Energy groups want state to delay ruling on PNM power plan

August 2014

By Staci Matlock

The New Mexican (read article there)

Updated: 9:18 pm, Thu Aug 7, 2014.

Energy advocacy groups are asking state regulators to reject a long-range power plan filed by Public Service Company of New Mexico until a decision is made on how the utility will replace electricity from its primary coal-fired plant.

Western Resource Advocates, New Energy Economy and the Coalition for Clean Affordable Energy say the utility company failed to prove its plan is the most cost-effective for ratepayers and failed to account for an array of risky factors such as coal prices, carbon emissions and increased safety at a nuclear power plant. Those costs, the groups claim, invariably get passed along to ratepayers.

“The [Public Regulation Commission] requires the most cost-effective portfolio for customers, and this is not the most cost-effective,” said Mariel Nanasi, executive director of New Energy Economy.

In addition, the groups and the New Mexico attorney general say the Public Regulation Commission should delay a decision on PNM’s power plan until after the regulators have made a decision on the utility’s proposal for shutting down two units at the coal-fired San Juan Generating Station near Farmington and replacing the power from those units. The power replacement plan will impact the utility’s future power plan and how much PNM customers will pay for their electricity.

“We’re asking the commission to put this on the back burner until we have sorted out these issues,” said Steven Michel, an attorney with Western Resource Advocates.

PNM officials maintain that their resource plan provides the most benefits at the least cost to customers. “At the end of the day, PNM’s IRP [integrated resource plan] proved to be the best way to balance reliability, affordability, and continuing to add cleaner energy resources at the least cost to our customers. We have seen no data to the contrary,” the company said in a statement.

The PRC has until mid-August to take action on PNM’s plan. It has scheduled a hearing on the power replacement plan for October.

All three energy advocacy groups filed protests July 31 against PNM’s integrated resource plan. The plan calls for a mix of solar, natural gas, coal-fired power and nuclear power to provide electricity to half a million customers over the next two decades.

Energy advocates think the plan still calls for too much coal, too much nuclear and too little renewable energy.

Utility companies are required to file integrated resource plans every three years in New Mexico, spelling out how they will provide power for 20 years. “PNM’s last integrated resource plan was very poorly done,” Michel said. “This one we thought was by and large thoughtfully done and their analysis was strong, but there were several things we think they analyzed poorly.”

Ratepayers can end up paying more than they should have to if the analysis of resources and costs is wrong. Michel said PNM has failed to prove its overall power plan and its plan for replacing power at the San Juan Generating Station are the most cost-effective options for customers.

For example, while PNM plans to close two coal-fired units at the San Juan plant, it wants to replace some of that power by buying additional capacity from one of the remaining two units. It originally asked for 78 megawatts of additional power capacity and then bumped it up recently to 132 megawatts of capacity.

The costs of those options weren’t properly considered by PNM, energy advocates claim. The utility didn’t take into account the financial risks of investing in coal, even though federal regulators are on the verge of approving new carbon-pollution and coal-ash rules that could greatly increase the costs.

In addition, it wouldn’t be in ratepayers’ best interests for the utility to agree to a long-term “take or pay” agreement for coal to feed the generating station because that would obligate PNM to pay for coal, even if it ended up not using it, Michel says.

“We think it isn’t wise [to invest in] any more coal capacity,” Michel said. “Folks can blame the [Environmental Protection Agency] for these regulations, but the fact of the matter is coal is a very dirty resource. If it needs to be cleaned up, it is very expensive.”

PNM also wants to start selling some of the power it owns at the Palo Verde Nuclear Generating Station to its New Mexico customers instead of on the open market. Palo Verde is under orders from the Nuclear Regulatory Commission to beef up safety measures, but Michel said the utility failed to include the costs and risks of those federal mandates.

PNM officials maintain their staff “used comprehensive modeling that included virtually every power resource and cost-risk scenario, including the additional power from Palo Verde and San Juan Unit 4.” They said the plan “will reduce the amount of coal in PNM’s portfolio by 14 percent, in addition to adding significant renewable energy.”

Contact Staci Matlock at 986-3055 or smatlock@sfnewmexican.com. Follow her on Twitter @stacimatlock.

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