Albuquerque Journal: Emission Rule Back for New Hearing

December 2011

By Michael Hartranft

A Santa Fe environmental group’s greenhouse gas rule adopted by the Environmental Improvement Board under the Richardson administration in late 2010 is back in the new board’s court.

Starting today, a day short of a year since the previous board approved it, the new board begins an evidentiary hearing on a petition to repeal the New Energy Economy rule.

The hearing will start at 9 a.m. in Apodaca Hall in the PERA Building in Santa Fe, across from the State Capitol. There will be public comment sessions at 6:30 each night of the hearing.

The cast of opponents – Public Service Company of New Mexico, the New Mexico Oil and Gas Association, Tri-State Generation and Transmission Association and other industry groups – is the same as it was a year ago. Last month, the groups went before the board – all Gov. Susana Martinez appointees – seeking the repeal of the state’s other greenhouse gas regulation, a cap-and-trade program proposed by the New Mexico Environment Department. A decision is pending.

Opponents’ arguments are virtually unchanged: Complying with the rule would drive up energy costs, jeopardize jobs and put New Mexico businesses at an disadvantage with those in states that have less regulation. They also claim the carbon reductions required by the rule would make little, if any, difference in the battle against global warming.

Lacks common sense

“The cap rule is not supported by statutory authority, technical merit or common sense, and it brings significant costs to New Mexico consumers with no environmental benefit,” Tri-State spokesman Lee Boughey said.

Unlike the NMED – which, under the Martinez administration, did an about-face on cap and trade and called no witnesses to support the measure during last month’s repeal hearing – NEE intends to fully defend its rule.

“The rule is based on sound reasoning and substantial evidence,” said Mariel Nanasi, executive director of the Santa Fe-based, nonprofit NEE. “To overturn it without any new evidence – except for climatic changes are more certain than ever – would be arbitrary and capricious.”

She said entry-of-appearance filings made with the EIB by 23 organizations that support NEE’s position- ranging from environmental advocates and tribal organizations to youth groups and solar and wind businesses – “shows the breadth and depth of support in New Mexico for this rule.”

“Nobody is asking them (industry opponents) to go out of business,” Nanasi said. “We’re asking them to be responsible members of society.”

In reaching its decision, the 2010 Richardson-appointed board declared there was compelling evidence that human-caused climate change is real and causes “severe impacts” to public health. Left unaddressed, it said, the effects could be catastrophic on New Mexico and the Southwest, from increased drought and less snowpack to more heat waves.

Congress ‘impetus’

The NEE measure, it said, would serve as an “impetus” for Congress and other states to act.

The rule would take effect in 2013, but only if the cap-and-trade program or federal emissions regulation are not forthcoming. Initially, it would apply only to the electric and gas and oil sectors, mandating sources that emit 25,000 metric tons or more of carbon dioxide to start reducing emissions by 3 percent a year through 2020. That would include coal and natural gas electric generation plants, as well as refineries, processing and treatment plants and compressor stations.

Companies unable to meet the reduction mandates could buy offsets from unregulated state companies that are able to reduce greenhouse gas emissions. To control costs, the rule set a $50-per-metric-ton limit on what a company would be required to spend to reduce emissions, with $1 added each subsequent year.

Steve Michel of Western Resource Advocates, who wrote much of the NEE regulation, testified the rule provides an “off-ramp” for any company that could demonstrate the cost of compliance would affect its “financial integrity.” He also testified it would increase electricity prices by less than 1 percent, and a fraction of a percent for the oil and gas industry.

A $500 million cost

But critics contend the rule would have enormous economic impacts.

“There are very few options available for electric utilities to meet this rule,” PNM spokesman Don Brown said, noting the rule would affect five PNM power plants. “We don’t have the ability to capture and store carbon, so what this rule results in is curtailing production at some sources that are covered by the rule and shifting to sources that are not.”

That could include switching from coal to more expensive natural gas, or increasing its open market power purchases. “We estimate the cost to PNM customers alone will total about $500 million through 2030,” he said.

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