PNM should plan to replace coal and nuclear plants
Over three years ago, New Energy Economy argued that Public Service Company of New Mexico should close its expensive, dirty, and old coal and nuclear plants and move immediately to cheaper, clean and local renewable energy.
According to its recent preliminary integrated resource plan, PNM is finally admitting that its coal plants are more expensive than renewable energy sources and will be shutting down the San Juan Generating Station and Four Corners coal plants (“PNM plan would end coal power by 2031,” April 22). We should all cheer this acceptance of the facts by PNM. But much more needs to be done.
First, PNM’s plan to shut down the coal plants takes an unreasonably long period of time, San Juan Generating Station in 2022 and the Four Corners coal plant in 2031. This plan requires ratepayers to continue to pay excessive costs to operate these highly toxic facilities for up to 14 more years. Cheaper sources of local, renewable electricity are available now.
Second, PNM has not agreed to exit its nuclear facilities in Arizona. These facilities are also more expensive, and more dangerous than local renewable energy facilities, and continue to create many tons of highly radioactive waste for which no acceptable storage solution has been developed.
PNM should be required to develop a plan for the shutdown of all of its expensive and toxic coal and nuclear facilities, in the very near future (certainly within five years), and the replacement of these facilities with less expensive, local renewable energy facilities. The estimated cost of such a shut-down, including cleanup, and the benefit of immediately lower costs to ratepayers from lower-cost, local renewable-energy facilities, should be included in the analysis and presented for public consideration.
PNM should be required to follow the law, and the proposed settlement of PNM’s latest rate case, calling for an additional 9 percent increase in rates, on top of the rate increase of 9.5 percent approved last year, to pay for the continued operation of PNM’s old coal and nuclear facilities, as endorsed by the staff of the Public Regulation Commission, Attorney General Hector Balderas and certain other environmental groups (that seek only to obtain the closure of the coal facilities over time, and without consideration of the cost to ratepayers), should be set aside as contrary to New Mexico law and regulation.
The law requires that PNM conduct a meaningful financial analysis showing a benefit to the public before it invests in new resources.
The regulatory compact requires such a showing because ratepayers are required to reimburse the utility for such approved investments, as well as paying PNM an additional profit margin on such investment.
In 2013, the partnership agreement at the Four Corners coal plant expired. PNM was required to re-evaluate its continued investment in the plant, and show that the plant provided the least cost alternative to the company, and before agreeing to a new $580 million coal contract; $90 million in new, federally mandated pollution controls; and $58 million in other new capital expenditures. The expenditures requested at the Four Corners coal plant in the last two rate cases alone amount to over $700 million.
Imagine if PNM spent these funds on fixed-price renewable energy systems like solar or wind instead?
It would be a hedge against the company’s continuously rising electric bills. Instead, PNM made these investments without such a thorough financial analysis and now seeks a bailout from government insiders that will require ratepayers to foot the bill. The PRC should reject this settlement and require a thorough analysis of the costs proposed and the alternatives available.