PRC Filings Demonstrate that PNM’s Replacement Power Plan is a Scheme to Cheat New Mexico Ratepayers
For Immediate Release
Contact: Mariel Nanasi (505) 469-4060
Executive Director, New Energy Economy
November 26, 2014
PRC Filings Demonstrate that PNM’s Replacement Power Plan
is a Scheme to Cheat New Mexico Ratepayers
Santa Fe, NM -- Today, New Energy Economy filed its opposition to the stipulated replacement power plan presented to the New Mexico Public Regulation Commission (“PRC”) by the Public Service Company of New Mexico (“PNM”) and others.
“It is crystal clear from the evidence provided today that PNM is defrauding its ratepayers and the PRC by massively inflating costs, rigging the modeling data, and refusing to conduct a transparent, competitive process to ensure the most cost-effective energy to New Mexico consumers,” said Mariel Nanasi, Executive Director and Attorney for New Energy Economy.
Testimony filed today by New Energy Economy reveals a number of crucial facts that show the stipulation to be risky and expensive for consumers, while generating huge profits and reduced risks for the company’s shareholders. Individually, any of these facts should force the Commission to reject the stipulation; taken together, they demonstrate a pattern of blatant corruption and fraud.
- The reason PNM is pushing for additional nuclear power from its Palo Verde 3 plant in Arizona is so that the company can force New Mexico consumers to pay more than double (8.1 cents/kWh) what PNM is earning on the open market for that energy (3.7 cents/kWh). In addition, by incorporating Palo Verde 3 energy into its New Mexico rate base, it shifts the liability of future decommissioning, and the risks associated with an aging nuclear plant, from its shareholders to New Mexico consumers.
According to David Van Winkle of New Energy Economy, “PNM acknowledges that PNM is losing money selling PV3 generated electricity on the open market. But by putting PV3 into rates it turns a troubled asset into a profitable asset for PNM, at enormous expense and potentially catastrophic risk to the ratepayers. “
- More coal is proposed in the stipulation because its partners in the San Juan plant are fleeing from their reliance on coal, and PNM is taking their interests, notwithstanding that it is acquiring an interest in technology and a fuel source that, according to experts, is essentially defunct. For its justification, all PNM can say is that it would not have reached agreement with the companies who are abandoning the plant unless it agreed to take their shares. So although coal is not cost-effective, and is an unreasonable and imprudent investment, PNM’s acquisition of more interest in this coal plant will be a de facto bailout of out-of-state utilities and of PNM and its shareholders – shifting liability for poor business decisions by the company onto the backs of unsuspecting ratepayers.
- After an expert in energy economics analyzed PNM’s modeling data that it has submitted to the PRC to justify shifting Palo Verde 3 into rate base and acquiring a greater interest in San Juan coal unit 4, it became clear that PNM had misled the Commission and consumers by using different costs than the company presented in its other, written filings, and manipulated the model in ways necessary to ensure that coal acquisition appeared to be economical, when it is not, and did much the same with Palo Verde.
“PNM failed to show this Commission a reasonable portrayal of their system, have used internally inconsistent forecasts that bias the selection of San Juan, and constrained their model in such a way that a least cost plan could not be generated,” said Jeremy Fisher, PhD, of Synapse Energy Economics.
For example, PNM artificially reduced the coal costs in its modeling to ensure the outcome it desired: more coal. According to Dr. Fisher, “there is sufficient evidence to suggest that the coal prices used [in its model]…are dramatically lower than either historic prices or those estimated by the Company elsewhere.”
In addition, PNM’s modeling restricted wind energy to a maximum of only 100 MW, even though wind is the most cost-effective energy resource according to PNM’s own numbers. Releasing this constraint, and allowing 400 MW of wind instead -- without any other changes to the model -- reduces consumer costs dramatically, and renders the entire San Juan Generating Station non-economic and unnecessary.
“It is outrageous for this stipulation to force New Mexico consumers to bear massive costs and catastrophic risks to bail out PNM and its shareholders,” said Nanasi. “It is even more shocking that PNM would go to such great lengths to obscure the facts and mislead the Commission and its customers. But the evidence speaks for itself.”
About New Energy Economy
New Energy Economy is a registered nonprofit organization established in 2004 to create economic opportunity in New Mexico with less carbon pollution and more clean energy. New Energy Economy works in partnership with diverse allies to encourage job growth, investment and innovation in a more efficient, sustainable and equitable energy sector. New Energy Economy grounds its work in the research and findings of the world’s leading scientific and technological authorities. Learn more at www.newenergyeconomy.org
NEW MEXICO JOINS NATIONAL MOVEMENT TO PRICE CARBON
Positive Force Challenging Gridlock
U.S. Congressman Chris Van Hollen (D-Md.) on Wednesday, July 30th introduced the “Healthy Climate and Family Security Act of 2014.” The attached bill caps global warming pollution, requires fossil fuel companies to pay for their emissions, and rebates that money to all Americans in a fair and transparent way that actually increases the net incomes of a large majority of American families!
“There is a positive force that is challenging gridlock in Washington – and it is collective action on climate,” says Mariel Nanasi, Executive Director, New Energy Economy. New Energy Economy is part of a national coalition of grassroots organizations – not necessarily national big green groups – that support the views of the people who want bold action on climate. “We don’t engage in the drama of gridlock; now is the time to respond to the most pressing issue facing humanity. Finally there is a courageous Representative who is truly representing the will of the public with a plan that is simple, fair, and achievable,” adds Nanasi.
The Healthy Climate and Family Security Act would cut carbon pollution 20% below 2005 levels by 2020, 40% by 2030, and 80% by 2050. It requires oil, coal and gas companies to buy pollution permits for 100% of the carbon they bring into the economy. It does not allow for potentially complex carbon “offsets” and it prevents Wall Street involvement in the carbon market. Then, in equal-size payments, it returns 100% of the revenue raised from the permit auction to all US residents with a valid Social Security number. The bill will spur economic investment and create a large number of jobs in solar and wind energy.
New Mexico organizations were amongst the first groups to endorse the legislation: 350.org, Earth Care International, New Energy Economy, New Mexico Interfaith Power and Light, Physicians for Social Responsibility – New Mexico, and Renewable Taos (New Mexico). “In New Mexico, we live close to the land and see ourselves as part of nature, not separate from nature, and therefore want to be at the forefront of stopping the polluters from spoiling life for our children,” says Nanasi.
Tell Congress you support the bill by signing a petition here: http://climateandprosperity.org/
Read the bill here.
Read a statement of support for the climate bill, endorsed by a variety of groups across the nation:Van Hollen bill sign on statement
“Given the unequivocal evidence of global climate disruption and the damage it is wreaking on communities across the country, President Obama and the EPA’s leadership on carbon regulation comes at a critical time and should be celebrated. While we applaud the administration’s progress, we believe the targets are too modest and the plan’s timeline for state’s implementation proposals is unnecessarily protracted given the urgent need to mitigate climate disruption. Further, the incorporation of emissions trading and offsetting creates opportunities for utilities to dodge the responsibility to either pay for their pollution at a level equivalent to the human health and environmental damage they create or to change to cleaner energy sources,” says Mariel Nanasi, Director of New Energy Economy.
Nanasi continues, “Though the modest targets set by the EPA fall short of the recommendations in the Kyoto Protocol and do not adequately address the threats of climate disruption outlined by recent reports from the Intergovernmental Panel of Climate Change (IPCC) and the National Climate Assessment, they are an important start. These standards are achievable and most importantly, they begin to provide the impetus for changes in our energy supply which will hopefully lead to the necessary comprehensive shift in our energy mix that is needed to protect our children and our planet. We know that solar and wind are cost effective today and present a critical opportunity to shift from harmful, global-warming-causing energy sources to cleaner energy sources.”
The nation stands at a crossroads. Solar and wind are increasingly out-competing coal and nuclear across the country. Renewable energy provides local jobs and sustainable economic development that can be the foundation for an economic revitalization built on clean energy sources. The EPA’s carbon rule leaves a great deal of flexibility and openness to states to determine the most effective plan for compliance. Unfortunately, New Mexico’s largest electric monopoly, Public Service Company of New Mexico continues to pursue deeper investment in coal. Currently, PNM’s energy portfolio consists of 58% coal with only 2% solar, and 5% wind. While an anti-haze/clean air ruling by the EPA last year is forcing PNM to close down two units at the San Juan Coal plant, PNM is pursuing the purchase of an additional 132 megawatts of coal in its replacement power proposal – posing significant risk to rate-payers as the EPA’s carbon rule and pending coal ash regulation ensure that the coast of coal will continue to rise.
New Mexico can do better. Conservation and energy efficiency should be central part of our state’s energy plan as well as solar and wind. Further, as coal plants are retired, we need to take the opportunity to replace coal with renewables to the greatest extent possible. New Energy Economy along with local public health, environmental, and rate-payer groups is pushing for a replacement power plan based on renewables as well as a date certain to close down a third unit of San Juan (2018) and the fourth Unit by or before 2023. THAT will ensure that New Mexico meets the carbon standards set by the EPA rule and that New Mexicans are protected against the financial risks, environmental, and public health costs of coal.
“There’s a strong link between economy health and energy choices. With substantial investment in solar and wind, which New Mexico has in abundance, we could be providing jobs in the new energy economy and reducing public health and environmental costs associated with coal pollution. Yet at the same time as they are closing two coal units, PNM is purchasing an additional 132 megawatts of coal. PNM’s failure to deploy renewables in New Mexico even as solar and wind prove cost-competitive is harming our economy and our health. With regulation like the Carbon Rule, the cost of energy to rate-payers and New Mexican tax payers will continue to rise unless we successfully push our utilities, like PNM, to stop investing in coal and to invest instead in clean energy,” states Nanasi.
Santa Fe, New Mexico – Today’s announcement by President Obama to declare Organ Mountain Desert Peaks a national monument under the Antiquities Act was celebrated across the Land of Enchantment. The national monument includes places that chronicle New Mexico’s history including the site of the original US-Mexico border prior to the Gadsden Purchase, training sites for the Apollo Mission (Kilbourne Hole), and thousands of ancient archaeological sites with unique prehistoric rock art carved and painted onto the cliffs. The scenic Organ Mountains offer a spectacular backdrop for amazing cultural destinations within the monument, including the petroglyph-lined canyons of the Sierra de las Uvas Mountains and the sites of numerous well-known western historical figures and events including Billy the Kid, Geronimo, and the Camino Real and Butterfield Stage Coach Trails. The Organ Mountains-Desert Peaks National Monument will benefit both the lands and the community. Economic studies show this designation has the potential to add more than $7.4 million in additional annual economic activity and doubling the number of jobs supported by outdoor recreation and tourism industry in the region.
This designation came in response to considerable input and support from the local community, Native American leaders including the All Pueblo Governors Council, the New Mexico and National League of United Latin American Citizens, the New Mexico and Las Cruces Green Chambers of Commerce, local ranchers, sportsmen, faith leaders, archaeologists, historians and numerous local elected leaders.
“Pueblo people from across New Mexico appreciate President Obama acting to designate the Organ Mountains-Desert Peaks as a national monument,” said Marian Naranjo, Executive Director of Honor Our Pueblo Existence, H.O.P.E. “This sacred area is home to plants, wildlife, and sacred sites that are part of the deep cultural connection between pueblo people and the land. The protection of these lands is essential for ensuring access and enjoyment to these sacred areas for generations to come, Naranjo enthusiastically exclaimed.”
Support for preservation is widespread and was reflected in several recent polls showing a majority of Doña Ana County residents (83%) wanted an Organ Mountains-Desert Peaks National Monument designation; as well as resolutions of support from Doña Ana County, the cities of Las Cruces, El Paso, and the town of Mesilla.
New Energy Economy, a Santa Fe based nonprofit published a digital photo book highlighting the broad and deep community support for a national monument including sportsmen, business owners, clergy, Native Americans, veterans, farmers, elected officials, and other civic leaders.
“The outpouring of statewide support for protecting Organ Mountains-Desert Peaks is because of its multiple uses. One sees evidence of Native Americans grinding pots in outdoor kitchens, grandfathers hunting with their grandsons, mountain bikers enjoying steady climbs, Veterans seeking solace in the vast expanse, and lovers losing themselves under the stars. This magnificent landscape attracts people of all ages, ethnicities, and backgrounds,” said Mariel Nanasi, Executive Director, New Energy Economy, who helped create the Organ Mountains-Desert Peaks National Monument, a digital photo book of photographs that features the diversity of New Mexicans and visitors who love Organ Mountains-Desert Peaks.
President Obama has responded to the local community and taken decisive action to protect the critical lands of this region and the economic, health, and cultural benefits they provide to the community. Senators Tom Udall and Martin Heinrich demonstrated real leadership in their efforts to work with the community and the Administration to ensure these lands are protected for future generations.
New advertising on cable channels running for the past weeks in Albuquerque show forest fires and babies suffering from asthma, with simple messages from Flora and Frankie, frogs delivering a call to action, from New Energy Economy, because climate change is no longer a thing of the future; it is here now. Three out of four Americans now acknowledge climate disruption is real, and more than two out of three believe we should be doing something about it.
The ad campaign is being sponsored by sponsored by Breakthrough Strategies &Solutions, LLC, a consulting firm working with New Energy Economy, dedicated to climate solutions and sustainable development. In an effort to inform more New Mexicans about the full costs of generating electricity from fossil fuels —such as wildfires, triple digit temperatures, and extreme weather — New Energy Economy wants to provide viable job-creating energy options like solar and wind, particularly plentiful in vast quantities in NM.
“Voters, including independent voters, are enthusiastic about tapping into clean energy. We all care about clear air and clean water and don’t want spoil today or tomorrow,” said New Energy Economy Executive Director Mariel Nanasi. Polls indicate that voters are strongly supportive of clean energy, and extremely distrustful of oil and coal companies who distort science and oppose responsible policies to convert from harmful fossil fuel dependency.
“In this tough economy, wise choices are more important than ever. We must address the climate challenge and transition, beginning now, from fossil fuels that have hurt the environment, that have hurt us, to renewable technologies, that create jobs and strengthen our health and our prosperity,” Nanasi added.
We can no longer afford burning fossil fuels that have been very costly for human health. A 2012 analysis by Dr. George D. Thurston, a Professor of Environmental Health at the New York University School of Medicine, finds that burning coal in New Mexico is associated with increased risk of heart attacks, asthma attacks, pneumonia, bronchitis, hospital admissions, and premature death. Those most at risk include infants, children, the elderly, and people with respiratory and cardiac disease. Dr. Thurston’s study finds that over the last five years these adverse health impacts have cost the public up to $240 million. This is consistent with a New Mexico Department of Health survey, that highlights disturbing accounts: 1 in 4 public high school students in the New Mexico report that they have asthma.
No longer can we allow Big Coal and Big Oil to continue to rig the system and block clean energy solutions. Our health is at stake. The statistics in New Mexico are all too common across the US. Solid majorities of Americans agree that climate change should be a priority for the President and Congress, and that the U.S. should undertake meaningful efforts to transition from fossil fuel to clean energy.
“We owe it to our kids to protect them and their futures, and that means addressing climate change before it becomes irreversible. Running away from tough problems only makes them worse. We need to implement available renewable energy strategies now. It’s time to step up and get it done,” Nanasi stated.
Event Helps Launch Over 1,000 Events in 100 Countries to “Connect the Dots” Between Extreme Weather and Global Warming
The largest wildfire in New Mexico state history is connected to climate change. That’s the message from a group of firefighters who gathered in the charred Santa Fe Forests to help launch a global effort to “Connect the Dots” between climate change and extreme weather. The testimonies are grave.
“Since I started in 1998, the increase in large mega-fires, where over 100,000 acres burn, has intensified,” says Porfirio Chavarria, City of Santa Fe Wildland Urban Interface Specialist.
“It’s a lot hotter and drier, we’re not getting as much rain as we’ve had in the past, and we think its going to get more intense,” adds Brian Moya, a firefighter with the Santa Fe department.
“The winds that we are having are causing the red flag warning conditions and drying up the little moisture we do have left in the ground. The fires are burning hotter and lasting longer, ” explains Brian Bird. “People need to take responsibility and show initiative to address the real problems, or else we are going to experience conditions that will be even worse.”
Graham Miller Chavarria and 10 firefighters from the Atalaya wildland hand crew traveled to the Las Conchas burn to create an image they hope will help people “connect the dots” between global warming and epic wildfires. The picture shows the firefighters in their gear, surrounded by the burnt forest, explaining the severe conditions our societies are increasingly facing due to a changing climate.
In May 2012, the international climate campaign 350.org coordinated more than 1,000 events in over 100 countries for “Climate Impacts Day.” From flood victims in Pakistan dragging boats into the streets of Karachi to villagers in Kenya holding “dots” where drought killed their crops, the day of events paintef a powerful picture of a world already reeling from the impacts of the climate crisis.
A 2012 Yale University poll in the U.S. found that Americans’ concern about climate change has increased with more extreme weather and warmer temperatures. According to the research, 82 percent of Americans report that they personally experienced one or more types of extreme weather or a natural disaster in the past year.
“Most people in the country are looking at everything that’s happened; it just seems to be one disaster after another after another,” Anthony A. Leiserowitz of Yale University, one of the researchers who commissioned the new poll, told the New York Times. “People are starting to connect the dots.”
“Coal is the primary driver of global warming emissions. In New Mexico, PNM is responsible for half of all global warming emissions. The wildfires and severe drought we are seeing are a result of these emissions,” says Mariel Nanasi, Executive Director of New Energy Economy, who went with the firefighters to the decimated forests. “There is no future in coal. Now, we need to turn to renewables that don’t cause these awful consequences.”
The June 2011 Las Conchas fire burned more than 150,000 acres, threatening the Los Alamos nuclear laboratory and causing the evacuation of thousands of nearby residents.
Scientists say that the higher temperatures brought on by climate change increase the amount of moisture that evaporates from the land, leading to hot and dry conditions that increase the likelihood and severity of wildfires. In New Mexico, the months leading up to the Las Conchas fire were part of the third-driest spring on record.
“Throughout the country, we’re seeing longer fire seasons and snowpacks that, on average, are disappearing a little earlier every spring,” Tom Tidwell, the director of the U.S. Forest Service, told senators at a hearing last June. “Our scientists believe this is due to a change in climate.”
New Energy Economy will defend New Mexico’s landmark carbon pollution law against Martinez’s Environment Improvement Board (EIB) and against her campaign contributors, polluters, including the state’s largest utility, PNM. Despite the fact that carbon reduction law has been praised by economists, business leaders, energy security experts, environmental advocates and doctors, the EIB voted to repeal the law. Public support for the law has surged across the state. But Big Coal and Big Oil are short-sighted and won this round. “Polluters have spent so much money tying this carbon reduction rule in legal knots. And they finally succeeded in orchestrating a sham process that has them profiting at the expense of New Mexican families and businesses,” said Mariel Nanasi, Executive Director, New Energy Economy.
New Energy Economy petitioned the EIB in 2008, the first and only citizen’s action of its kind – to cap harmful carbon pollution and protect New Mexico’s clean air and water – and two years later after fighting off legal maneuvers and a million dollars worth of obstruction by the wealthiest polluters – a law to reduce toxic pollution was adopted. The law was economically feasible. The law promoted energy independence and energy security. The law was good for New Mexican businesses and families. But, ultimately, NOT for Governor Martinez’s Wall Street shareholders. And that’s why her hand-picked board defeated the law.
In their rush to cash in on their political capital, PNM and the other opponents have tied New Mexico’s administrative and legal processes in such tight knots that it will only come undoneonce a court sincerely confronts what is at stake: climate change regulations that mandates the shift from coal to a clean energy economy. If deferred, our children will bear the economic and moral burden of sickness and environmental destruction, and forestall an opportunity to stimulate a new energy economy.
“Cutting carbon pollution was a chance for New Mexico to lead, to do what our young people need us to do today for their future, their air and water, their health. Instead, Martinez’s EIB parroted industry claims — to keep coal pollution spewing at the expense of New Mexicans,” said Nanasi.
The writing was on the wall; there is no surprise with today’s decision. EIB members Gregory Fulfer and James Casciano testified against the law, were chosen for their predisposition and then tainted the process. EIB Chair Deborah Peacock met behind closed doors with PNM and other corporations to plan out the repeal “process.” The necessity for the rule didn’t change, just the politics. The process has been arbitrary and capricious and a testament to money’s control over politics. “Poisonous toxins pour from the coal plant smokestacks every day; responsible government would put a stop to that, but Martinez’s EIB has been hijacked by special interests,” said Nanasi. Regrettably, these convoluted legal maneuverings reduce public confidence, adversely impact public health and are incredibly costly.
Press Release: Court Denies Attempt by Gov. Martinez and PNM to Stall Pollution Controls for Coal-burning Plant
For Immediate Release: March 1, 2012
- Lori Goodman, Diné CARE, 970-759-1908
- Mariel Nanasi, New Energy Economy, 505-469-4060
- Mike Eisenfeld, San Juan Citizens Alliance, 505-360-8994
- Jeffrey Billington, National Parks Conservation Association, 202-419-3717
- David Van Winkle, Sierra Club, 505-820-1006
Court denies attempt by Gov. Martinez and PNM to stall pollution controls for coal-burning plant
DENVER – A federal court ruled today that PNM must comply with a decision last fall requiring the utility to install pollution controls to significantly cut the 16,000 tons a year of harmful
haze-, ozone-, and fine particle-producing nitrogen pollution that pours from the smokestacks each year at the San Juan Generating Station near Farmington, N.M.
Gov. Susana Martinez and PNM had petitioned the court to delay the EPA’s pollution-control requirement from taking effect while they challenge the agency’s decision in court. Today’s 10th Circuit decision denies the Martinez-PNM delay, at the same time sending a positive signal that EPA’s decision stands on solid legal ground.
“Now it’s really time for PNM and Gov. Martinez to stop standing against the health of our communities who breathe this coal plant’s pollution day in and day out,” said Sarah Jane White with the Navajo group Diné CARE. “It’s time they start standing instead where the people of New Mexico stand – on the side of energy from clean sources that create jobs and protect health, land, air and water.”
The San Juan plant sits just outside the borders of Navajo tribal land near Farmington. “As long as San Juan Generating Station is running, it needs the best pollution controls possible,” said White, “but when you look at the smartest use of precious ratepayer dollars, moving off coal to renewable energy is the answer.”
The federal court’s decision comes on the heels of a report released earlier in the week that revealed that while PNM has been fighting EPA’s pollution control requirements, the utility has raised average residential rates 41 percent since 2008, and steered the large majority of the money into corporate profits.
“PNM is already irresponsibly funneling over a hundred million dollars of New Mexicans’ hard-earned money into skyrocketing corporate profits during a tough recession,” said New Energy Economy Executive Director Mariel Nanasi. “Now Governor Martinez and the utility should immediately stop wasting more ratepayer and taxpayer money fighting clean air and public health in court, and start investing in clean energy.”
For decades, nitrogen emissions from coal-burning power plants have been a major source of harmful haze in the Four Corners region, clouding the air and views in economically important national parks. Premature deaths, asthma attacks, heart attacks, chronic bronchitis, and hospital visits from San Juan Generating Station’s pollution cost an estimated $255 million a year, according to the Clean Air Task Force.
Nitrogen oxide reacts with other compounds to form small particles that penetrate deeply into sensitive parts of the lungs. It is also a raw ingredient in the formation of ground-level ozone, which leads to asthma attacks, respiratory problems, lung damage, and even premature death.
Western Environmental Law Center and Earthjustice represented the following groups contesting the request by PNM and Gov. Martinez to delay implementation of the pollution controls: New Energy Economy, San Juan Citizens Alliance, National Park Conservation Association, Diné Citizens Against Ruining our Environment, and Sierra Club.