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Location requirement inspires different interpretations

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FARMINGTON — One paragraph in the Energy Transition Act is at the center of debate as the New Mexico Public Regulation Commission considers a plan to replace the electricity that the Public Service Company of New Mexico currently receives from the San Juan Generating Station.

Because PNM is regulated by the PRC, the commission must approve any power purchase agreements or new generation assets that involve the company.

The Energy Transition Act, which became law last year, included a location requirement for replacement resources. The various parties involved in the case have differing opinions about what that means.

More: Upcoming hearing will focus on replacing the power PNM receives from San Juan power plant

The majority of them say that the Energy Transition Act requires a maximum of 450 megawatts of generation assets or battery storage to be located within Central Consolidated School District boundaries. Under that interpretation, the commission could approve a plan that does not include any new electricity generation or storage in CCSD boundaries.

Other involved parties disagree and say that all 450 megawatts must be located within CCSD boundaries.

The hearing examiners asked the various intervening parties to discuss their preferred portfolios for replacing the power from San Juan Generating Station, including whether resources would be located within CCSD boundaries.

The intervening parties responded to the request last week.

PNM's plan includes 280 megawatts of natural gas in CCSD boundaries

PNM filed a proposal in July for replacing the power from the coal-fired generating station with a mixture of natural gas, batteries and renewable sources. PNM is one of the parties that interprets the Energy Transition Act as placing a maximum requirement of 450 megawatts in CCSD boundaries. Unlike some of the other parties, PNM stated in its response that some power must be located in those boundaries to balance the various factors outlined in the Energy Transition Act.

More: Looking forward: PNM official talks next steps as utility looks to end SJGS operations

PNM has proposed the creation of a seven-unit natural gas generating station called the Piñon Gas Plant. The plant would produce 280 megawatts of power and be located within CCSD boundaries.

Groups support natural gas, solar mix

Western Resource Advocates submitted a proposed portfolio that has received the most widespread support.

That plan would increase the amount of solar power and battery storage in CCSD boundaries while decreasing the size of the proposed natural gas plant. It proposes making the Piñon Gas Plant a four- or five-unit plant and adding 100 megawatts of solar paired with 30 megawatts of four-hour battery storage located within CCSD boundaries. It also supports increasing battery storage at the Sandia and Zamora substations, which are located outside of San Juan County.

This proposal received support from several other environmental advocacy groups, including Interwest. 

While Sierra Club officials stated they prefer a portfolio without any new natural gas, they said they would support WRA's proposal. The Sierra Club's proposal would rely on renewable energy and battery storage located wholly outside of San Juan County.

Local leaders say ETA requires 450 megawatts in CCSD boundaries

Elected leaders form San Juan County, Farmington, CCSD and the San Juan legislative delegation have maintained that the Energy Transition Act requires 450 megawatts of replacement power be located in CCSD boundaries. Because of that, they maintain that the PRC should reject PNM”s proposals for replacement resources and order the utility to send out a new request for proposals.

However, if the PRC chose to select one of PNM’s proposals, they say the commission should select the scenario that would replace the San Juan Generating Station’s power with natural gas generation in CCSD boundaries.

“A fundamental goal of the ETA is for PNM to mitigate the damage abandonment will have on the communities by selecting ETA-compliant replacement resources,” they state in their response.

They argue that PNM can only locate less than 450 megawatts of replacement power in CCSD boundaries if its replacement resources scenario contains less than 450 megawatts of nameplate capacity. The proposed plan contains 760 megawatts with only 280 megawatts located in CCSD.

The PRC staff also supports the interpretation that all 450 megawatts must be located in CCSD boundaries. It's proposal would include both solar and natural gas located in San Juan County.

Several environmental groups say no new fossil fuels should be added

“There is no question that in order for humanity to survive we will have to live in a carbon-constrained world — the first step is to ban all new fossil fuel investments,” advocacy group New Energy Economy stated in its response.

NEE states adding new natural gas generation could lead to additional methane emissions because of leaks in equipment during natural gas production.

The group supported two of PNM's proposed solar projects but stated the PRC should reject other proposed assets because, it alleges, they were not subject to competitive bids.

The Coalition for Clean and Affordable Energy submitted its own proposals that would increase the amount of power generated in CCSD boundaries without having any new natural gas generation.

Instead of the Piñon Gas Plant, CCAE suggests a project creating a 200-megawatt solar array paired with 100 megawatts of battery storage, as well as another 100-megawatt solar array paired with 30-megawatts of battery storage. Both projects would be located in CCSD boundaries.

CCAE states this would add 430 megawatts of generation capacity or storage within CCSD and invest $447 million into San Juan County. However, the group acknowledges that scenario will be more expensive for PNM customers. But CCAE maintains it would pay off in the long run because natural gas assets would have to be replaced over time as more rigorous renewable portfolio standards outlined in the Energy Transition Act take effect.

PNM says natural gas is needed for reliable, affordable power

With the exception of WRA's preferred plan, PNM states the other proposals would not provide the affordable, reliable power that it has proposed. The utility maintains that natural gas is needed to ensure the availability of reliable electricity when the sun isn't shining and the wind isn't blowing. None of the proposals include battery storage that can last longer than four hours.

PNM has urged the commission to approve at least a six-unit configuration for the Piñon Gas Plant.

While the Sierra Club acknowledged PNM's argument that natural gas is needed for reliability, it argued that not approving the Piñon Gas Plant won't leave the utility without natural gas. It states that PNM would still have 989 megawatts of natural gas.

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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