Group accuses PNM of using bad data to back San Juan plan

Posted: Friday, September 25, 2015 9:00 pm | Updated: 10:27 pm, Fri Sep 25, 2015.

By Steve Terrell
The New Mexican | 

An advocacy group for alternative energy charged Friday that the Public Service Company of New Mexico has “fabricated” numbers about higher demand for electricity and used a “fictitious baseline” in its efforts to win approval for an operations plan at the San Juan Generating Station.

The group, New Energy Economy, contends that PNM relied on bad numbers in a computer modeling program to try to convince the state Public Regulation Commission and the public at large that using primarily nuclear power from an Arizona plant and coal power from the San Juan plant near Farmington would cost less than solar and wind power.

Mariel Nanasi, executive director of New Energy Economy, says she believes PNM is manipulating the numbers to justify its request for more coal and nuclear power so it can pass on costs of the San Juan Generating Station and the Palo Verde nuclear plant to its ratepayers.

David Van Winkle, an expert for New Energy Economy, elaborated on the allegations in a 100-plus-page document filedFriday with the Public Regulation Commission.

“Now, for the first time in history, solar and wind also are far better in terms of cost than coal and nuclear,” he said. “The market for coal is collapsing. Current and forthcoming regulatory measures that will affect coal will make it increasingly expensive and risky for utilities and their ratepayers. Yet, PNM management predetermined the outcome of the replacement power package in 2012 and has bent over backwards to manipulate the outcome of this case to mislead the public and the [regulation commission] to believe that coal and nuclear continue to be cost-competitive.”

A spokeswoman for PNM said the company didn’t have enough time to review all of Van Winkle’s testimony.

“However, PNM does not agree with any of the characterizations in the executive summary,” the company said in a statement. “PNM will file our response to all of their assertions on Oct. 5. Our filings speak for themselves and will be fully supported in public hearings before the PRC.”

Van Winkle, a former financial analyst with Texas Instruments, has worked as an analyst for several environmental groups. He said PNM vastly underplayed rate increases it plans to pass on to consumers during the next several years.

In its recent filing for a rate increase, PNM said retail electricity demand will be at “zero growth through 2033.” However, Van Winkle said, in a computer program that crunched numbers for the utility in the San Juan case, PNM gave a figure of 20 percent growth by 2033.

“In other words, PNM’s testimony and discovery responses provide fundamentally contradictory information,” Van Winkle said. “PNM asks for rate increases, based on zero growth, in order to justify higher rates, but uses 20 percent growth to justify the acquisition of new baseload resources in [the San Juan] case.”

The utility is proposing to close two of the San Juan plant’s four coal-fired units and replace the lost capacity with more coal-generated power from another unit at the plant, as well as natural gas from a proposed new facility, nuclear power from the Palo Verde plant in Arizona and a small percentage of solar power.

In a proposal for a rate increase filed in August, PNM asked to raise its rates for residential customers by 15.8 percent. That would mean about $123.5 million in revenue.

The company said that, if the Public Regulation Commission approves the San Juan plan, that would mean cheaper coal costs, which would mean the rate increase would be closer to 8.31 percent for the average residence.

The five-member Public Regulation Commission will vote on both the power plant plan and the rate increase.

Van Winkle also said PNM, in the San Juan plan, significantly understated the rate increases it plans during the next 20 years.

The utility’s revenue requirements in the request for a rate increase are estimated at $77 million in 2018, not the $10 million figure stated in the San Juan plan. The miscalculation would amount to $2.3 billion over 20 years. Van Winkle said.

He also said that PNM provided false assumptions in its computer modeling program about value of Palo Verde that “biased the outcome” in favor of the utility’s plan.

“When these inconsistencies were removed, four alternative replacement plans were more cost-effective,” he said. Those plans use more renewable energy than PNM’s proposal.

In addition, Van Winkle said, PNM overestimated the cost of renewable energy in its computer program. PNM used a figure of 6.8 cents per kilowatt-hour for solar power. However, in Southern New Mexico, Southwestern Public Service is seeking approval from the Public Regulation Commission for a plan that would use 140 megawatts of solar energy that sells for 4.2 cents per kilowatt-hour.

When the revenue requirements analysis is corrected, Van Winkle said, at least three alternative plans — all of which involve more use of solar and wind energy — are more cost-effective than PNM’s plan.

New Energy Economy is recommending that PNM use 400 megawatts of wind and solar energy by early 2018. PNM’s plan calls for 40 megawatts of solar power at San Juan.

In its statement, PNM said: “Contrary to [New Energy’s] allegations, PNM has a longstanding commitment to renewable energy.”

The company also noted that the latest stipulation agreement for the San Juan plant has been endorsed by “several parties that represent renewable energy, environmental and customer interests.”

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