ALBUQUERQUE — New Mexico regulators on Wednesday decided on a course for how they will handle a major utility case that marks the beginning of the end for coal-fired electricity generation in the state.
The state’s largest utility, Public Service Company of New Mexico, recently submitted its application for closing the San Juan Generating Station. The filing includes a mechanism for financing the closure and providing benefits and training to the workers who will be displaced. It also outlines options for replacing the lost power. All the elements hinge on the state’s new energy transition law.
The Public Regulation Commission during its meeting voted to split the proceeding into two parts: one for the closure and financing and the other for the replacement power.
Commissioners and staff say they expect numerous legal issues to be raised as the effects of any decision will be felt for decades by the state and the utility’s customers.
They opted for extending the timelines for considering the proposals. It could take about nine months before a final ruling is issued related to the closure and financing and several months more to settle on which mix of solar, natural gas or battery storage will be tapped for generation going forward.
“Since the issues are critical to New Mexico’s future and since the replacement resources will be long lasting, perhaps 20 or 30 years, and since the costs are going to be significant, I think it’s imperative for the commission to have as complete and comprehensive an understanding as possible,” said Commissioner Valerie Espinoza.
The commission opted to consider PNM’s application as part of ongoing case that involved abandonment of the power plant, raising questions as to whether the new Energy Transition Act would be applied to the decision-making process since it took effect after that case began.
Environmentalists say tens of millions of dollars in severance pay and job training funds for power plant and mine workers could be compromised if the energy law is ignored.
Utility spokesman Ray Sandoval said PNM is confident that the provisions of the new law apply to the filing.
In addition to establishing ambitious new renewable energy goals for investor-owned utilities and rural electric cooperatives, the law allows Public Service Company of New Mexico and other owners of the San Juan plant to recover investments and decommissioning costs by selling bonds that are later paid off by utility customers.
PNM plans to shutter the plant in 2022 as part of its plans to drop coal-fired generation. As regulatory and market pressures have pushed many utilities across the U.S. to move away from fossil fuels, PNM also has set a goal of being emissions-free by 2040.
Commission chairwoman Theresa Becenti-Aguilar, whose district includes the power plant and parts of the Navajo Nation, pushed for the utility to do more outreach. She said Navajo communities will be hit hard by the closure.
The utility is planning a series of public meetings this month in Farmington, Albuquerque and on the Navajo Nation. It also has reached out to the tribe to set up chapter meetings and a briefing for tribal officials.