The Public Regulation Commission’s decision to postpone its vote and give Public Service Company of New Mexico even more time to get concrete on the utility’s plan for shutting down half of the coal-fired San Juan Generating Station amid escalating costs and risks was a too-generous offer to a company that’s already been given ample time.
So while we should be turning the page by now and planning for wind and solar, it is still important to recognize that in their decision, the PRC did still correctly refuse to write PNM any blank checks at ratepayer expense. That level of vigilance on behalf of the public must continue as PNM scrambles to try to continue to pitch its plan for continued reliance on coal and nuclear.
When you’re making an important decision about a big expenditure for your home or business, you try to look sharply at present and future circumstances to ensure that you aren’t taking too much risk. You try as best you can to avoid having to look back one day and wish you’d steered hard-earned resources in a different direction. This is the responsibility PRC commissioners have been undertaking on behalf of PNM customers in their review of the company’s coal and nuclear plan. Now they’re going to have to keep it up. There’s simply little or no faith in the utility’s management of risk at ratepayer expense, or in its commitment to the public interest over shareholder gain.
PNM has not proven an ability to plan for the future with smart investing in mind. Consider how it has spent money in the past at San Juan Generating Station. About 10 years ago, PNM knew it needed to reduce smokestack pollution at the coal plant in order to address 60,000 air-quality violations. The company also knew at that time that additional emissions reductions would be needed to reduce the plant’s contribution to smog haze at national parks.
Instead of being proactive, and objectively and comprehensively assessing the wisest financial path to make all of the pollution reductions that would be needed, PNM spent hundreds of millions on controls to go just partway and piecemeal on pollution reduction needs. But the requirement for fuller pollution reduction didn’t go away, and today the closure of two units at San Juan Generating Station suggest that bill-payers could have been better served if PNM had been forward-planning and proactive about the full scope of pollution reduction needs for its coal plant back in 2005.
The PNM power replacement plan that has been before the PRC is another occasion where sound and smart and comprehensive forward planning is needed to minimize risk to electricity bill-payers. But in its proposal for heavy reliance on coal and nuclear to replace the two-unit closure at the San Juan plant, PNM did not conduct genuine resource planning in which all feasible power sources are evaluated on a consistent and comparable basis. Instead, the company internally chose its own nuclear from Palo Verde unit 3 in Arizona and to acquire more coal shares from other owners exiting the San Juan plant. It’s an approach that has turned out to be problematic in many ways:
• $1.1 billion in errors have been discovered in PNM’s proposal.
• There is no coal supply or coal price certainty beyond 2017.
• No other utility has stepped up to acquire more capacity at San Juan even at zero cost, sparking the hearing examiner’s concern about PNM becoming “the owner of last resort, absorbing exiting owners’ shares to protect its investment even if the plant has become uneconomic — in a version of the ‘too big to fail syndrome.’ ”
u PNM’s own modeling shows that 260 megawatts of solar and 400 megawatts of wind would be cheaper, create thousands of jobs in-state, save billions of gallons of clean water, and is feasible and available.
Such concerns have sparked widespread public distrust in PNM’s coal and nuclear proposal, including from the city of Albuquerque, Bernalillo County, the city of Santa Fe and Santa Fe County. And public confidence in the utility has been worsened still by evidence that over the last six years, PNM has raised residential electricity rates by 56 percent and steered nearly half the revenue from its total rate hikes over that period to fund a 461 percent increase in corporate profits while real median household income in New Mexico has declined.
The PRC’s willingness to give PNM more time on its coal and nuclear plan unfortunately wasn’t necessary. Now regulators’ continued strong watchfulness of PNM on behalf of New Mexico residents and businesses will be.
Neri Holguin is a conservation advocate and a New Energy Economy board member.