Major shift to renewable energy advances in New Mexico Senate
Backers of the controversial Energy Transition Act — which is meant to ensure the shuttering of a massive coal-burning power plant in San Juan County and push New Mexico toward more reliance on renewable energy — won a victory on Saturday when a state senate committee gave it a positive recommendation following a four-hour debate.
The US Senate Conservation Committee voted 5-3 to give Senate Bill 489 a ‘do-pass’ recommendation. Last year, the same committee killed a similar proposal, nmpoliticalreport. com wrote.
“This transition to renewable ener- gy will not be easy,” said the bill’s primary sponsor, Sen. Jacob Candelaria, D-albuquerque.
A major purpose of the legislation, he said, is “to lay out a just transition for impacted communities to move away from coal and towards a green energy economy”.
Among the features of the 8o-pluspage bill is a 50-percent renewable energy portfolio standard in New Mexico by 2030, with a goal of 80 percent renewable energy by 2040. SB 489 also is intended to soften the financial hit to Public Service Company of New Mexico (PNM), the state’s largest utility and majority owner of the San Juan Generating Station near Farmington.
The aging plant is a major source of employment in northwestern New Mexico.
The bill would set up an economic redevelopment fund to help Farmington and surrounding towns aid displaced workers and would mandate that any replacement energy sources be located in the Central Consolidated School District in the Farmington area — which, Candelaria said, would mitigate the loss of property tax revenue to schools. PNM has said it wants to close the plant by 2022.
Candelaria and other bill supporters argued that the public would not have to pay higher electrical rates if the bill is passed. Under the measure, PNM would be allowed to issue securitized bonds to pay off old debts for the San Juan plant. This would be done with new securitized bonds, which have significantly lower interest rates. Candelaria said the securitized bonds have interest rates as low as two percent or three percent.
Bonds for public utilities typically carry rates as high as nine percent, Candelaria said. “This means ratepayers end up paying millions of dollars for unnecessary debt service.”
The new bonds would be paid off by ratepayers through a new ‘energy transition’ charge. But, Candelaria said, this charge would replace an existing $13 monthly fee to pay off PNM’S old debt. The energy transition fee would be less than or equal to the old charge, bill proponents said.
The securitized bond proceeds, Candelaria said, would not only pay off the utility’s initial capital investment in the coal plant, it also would be used for new renewable energy facilities to replace the coal-fired power, reclamation costs, severance and training programs for displaced workers, and a fund to help communities deal with the economic impacts of losing the coal operation.