New Mexico is facing its own energy crisis

Paul J. Gessing
Rio Grande Foundation

Western Europe is facing an energy crisis this winter. Prices have skyrocketed. Natural gas is 400% higher than the start of 2021 while coal is up over 300%. As if high prices weren’t enough of a problem, 40% of the natural gas that Europe uses comes from Vladamir Putin’s Russia, an unreliable supplier to say the least.

New Mexicans should take heed. Thankfully, despite the Biden Administration’s permitting ban on federal lands (since invalidated by a judge), New Mexico has steady supplies of oil and natural gas. Those supplies help protect us from wild price swings and supply disruptions like those that could cause massive economic pain and human suffering in Europe this winter. 

While we’ll be fine this winter, New Mexico’s largest utility is facing serious challenges finding enough electricity by next summer. Due to the Energy Transition Act of 2019 which forms the cornerstone of Gov. Lujan Grisham’s “Green New Deal” agenda, the San Juan Generating Station is slated to be permanently shut down next June during the hottest part of next summer.

PNM executives have stated clearly that the hunt for “renewable” power to replace San Juan Generating Station is not going well. Even in the best of circumstances “renewables” like solar and wind are inconsistent and require backup like batteries, but the pandemic has hit supply chains hard and projects are being delayed. 

Unless Gov. Lujan Grisham acts quickly to keep San Juan Generating Station open, the plant will be taken offline as scheduled this summer and blackouts and brownouts could be the result. If you don’t believe me, Tom Fallgren, PNM’s vice president of generation told the Public Regulation Commission recently, in discussing the possibility of brownouts and blackouts said, “Am I concerned? Yes. Do I lose sleep over it? Yes. Can we solve it? Yes.”

Paul Gessing

He further noted that, PNM practices for scenarios, such as brownouts, have detailed procedures to handle them and prioritize power for places such as hospitals. Finally, Fallgren noted, “We are looking at any and all options. ... And we continue to beat the bushes, so to say, for other opportunities as well.”

Are you feeling reassured? I’m not. Interestingly enough, PNM continues to reject new natural gas-powered resources in New Mexico as replacement supply.

Even if we escape serious power outages this summer, the issue is not going away. In fact it will only get worse. In 2023 and 2024 PNM is abandoning its leases for power from Palo Verde (a nuclear power plant in Arizona), and by the end of 2024 PNM will no longer receive power from the Four Corners plant, yet another coal-fired plant here in New Mexico. 

Ironically, as has been discussed in PRC hearings, the Navajo Tribe wants to take over Four Corners plant (saving jobs and tax revenues) while environmentalists are pushing hard to shut it down completely.

Regardless of what happens next summer of over the next few years, these are policy-driven decisions made by Gov. Lujan Grisham and Democrats in the Legislature. They could have massive implications for New Mexico families. 

Already, with the price of everything already going up, New Mexicans’ electric bills rose 5% just last year. Those rate hikes will continue to escalate for years into the future regardless of whether PNM or Avangrid is in charge. Wasn’t the Energy Transition Act supposed to hold the line on price increases?

New Mexicans and their elected officials must be aware of the very real problems facing them as June of 2022 approaches. It is not too late to prevent this crisis. 

Paul Gessing is president of New Mexico’s Rio Grande Foundation. The Rio Grande Foundation is an independent, nonpartisan, tax-exempt research and educational organization dedicated to promoting prosperity for New Mexico based on principles of limited government, economic freedom and individual responsibility