Regulators to mull PNM’s long-term energy plans
As utility prepares to lose Four Corners Power Plant, firm looks to wind, solar and battery storage in replacement strategy
State regulators are set to consider a long-term plan by New Mexico’s largest electric utility to replace fossil fuel sources, largely with renewable energy.
Reactions to Public Service Company of New Mexico’s 20-year “integrated resource plan” have been mixed, with approval coming from some environmental and economic advocates and criticism from regulatory staff, in part due to concerns about ensuring reliable service.
A March 15 review by the New Mexico Public Regulation Commission’s Utility Division staff says the plan doesn’t meet three core objectives: reliability; environmental compliance; and affordability.
PNM’s plan, submitted to the commission in December, says the scale of transformation of energy generation in accordance with the state’s Energy Transition Act, alongside a projected growth in energy demand, “is unprecedented in PNM’s history and will challenge the company’s ability to plan, coordinate, and execute.”
PNM anticipates losing 500 megawatts of power generation, or about 25% of the current total demand during peak times, in the next eight years with its planned exit from the Four Corners Power Plant, the expiration of a purchase contract with Valencia Power and the retirement of the Reeves Generating Station, a natural gas plant in Albuquerque.
The utility maps a replacement strategy of mostly solar and wind energy generation, along with battery storage.
State law requires electric utilities to submit integrated resource plans to the commission for review every three years, evaluating supply, price volatility, potential environmental regulations and other factors “to identify the most cost-effective portfolio of resources.”
The commission staff report calls PNM’s plan “overbuilt,” pointing out the utility anticipates more than double the amount of installed capacity in 20 years than it anticipated three years ago, at a cost difference of $2.7 billion.
“The financial burden of overbuilding will fall on the utility customers, who will see astronomical increases in rates because of this plan,” the report states. “Low-income customers will experience the biggest hardship.”
Some environmental and consumer advocates, however,
expressed support for PNM’s plan in written responses submitted to the commission.
A statement from environmental advocacy group Western Resource Advocates says the group “applauds PNM’s commitment to planning for the aggressive development of wind, solar and battery storage resources, or ‘no regrets’ options that are required for any attempt to decarbonize the power generation industry and economy as a whole.”
Leaders of New Mexico Affordable Reliable Energy Alliance wrote in response the utility’s planning processes and integrated resource plans “have significantly improved as PNM has incorporated state of the art planning tools.”
The Public Regulation Commission is scheduled to discuss the plan Thursday and potentially take a vote on whether to accept it. Commissioners are required to make a decision by mid-April.
During a March 28 meeting, commissioners appeared to disagree on an approach to reviewing — and potentially accepting — PNM’s plan, due to staff criticisms.
Commissioner James Ellison requested a public presentation from PNM on the plan, noting the “significant staff concerns” that had not been addressed by the utility. Ellison lamented the commission’s April 16 deadline to vote on acceptance, noting the short time frame would not allow commissioners to raise questions to PNM.
Commissioner Pat O’Connell acknowledged the staff report cited substantive concerns but said he didn’t believe it pointed out anything that should disqualify the plan from being accepted.
“It’s really kind of a check-in on the process at this point; it isn’t a moment that shapes the future,” O’Connell said. “Frankly, that’s my biggest criticism of the staff report, is that their comments aren’t really tied to remedies that are constructive — I think — in terms of the future.”
O’Connell, who formerly worked as a director of planning and resources for PNM, said in an interview Monday the commission’s rules laid out simple criteria for accepting an integrated resource plan.
Such a plan presents modeling and analysis over 20 years but is basically a three-year plan because the utility would be repeating the process, he added.
“This will kick off a [request for proposals] and a set of decisions that get made in the near-term,” O’Connell said, “but the entirety of that 20-year ‘most cost-effective portfolio’ isn’t set in stone.”