PNM seeks to issue $300M in bonds

Utility says move will save customers money as it pulls out of coal-fueled Four Corners Power Plant

The Public Service Company of New Mexico hopes to issue $300 million in bonds while pulling out of the Four Corners Power Plant, a decision the company says will save customers money.

Tom Fallgren, vice president of energy generation at PNM, said his company’s plan will save customers $30 million to $300 million over the long haul. Fallgren said one of PNM’s expert witnesses gave a range of potential results for typical residential customers, the worst being a $1.32 increase in the monthly bill and the best a $19.31 decrease.

But PNM’s proposed departure from Four Corners has been challenged by some environmentalists and others.

“There are a lot of different views on the case, on what the law is and what the facts show,” said Sierra Club attorney Matt Gerhart. “If you talk to 10 different attorneys, you’ll get 10 different answers.”

The Sierra Club opposes PNM’s plan, in part because it could prevent the early closure of the plant, Gerhart said.

The proposed $300 million bond, much of which would cover past investments in Four Corners, is among the most contentious issues in the plan. PNM representatives and critics debated during a seven-day hearing the past two weeks the plusses and minuses of PNM’s proposal.

Fallgren and PNM say that by comparison to staying in Four Corners until 2031, the use of cheaper and cleaner solar, wind and other forms of energy will save considerable money. Also, the state’s Energy Transition Act of 2019 will give PNM the chance to receive lower interest rates on 25-year bonds, and that will save money as well, he added.

Critics of PNM say the company squandered time and money over the past several years with unwise investments at Four Corners while the nation’s passion for coal-fueled plants waned. Those critics say all, or at least a chunk, of the $300 million in bonds should be PNM’s responsibility, not the customers’.

The Public Regulation Commission probably will rule this fall on PNM’s proposal to get out of Four Corners. The commission also is expected this fall to vote on whether PNM should merge with Avangrid of Connecticut and its parent company, Iberdrola of Spain.

Fallgren said Friday the commissioners “have all the information they need to make a good decision.”

The case also may test whether the Energy Transition Act trumps the Public Regulation Commission’s ability to find some of PNM’s capital investments at Four Corners “imprudent.” If the commission denies PNM’s proposal, questions over the wisdom of past investments will come into play, Gerhart said.

PNM intends to turn its ownership share of the plant to the Navajo Transitional Energy Co. at the end of 2024. PNM wanted out of Four Corners badly enough that it will pay the company $75 million to take its share of the plant.

Navajo Transitional Energy and other owners of the plant, such as Arizona Public Service (the primary owner) and Tucson Electric Power, are expected to keep the plant open until 2031.

Critics asked a PNM expert witness, Frank Graves, about the degree of analysis PNM performed before committing to the capital investments in recent years. El Paso Electric left Four Corners five years ago while PNM, currently 13 percent owner of the plant, decided about eight years ago to stay in.

Graves, a utility industry economist from Boston, said PNM didn’t perform a rigorous analysis of the matter, but “by luck or by intuition they ended up about in the right place, anyway.” Graves said the capital investments PNM has made in recent years were defensible.

“It was a bad process,” he said, “but it wasn’t an imprudent decision.”

Mariel Nanasi, attorney and leader of New Energy Economy, a longtime PNM critic, said that admission was a blow to the utility. “Had PNM done an appropriate analysis … at that time, they would have gotten out, too,” Nanasi said late last week. “This is what PNM didn’t do and EPE [El Paso Electric] did.”

Fallgren said PNM “could have presented that better” but did perform analyses.

“Could we have done even more on the rigorous analysis? I’m not disputing that,” he said.

He said merely because El Paso Electric got out of Four Corners didn’t mean PNM erred by waiting. He said El Paso Electric now faces criticism from some environmentalists for its reliance on natural gas as an energy source.