Many environmental groups and other organizations say Public Service Company of New Mexico should get out of the pollution-spewing Four Corners Power Plant — but not the way the utility has proposed.

PNM's agreement to transfer its share of the coal-fired plant to Farmington-based Navajo Transitional Energy Co. is worse than the status quo, they contend. They argue customers and shareholders will pay the tab, additional expenses will arise to procure replacement energy and, after all that, Four Corners will stay open and keep polluting.

A PNM executive, on the other hand, calls it an excellent deal for all involved.

"I see it as a win-win-win-win-win for all parties," said Tom Fallgren, a PNM vice president. He generally described the groups' criticisms of the deal as unfair or poorly informed. He said one of the criticisms — that PNM has agreed not to vote for closure of the plant before leaving it at the end of 2024 — is "very standard contract language."

It might be hard to find viewpoints more contrasting than those of PNM and organizations that oppose the transfer of its shares of the Four Corners Power Plant. The New Mexico Public Regulation Commission is expected to consider the proposal this summer.

Commission Chairman Stephen Fischmann of Las Cruces said the case will be a tough one to decide. "There's a long history and many unresolved issues, and the Four Corners abandonment is a complicated case," Fischmann said.

Among the issues:

  • PNM shareholders would pay Navajo Nation-owned NTEC $75 million to take the plant off its hands. NTEC owns the nearby Navajo Mine that supplies coal to the plant and some shares of the plant itself. PNM spokesman Ray Sandoval said the $75 million will relieve PNM customers of Four Corners coal contract obligations.
  • PNM customers already are paying for nearly $300 million in capital and economic development aid related to the Four Corners plant.
  • Critics worry PNM could get sucked into further costs at the plant if an environmental hazard from the past were discovered.
  • Some see a tie between PNM's transfer of the power plant and its proposed merger with the Connecticut-based energy company Avangrid. 

A technical adviser to the Sierra Club said in testimony early last month that the PNM transfer of Four Corners shares is "driven" by the merger proposal because Avangrid, which focuses on renewable energy sources, doesn't want to be involved in the coal plant. But PNM's proposed contract with NTEC and the merger with Avangrid will make it harder to shut down the power plant, said the adviser, Jeremy Fisher of Oakland, Calif.

Fisher said the plant is the state's largest stationary source of greenhouse gas emissions. 

PNM assured NTEC it would stay in Four Corners until the end of 2024 and would vote against closure until then, he said, which would prevent other owners from shutting Four Corners down before 2027 at the earliest. A vote to close must be unanimous, he said, and there is a two-year delay after a decision is made to close.

But Sandoval said there is no proposal to close the plant before its scheduled 2031 shutdown, and executives of Arizona Public Service, the majority owner, have said they don't plan to close it before then.

A spokeswoman for Avangrid wrote in an email that PNM had planned to sell its interest in Four Corners for financial and environmental reasons before the merger proposal.

"That plan aligned with Avangrid’s policy not to own coal and so Avangrid included a provision in its merger agreement to require PNM to follow through on its plan to sell its interest in Four Corners and to file for Commission approval for such a sale," she wrote.

The Four Corners transfer and merger proposal are separate matters before the Public Regulation Commission.

Matt Gerhart, a senior staff attorney with the Sierra Club, called the Four Corners proposal flawed and said it should be denied by the PRC.

If the Sierra Club opposes a company's plan to pull out of a coal plant, Gerhart said, "you're clearly doing something wrong."

"We very much believe the deal with NTEC is a bad deal for ratepayers and for the environment and for the people who live in the shadows of the Four Corners plant," said Gerhart, who is based in Denver.

Stephanie Dzur, an Albuquerque attorney for the 11-organization Coalition for Clean Affordable Energy, another opponent of the proposal, said it would be a bad commitment for PNM customers.

"PNM has the burden of proving the transaction is in the public interest," Dzur said, adding the utility hasn't done that.

Questions about NTEC's financial stability aren't answered in the PNM proposal, she said, which is "another reason that this is such an irresponsible way to dispose of this coal plant." If an environmental disaster were discovered and NTEC proved to be "a financial turnip," she said, PNM could be drawn back in financially.

Dzur's coalition represents organizations such as the Southwest Energy Efficiency Project, Environment New Mexico, the New Mexico Public Interest Research Group and the Natural Resources Defense Council.

Another observer, the New Mexico Attorney General's Office, also expressed opposition. An office spokesman said through an email that PNM must "improve its commitments to impacted rural communities in its transition to clean energy."

Fallgren said NTEC has financial assurance obligations in the proposed contract and that it's "just not accurate" to suggest NTEC may default in the deal. Further, he said, if an environmental crisis were caused by Four Corners after PNM got out, that would not land on PNM.

If such a problem were found in the future and had begun under PNM's watch, then PNM would bear some responsibility, he added.

As for the $300 million to be covered by PNM customers, the utility says customers would actually save $30 million to $100 million in the deal. That's because PNM would switch to less expensive renewable energy sources, Fallgren said.

Further, he said, PNM would refinance the $300 million at a lower interest rate under the state's Energy Transition Act, with the commission's approval.

The $300 million mainly covers PNM's capital expenses at Four Corners, although there also are payouts for workers' support, Native American assistance and other economic development or assistance funds.

PNM owns 13 percent of the plant and NTEC 7 percent. Along with Arizona Public Service, two other organizations are part owners: Tucson Electric Power and Salt River Project.

Navajo Transitional Energy officials declined to comment on the proposal to take over PNM's ownership interest.

Fallgren said the deal with NTEC would preserve jobs at Four Corners, benefit the Navajo Nation, save PNM customers money and enable PNM to move to carbon-free energy faster. He also lauded the decision by plant owners to reduce emissions by 20 percent to 25 percent by going to seasonal operations in 2023.

"This is a good deal for all," he said.

Dzur, however, said PNM has chosen an odd way to unload the "crappy old, polluting" Four Corners plant. "They want to abandon the plant to a coal company."

And that, she said, is hardly in the public's interest.

(5) comments

Lynn k Allen

So many snakes. Even when we get an agreement & think we have cut off the head of this snake, it still tries to bite us and still lies to us!!!

Watch our PRC and remember who votes & took action, and who protects us.

Maybe zip our PRC a comment??

& contribute to those organizations really protecting us.

Philip Taccetta

“PNM had planned to sell its interest in Four Corners for financial and environmental reasons before the merger proposal.” Environmental reasons” really? Does anyone believe that PNM is concerned about the environment? All they care about is the financial reasons. Keep all the overpaid executives and their shareholders with practically guaranteed profits happy! Don’t let the environment get in the way. PNM has been fighting this for years. If they cared for the environment at all they would have shut their pollution machines down and re-trained and compensated workers long ago.

While I understand the need for the Navajo Nation to try and protect jobs, I’m disappointed that they want to keep operating the dirty coal fired plant. Let PNM and Avengrid (should the ill advised merger goes through) re-train workers at their expense and keep them employed.

Just shut that pollution machine down!

Mike Johnson

Many good points here, and in actuality, Avengrid is behind this debacle, and that merger should be denied and stopped. Their reputation for political corruption and political dealing is far too extensive to trust them here in NM.

Paul Gibson

Wow. Stop the presses. Mike Johnson and I agree ;-)

Mike Johnson

[thumbup] We probably have more common ground than either of us know, if a variety of subjects were discussed and not just politics.

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