Our View: PNM needs to negotiate for better plan

Posted: Thursday, April 9, 2015 7:00 pm | Updated: 12:20 am, Fri Apr 10, 2015.

The Public Service Company of New Mexico plan designed to transition away from coal and provide reliable, cost-effective power for its customers must be reworked. That had become increasingly clear as supporters began to question PNM’s cost projections and the reliability of its coal supply, with the Albuquerque City Council rescinding its support earlier this week. Albuquerque was just one of the groups backing away from PNM’s plan.

Yet another blow followed when the hearing examiner overseeing its adoption refused to approve PNM’s path forward to find new sources of power after partial closure of its coal-fired power plant in northwestern New Mexico. “The risks and costs associated with the Stipulation [agreement] outweigh its benefits,” was the statement from the hearing examiner. It can’t get much plainer than that.

What is at stake right now is the future of energy sources for some 2 million PNM customers in the Southwest. Two of the four units at the San Juan Generating Station are scheduled to close in 2017, part of an agreement with federal and state officials designed to reduce haze in the Four Corners area. PNM, the plant operator, had wanted to replace the two units with additional coal-fired generation and a mix of natural gas, nuclear and solar power. Utility company officials sold the plan as the cheapest, best bet for ratepayers and for utility investors.

The hearing examiner, in making a recommendation to the Public Regulation Commission — which has final approval — did not agree. Examiner Ashley Schannauer is concerned about the 132 megawatts of coal-fired power being called for in the agreement. PNM lacks a contract for the coal past 2017, for one thing, and there have been questions about ownership at the plant. As PNM takes over more of the plant ownership, the utility takes on additional risk and potential costs. Schannauer — as have plan critics — believe PNM must further diversify its sources of power to reduce long-term risk. The hearing examiner points out that PNM is taking on the very risks other utility companies are seeking to avoid.

The plan simply doesn’t make sense, given the federal government’s increasing desire to rein in carbon-dioxide emissions. The PRC should have little alternative but to say no to the PNM plan as presented.

For renewable energy supporters, this rejection is welcome — they have been saying all along that PNM could provide the energy its customers needs with a stronger mix of wind and solar power. As presented, PNM would close Units 2 and 3 and continue operating two other coal-fired units, but equip them with pollution controls to reduce the haze caused by burning coal.

Solar and wind supporters maintain that PNM could simply shut down all the coal-burning units. Renewable energy, they contend, is cheaper and, in the long term, better for the environment. Even without a formal PRC vote, with the hearing examiner’s rejection of this proposal, the utility must find another path forward.

Read the article here.

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