Re: SB 489 Energy Transition Act
Dear New Mexico Senators and Representatives,
As a voter in New Mexico I am discouraged to learn of legislative action that unfairly raises electricity rates for residents and businesses, and unfairly uses the genuine hunger of New Mexicans for a long-overdue increase in renewables with a complete PNM bailout for failed assets at its coal-fired San Juan Generating Station (San Juan).
In advance of PNM’s actual abandonment of San Juan, or approval by the New Mexico Public Regulation Commission (PRC) in a litigated hearing, SB 489 allows PNM to recoup more than $320 million from ratepayers, through a “non-bypassable” charge on our monthly electric bills, for the money it planned to make on those San Juan assets until 2053. Here is what is wrong with SB 489’s version of securitization for PNM’s failed assets:
1. PNM should NOT be awarded 100% recovery from ratepayers. Failed assets recovery has been awarded when there is an external cause (EPA Regulation, like the Regional Haze Rule) causing “early” retirement of a plant. In those instances, under the New Mexico Public Utility Act there is an obligation to balance the interests of public utility customers and investors in the ratemaking process. The PRC has previously held that the cost burden must be balanced between shareholders and ratepayers. But in the instant case, PNM is not closing San Juan because of some external cause, it is closing San Juan because PNM cannot meet its burden to show that San Juan is cost effective against alternative resources (wind & solar).
2. The Legislature should NOT award PNM any more money than PNM would get at the PRC. PNM is afraid that the PRC might not give PNM their failed asset recovery because utilities usually are not entitled to compensation for failed assets when a plant is shut down for economic reasons. Realistically, the PRC will award PNM no more than 50% of its failed assets. The Legislature should not consider a dollar amount higher than that.
3. SB 489 falsely claims that will save ratepayers money but that is only if the PRC gives PNM the right to 100% recovery of stranded assets - which it most certainly will not. PNM never chooses to lose money - actually it’s against their fiduciary duty to do so. Therefore, they can't choose to save ratepayers money over making money for its shareholders, unless regulated to do so.
4. SB 489 is premature. It is irresponsible for legislators to vote to give PNM nearly half a billion dollars prior to the PRC hearing the San Juan abandonment case and determining the true costs of clean up and replacement power needs. PRC has now opened a docket on the San Juan abandonment and is preparing to hear information from various parties through extensive and exhaustive discovery, cross-examination, experts, etc. regarding replacement power and energy ownership, clean up, reparations for San Juan county residents and workers, etc. There is much to be understood and the legislative session is not a proper or robust enough forum to investigate these matters and will make it impossible to accurately determine all costs and outstanding issues.
5. SB 489 essentially “bakes in” PNM ownership for 450 MW of replacement power resources to the detriment of a robust competitive renewable energy Request-For-Proposal process that could produce ten thousand new jobs statewide. This is problematic for a number of reasons: a) violates anti-trust provisions, is anti-competitive, and is inherently unfairly stifling the market for other power producers; and b) will NOT result in the lowest cost renewable energy for consumers; and c) undermines the authority of the PRC to require a utility to “acquire the most cost effective resource(s) among feasible alternatives.” This IS the bedrock of utility law.
I urge you to reject PNM’s bailout bill and demand corporate accountability.