The state Public Regulation Commission expects Wednesday to begin revisiting Public Service Company of New Mexico’s proposed abandonment of a power plant.

The question is how PNM pays for remaining capital costs and some other expenses at the San Juan Generating Station in Northwest New Mexico after it leaves the plant this year.

While PNM is expected to use 25-year, low-interest bonds allowed under the state’s 2019 Energy Transition Act, when those bonds are issued and what happens until then are matters of contention.

Some organizations say it’s unfair for PNM customers to have to keep paying through their bills for a plant that will close this fall. They say the bonds should be issued as soon as PNM leaves the plant and customers should get a credit at that time for costs they already have paid. Some fear customers will be double-charged in monthly bills and when paying off the bonds.

The controversy threatens to set off one more battle between the commission and PNM, the state’s largest utility. They currently are on opposing sides of two cases before the state Supreme Court. One involves PNM’s proposed merger with two companies and the other involves its plan to depart from Four Corners Power Plant.

Commissioner Cynthia Hall of Albuquerque said the commission will deliberate with care. She also said she wasn’t surprised by the conflict.

“Usually, cases are a fight,” Hall said. “I don’t know that we would want to be hasty with anything like this.”

PNM contends it’s irrelevant customers will keep paying off plant costs after it closes because they will get an appropriate credit in the company’s next rate-setting action in late 2023 or early 2024.

“It all comes out in the wash,” PNM spokesman Ray Sandoval said.

Commission staffers, in a document filed late Friday, agree with the Attorney General’s Office, Western Resource Advocates and other organizations in questioning PNM’s proposal for paying off capital debt once the utility company leaves San Juan.

The staff wrote it “suggests that the Commission consider amending the Financing Order to direct that PNM issue the ... bonds within a certain prescribed period after the final abandonment” of the plant.



“We’ve got it on the agenda,” Commissioner Stephen Fischmann of Las Cruces said Monday, referring to Wednesday’s meeting. He said he expected the commission to send it to hearing examiners Anthony Medeiros and Ashley Schannauer for further analysis. He said “legitimate issues are being raised” in the case.

Hearing examiners are basically administrative law judges employed by the commission.

Commission Chairman Joseph Maestas of Santa Fe said the commission is concerned about the issue, “and we plan to take action.”

Western Resource Advocates, Coalition for Clean Affordable Energy and Prosperity Works filed a document with the commission at the end of February pointing to problems they had with PNM’s plan to pay for many millions of dollars in costs owed after the company leaves the power plant at the end of October.

The costs include remaining capital expenses at the plant, assistance to unemployed workers and other items.

The Attorney General’s Office, Bernalillo County and New Mexico Affordable Reliable Energy Alliance last week also filed concerns with the commission. Groups have argued the Energy Transition Act and a commission order two years ago called for the abandonment, the bond issue of about $360 million and the credit to customers to come about the same time.

Sandoval said PNM will apply for a new “rate case,” or the process involved in determining the amount to charge customers to cover costs, late this year. He said it typically takes a rate case 12 to 18 months to clear the process before showing up in customers’ bills.

At that time (in late 2023 or 2024), he said, customers will get an “offset,” or credit, for the money they have paid for the San Juan investments. To suggest customers are being gouged before then is inaccurate, he added, because PNM also is carrying $1.2 billion in other costs customers aren’t yet covering. Those costs also will go into customer rates when the rates are reset, he said.

Sandoval also said customers generally will pay $3 less per month beginning in January because they won’t have to cover the coal contract at San Juan.

While critics say they were led to believe PNM would abandon San Juan, issue the bonds and provide the customers’ credit about the same time, Sandoval said that wasn’t the case. PNM expected to issue bonds at the same time new rates go into effect in a couple years, he said.

“That was our plan then. That’s our plan now,” he said. “That was always our plan.”

Popular in the Community