PNM should credit customers for shuttered plant ASAP
Utility wants to upend Energy Transition Act to benefit shareholders
Three years ago, New Mexico passed the Energy Transition Act and took a nation-leading step toward reducing the harmful greenhouse gas emissions that cause climate change. This visionary law sets some of the strongest clean energy targets in the country and channels millions of economic development dollars to lessen the local impacts of closing the aging coal-fired San Juan Generating Station. The ETA also utilizes a financial tool that facilitates coal-plant closure through low interest rates, providing significant savings for electric utility customers.
Now, Public Service Company of New Mexico (PNM) has announced plans to delay its refinancing of San Juan until the conclusion of its next general rate case, likely in January 2024 — a delay that will benefit PNM’s shareholders at the expense of its ratepayers. In fact, the delay amounts to $134 million in ratepayer savings that should go to PNM’s customers.
In sponsoring the ETA, our aim was to ensure our state takes strong action to address climate change.
The law calls for 50% of New Mexico’s electricity generation to come from renewable energy resources by 2030 and for utilities to reach zero-carbon electricity by 2045.
To ease the path forward, the ETA provided nearly $40 million in economic assistance funding for those communities most affected by San Juan’s closure. The law also benefits PNM by allowing full recovery of the remaining investment in the plant if the utility uses a financial tool called securitization bonds.
Ratepayers benefit because the bonds’ low interest rates reduce the total amount customers will have to pay for the utility’s costs in closing the coal plant. The PRC approved PNM’s proposal to issue the bonds at abandonment and ordered PNM to give ratepayers a credit removing San Juan costs from rates.
PNM now wants to upend the intent of the ETA by delaying the issuance of the bonds by 18 months and depriving the utility’s customers of a 10% rate decrease they should see on their bills the month after the plant closes. After the plant closes, PNM wants to continue to collect all its San Juan costs in rates, including the profit component embedded in rates.
Unless the PRC orders a rate credit, PNM will have no timely incentive to issue the bonds, and ratepayers will continue paying for a plant that no longer provides electricity generation for PNM customers, all while PNM wouldn’t be incurring any operating costs there.
We see the urgency of the climate crisis every day in our state: prolonged drought, record-hot summers and more intense wildfires with each passing year. The climate action outlined in the ETA is more relevant than ever. The energy transition it calls for will also open new doors to economic opportunities for our state.
With our abundant sun and wind for renewable electricity generation, we can realize the economic benefits of clean energy. Market forces also are driving this transition, as renewable resources have become less expensive than coalfired generation, and the ETA will help electricity customers realize the economic savings of that shift sooner.
But we must ensure this transition benefits all New Mexicans, particularly the disproportionately impacted communities located around PNM’s coal plants. Although PNM has recently committed to provide the transition assistance funds to those communities without delay, ratepayers are also entitled to receive their benefits, especially as inflation rises across the nation.
I hope New Mexico’s Public Regulation Commission accepts the recommendations of its hearing examiners to reject PNM’s planned delay and instead provide PNM customers the rate reduction they are entitled to when San Juan closes this September. The time to carry out the provisions of the ETA is now. We can’t afford to wait.