New Mexican: Groups request independent assessment of PNM plan

June 2014

Public Service Company of New Mexico wants to replace some of the coal power produced at the San Juan Generating Station in the Four Corners area with solar, natural gas and nuclear power. But the switch is likely to cost PNM customers. New Mexican file photo

Public Service Company of New Mexico wants to replace some of the coal power produced at the San Juan Generating Station in the Four Corners area with solar, natural gas and nuclear power. But the switch is likely to cost PNM customers. New Mexican file photo

Posted: Sunday, June 1, 2014 8:00 pm | Updated: 11:34 am, Mon Jun 2, 2014.

By Staci Matlock
The New Mexican

An unusual coalition wants state regulators to appoint an independent examiner to vet a plan by the state’s largest electric utility for replacing electricity from a coal-fired power plant.

They want to make sure the plan is the most cost-effective for consumers and minimizes damage to the environment.

The New Mexico Attorney General’s Office, energy company Southwest Generation and New Mexico Industrial Energy Consumers joined the Santa Fe-based New Energy Economy, Interwest Energy Alliance and the New Mexico Green Chamber of Commerce to ask for an independent auditor May 29. Some of these groups — like the big company trade group New Mexico Industrial Energy Consumers and the green power advocates at New Energy Economy — are most often at loggerheads over energy issues.

This time, however, the groups agree an independent monitor is needed to ensure Public Service Company of New Mexico is picking new power resources in a “reasonable, unbiased and competitively fair manner,” according to the motion filed Thursday with the state Public Regulation Commisson.

Utility companies like PNM can produce their own electricity from facilities they own or buy it through long-term power purchase agreements. In either case, the costs of the power are passed on to rate payers. In a utility case that many consider one of the most important energy decisions public regulation commissioners will make this year, PNM is asking for approval of a plan to retire two coal-fired units at the San Juan Generating Station near Farmington and replace the power with other resources.

The groups asking for an independent monitor think PNM’s plan needs careful scrutiny by a third party.

Under the joint proposal, an independent examiner would be selected from a list of qualified candidates provided by PNM but approved by state regulators and the attorney general. PNM would pay for the examiner, who would keep a log of all communications with parties involved in the power-replacement case.

PNM’s power-replacement plan grew out of a mandate from the federal government to clean up pollution in the Four Corners region of northwestern New Mexico. The San Juan Generating Station, which provides more than half the electricity used by PNM customers, is a primary culprit behind the emissions clouding up the region’s skies and obscuring nearby national monuments.

To correct the haze problem, PNM proposes retiring two of the four coal-fired generating units at the San Juan plant. It will install pollution controls on the remaining two units under the plan.

The federal Environmental Protection Agency is expected to decide by September if the plan will sufficiently reduce haze. The New Mexico Public Regulation Commission, meanwhile, has to decide if PNM’s plan to replace the 834 megawatts of coal power from the two San Juan units makes the most sense for ratepayers and the environment.

PNM proposes to replace the power with 134 megawatts of nuclear power from the Palo Verde Nuclear Power plant, 40 megawatts of power from a new solar farm and 177 megawatts from a natural-gas-fired plant near Farmington. PNM also wants to add 132 megawatts of coal-fired capacity on one of the remaining San Juan Generating units, a recent increase from 78 megawatts the company originally requested under the power replacement plan.

A hearing on the power-replacement plan is scheduled Aug. 19-29 at the PRC offices in Santa Fe, but PNM filed a request with the commission Friday to postpone the hearing to Oct. 6-17.

PNM says its power-replacement plan offers the most reliable mix of electricity for its customers at the best price while reducing pollution. Even with the request for additional coal-power capacity at San Juan, “our total reliance on coal as part of overall energy mix would drop by about 10 percent, which is a significant reduction,” said Valerie Smith, a PNM spokeswoman.

But renewable energy advocates from New Energy Economy, the Sierra Club and the New Mexico Green Chamber of Commerce think the company can do a lot better. They want to see the company ramp up renewable energy and steer clear of coal and nuclear power.

New Energy Economy’s Mariel Nanasi said adding back any coal capacity to PNM’s mix of resources will increase environmental risks and ultimately the costs to consumers.

On Monday, the federal government is expected to release a new rule for carbon emissions from coal-fired power plants. The costs of coal under that rule and the expected increase in costs associated with coal ash under proposed federal regulations are expected to increase.

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

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