Controversial legislation that would allow the state’s largest utility to recover losses from closing the coal-burning San Juan Generating Station is scheduled to face its first test next week in front of a state Senate committee.

The Senate Conservation Committee is scheduled to hear Senate Bill 47, sponsored by Sen. Jacob Candelaria, D-Albuquerque, on Tuesday.

The bill would allow Public Service Company of New Mexico to sell bonds to recoup money lost if it closes the San Juan plant in 2022. The utility last year issued a plan that calls for ending the company’s reliance on coal power completely by 2031.

An identical bill in the House of Representatives, House Bill 70, has yet to be heard by a committee. Both bills have bipartisan sponsorship. The Senate bill is co-sponsored by Sen. Steve Neville, R-Aztec, while the House bill is sponsored by Rep. Bobby Gonzales, D-Taos, and co-sponsored by Rep. Rod Montoya, R-Farmington.

In a letter to House Speaker Brian Egolf and Senate Majority Leader Peter Wirth, both Democrats from Santa Fe, Mariel Nanasi, executive director of the clean-energy advocacy group New Energy Economy, said the legislation as written is unconstitutional because there are pending cases before the state Supreme Court involving PNM and the San Juan plant.

Ever since PNM floated the idea behind the legislation, Nanasi has opposed the proposal, calling it a bailout for PNM that ultimately would be paid by its customers.

In her letter, Nanasi argued the bills represent “an end-run” around statutory and regulatory requirements. The bills would require PNM to own any replacement power — such as solar, wind and natural gas — that would replace the coal generation. New Energy Economy contends that would give the company a monopoly.

Both Egolf and Wirth, who said Thursday he hadn’t yet read Nanasi’s letter, declined to comment.

But bill sponsor Candelaria said his bill would have “zero point zero” effect on the cases before the Supreme Court. Candelaria has said his bill will give PNM an incentive to move away from coal sooner rather than later.

In a written statement, PNM spokesman Ray Sandoval disputed Nanasi’s claim that the legislation is unconstitutional.

“We feel that [New Energy Economy] is misinterpreting that constitutional provision and that the legislation will help ensure New Mexico’s transition to a more sustainable energy future by adding a tool to the current regulatory process,” he said.

If the proposal became law, the Public Regulation Commission, which oversees the utility’s rates, still would have to approve the issuance of any bonds through the process. The commission also would have to approve of closing the San Juan Generating Station.

Tuesday’s hearing could have repercussions in the Democratic gubernatorial primary. The chairman of the Conservation Committee is Sen. Joe Cervantes, D-Las Cruces, who is running for governor.

Contact Steve Terrell at 505-986-3037 or sterrell@sfnewmexica­ Read his blog at