Legislators react to news of Escalante's closure with bill aimed at economic development

Hannah Grover
Farmington Daily Times
Rep. Patricia Lundstrom, D-Gallup, asks a question, Monday, Sept. 9, 2019, during an Indian Affairs Committee meeting at Dine College in Shiprock.

FARMINGTON — Legislators are responding to the news that Tri-State Generation and Transmission will close the Escalante Generating Station with a bill that would allow McKinley County to create an authority governed by five to nine members to focus on redevelopment.

House Bill 8, also known as the Electric Generating Facility Economic District Act, initially would have helped all communities with fossil fuel power plants that will be retiring. 

But it was amended to only apply to non-investor owned coal-fired power plants. The only power plant in the state that meets that description is the Escalante Generating Station near Prewitt.

The Escalante Generating Station, owned by Tri-State, has provided power to the La Plata Electric Association in Durango, Colorado. LPEA and other members of Tri-State have been pressuring its power provider to reduce its dependence on fossil fuels. 

Tri-State announced its decision to end coal-fired generation just days after more than a dozen business owners served by member cooperatives like LPEA delivered a letter asking Tri-State to commit to 80% carbon-free electricity by 2030. 

New Mexico Rep. Patricia Lundstrom, D-Gallup.

Tri-State has set aside $5 million for economic development in McKinley County, according to bill sponsor Rep. Patricia Lundstrom, D-Gallup, who works in economic development in McKinley County.

During the committee meeting on Jan. 24, Lundstrom described the bill as setting up a financing district for redevelopment and reuse of an industrial site. The site she referred to is the existing Escalante site, which includes a paper maker and two coal mines. At one time, the site provided about a sixth of McKinley County's budget, she said.

This district would have bonding authority and could implement a quarter of one percent gross receipts tax to pay for infrastructure bonds. 

Why amend the bill?

The first question sponsor Lundstrom received during the House Commerce and Economic Development Committee on Jan. 24 was why the amendment was specific to Escalante and not to the San Juan Generating Station.

"The San Juan Generating Station is an investor-owned utility," she explained. "It has a different type of process when it comes to decommissioning."

She said Escalante's decommissioning is not under the New Mexico Public Regulation Commission's purview.

"Our focus isn't San Juan County," she said. "Our focus is McKinley County."

The Escalante Generating Station is not eligible for the securitization — or refinancing of past investments using low-interest bonds — authorized under the Energy Transition Act, which was signed into law last year. The ETA required PRC approval for securitization and allowed a portion of the bond revenue to be dedicated for economic development in impacted communities, as well as assisting displaced workers.

Governor supports HB 8

The bill has received the support of Gov. Michelle Lujan Grisham, who authorized it to be placed on the 30-day session agenda.

Tripp Stelnicki, a spokesman for the governor's office, said HB 8 is not building on the Energy Transition Act, but it is responding to a similar situation. Coal-fired power plants are being affected by global economic factors.

More:Tri-State announces it will close the Escalante Generating Station by the end of the year

"These bills are not prompting or causing closures — they are in response to and in anticipation of the reality of the changing energy markets," Stelnicki said. "The state is making every effort to ensure high-quality jobs remain in the affected communities. We will keep up those efforts!"

He said HB 8 is "intended to provide for a community and a group of workers that have been negatively impacted by a company's decision to close and move in another direction."

Stelnicki said it underscores the state's commitment to providing for those workers and ensuring the impacted communities are assisted as much as possible.

The amended bill received unanimous approval from the House Commerce and Economic Development Committee on Jan. 24, and is now headed to the House State Government, Elections and Indian Affairs Committee, which meets at 8 a.m. Mondays, Wednesdays and Fridays. The committee meetings can be viewed online at nmlegis.gov.

If it passes, the law would go into effect immediately upon the governor's signature.

"We always expect and hope for bipartisan support when the idea is a good one, and this one is," Stelnicki 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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