about whether a new law applies to the case remains unanswered.
The various parties — or intervenors — in the case being heard by the New Mexico Public Regulation Commission filed responses last week outlining why they believe the Energy Transition Act applies or does not apply to the case.
PNM had previously filed its arguments about why it believes the Energy Transition Act applies to its application.
The reason behind the uncertainty comes from a section of the state constitution that prohibits new laws from impacting pending cases.
Energy Transition Act: Law outlines a path away from coal. The first steps are underway
PRC staff says the case was pending when the law was passed
The PRC staff filing states that the case began in January when the PRC opened a docket after learning NM had already taken irrevocable steps that would lead to the San Juan Generating Station closing in 2022.
While the PRC opened a docket and ordered PNM to file an abandonment application, the New Mexico Supreme Court placed a stay on the PRC order that was in place until after the Energy Transition Act went into effect.
PNM maintains that the case was not pending because the utility had not filed for abandonment until July, after the Energy Transition Act went into effect. It then filed a consolidated application for financing, abandonment and replacement resources in a new docket.
The PRC staff’s filing states that PNM “flouted the Commission’s directive to file the abandonment application” in the docket that opened in January, and chose to instead file for abandonment in a new docket. The staff maintains the PRC corrected that “misstep” by consolidating the abandonment and financing portions of the case into the docket that opened in January.
State Supreme Court: Decision leaves regulators to decide on applicability of new energy law
Farmington, San Juan County say the new law applies to the case
The San Juan County Commission and the City of Farmington support PNM’s claims that the Energy Transition Act applies to the case, at least to the extent that the new law requires a utility to provide funds that will address the adverse economic impact of closing the power plant as well as severance pay and job training for employees.
In addition, their filing states they don't oppose PNM’s application as long as it doesn’t affect Farmington’s ability to take ownership of the generating station.
They also argue that all 450 megawatts of replacement power must be located within Central Consolidated School District boundaries.
In that argument, they disagree with PNM, which has proposed solar farms in other counties as well as a 20-megawatt gas plant in CCSD boundaries.
Unions say Energy Transition Act is needed to help workers
The unions representing workers at the mine and power plant — International Brotherhood of Electrical Workers Local 611 and International Union of Operating Engineers Local 953 — also support PNM’s position that the Energy Transition Act does apply to the case.
“The only reason we are even having to consider that question is because of the Commission’s unilateral decision to docket portions of the Consolidated Application – filed after the effective date of the Act — into another proceeding that pre-dated the Act, even though that prior docketed proceeding had been stayed by an order of the Supreme Court until after the effective date of SB 489,” the unions state in their filing.
The unions state that the Legislature passed the Energy Transition Act and the governor signed it into law “specifically to mitigate the harms caused by the abandonment of facilities such as the San Juan Generating Station, and the impacts those harms will visit on the community and affected workers.”
New Energy Economy says applying new law will hurt ratepayers
New Energy Economy, an environmental advocacy group, argues that the Energy Transition Act cannot apply because it could hurt ratepayers.
New Energy Economy supports the PRC staff’s claims that PNM had taken steps to close the power plant prior to the PRC opening the docket in January. It highlights PNM informing its co-owners in June 2018 that it would close the plant.
PNM is currently seeking full cost recovery through a mechanism known as securitization. This means the utility would refinance its investment into the San Juan Generating Station at a lower rate through the sale of low-interest bonds. Ratepayers would pay off the bonds over the course of 25 years.
“The adverse effect of the ETA on ratepayers is evident: PNM gets to determine the amount it seeks from ratepayers,” New Energy Economy states in its filing. “The Commission has no ability to determine if the amount requested is legitimate let alone use its traditional role as ‘regulator’ and apply general legal principles: to balance the interests between shareholder investors and ratepayers, question the ‘prudence’ of utility investment, and ensure that rates are increased only if they are just and reasonable.”
In addition, New Energy Economy argues that the time constraints in the Energy Transition Act prevent “meaningful opportunity to investigate, discover and prepare testimony” about the costs claimed and also about impacts of the power plant to the environment and the health of the surrounding communities.
New Energy Economy highlights that it took two years for the PRC to issue a final order when PNM applied to close the two other units at San Juan Generating Station. If the Energy Transition Act is applied to the case, the PRC must issue a decision within nine months. Failure to reach a decision within that time frame would be considered approval of the application.
New Energy Economy further opposes the Energy Transition Act's requirement that replacement power be built inside CCSD boundaries. It states that will prevent PNM from seriously considering efficiency or the impacts to rates. For example, New Energy Economy highlighted the low cost of wind power. San Juan County does not have ideal locations for wind generation. And, because none of the PNM customers live in San Juan County, the power would have to be transmitted south to the customers, which means additional transmission costs.
Sierra Club argues PRC cannot determine if law applies
The Sierra Club argues that the PRC does not have the legal authority to rule on whether the Energy Transition Act applies to the case.
The Sierra Club states that the New Mexico Supreme Court has ruled abandonment is voluntary and the PRC does not have the legal authority to require a utility to file an abandonment application by a certain time.
Further, the Sierra Club highlights that the state Supreme Court had place a stay on the order in the January docket. The Sierra Club maintains that the court-initiated stay means that the case was not pending.
The Sierra Club highlights the importance of the Energy Transition Act in assisting impacted workers and the community.
“No other statute authorizes this funding for workers affected by the abandonment of a utility’s power plant,” it states. “If the Commission refuses to apply the ETA, the Commission would be directly responsible for depriving power plant and mine workers of millions of dollars in job training and severance benefits.”
In addition, while the PRC had opened a docket for abandonment of the San Juan Generating Station, it had not created a pending case for financing or replacement resources.
The Sierra Club also highlights a portion of the Energy Transition Act that states that if there was a pending abandonment case prior to the law going into effect, the utility could file for financing. If the financing order was consolidated with the abandonment case, the timeframes required by the Energy Transition Act would apply to the entire case.
WRA, CCAE argue that a pending case did not exist
Advocacy groups Western Resource Advocates and Coalition for Clean and Affordable Energy stated in separate filings that they do not believe the January docket constitutes a pending case. In addition, both entities state that no parties had intervened in the docket prior to July. That means there were no parties with vested interest that could be impacted by the Energy Transition Act applying.
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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