WOW! What we learned about the Energy Transition Act (ETA) in the PRC 8 day hearing underscored our understanding of how right we were about our opposition to its passage and implementation! We provide highlights.
What was PNM asking for?
Abandonment of San Juan Generating Station; and
Its proposed financing order for $361 million in a non-bypassable charge that will appear on ratepayers bills for a period of 25-28 years based on cost estimates only and without any definitive understanding of what the interest rate will be. The PRC has NO ability to amend or modify the financing order or deny the financing order based on prudence or any other “traditional” PRC oversight standard such as, it won’t result in just or reasonable rates.
Once approved the financing order for $361 million includes the ability of PNM to request an “upward adjustment” for any “energy transition cost” and the PRC must adjudicate the upward adjustment (cost increase – with NO limit) within 30 days.
What were the hearing highlights?
Yes! virtually all participants want the San Juan Generating Station to close. Because of the influential and super powerful testimony from our Indigenous relatives coming from the impacted communities and our cross-examination there was agreement to call for an independent investigation by New Mexico agencies to evaluate the extent of contamination and pollution of the plant and mine, a proposal for comprehensive clean-up and a remediation plan.
WRA’s witness, Douglas Howe, admitted that his testimony was incorrect (and incomplete) because he used inaccurate numbers in his financial evaluation comparing the Energy Transition Act and past PRC decision-making treatment. Under the ETA it would cost ratepayers $20 million MORE per year for 25 (or 28) years compared to past PRC orders, especially the decision that was deployed in Case No. 13-00390-UT, Phase I of the San Juan Generating Station abandonment of Units 2 & 3. There were a number of other witnesses that also testified that ratepayers would do much better if the ETA did NOT apply, including New Mexico Attorney General witness, Andrea Crane, who stated: “I recommend that the NMPRC approve the abandonment of SJGS Units 1 and 4, but deny the Company’s request to recover 100% of its stranded costs from ratepayers. In fact, a possible result is that 100% of any stranded costs are allocated to shareholders, rather than New Mexico ratepayers.” Sierra Club witness, Jeremy Fisher, also testified: “While the Company’s going-in position is that ratepayers should bear 100% of all stranded costs, ratepayers going-in position should be that the Company bears 100% of all stranded costs.” These are remarkable departures from their public positions!
PNM’s chief securitization witness, Charles Atkins (his company has thus far been paid $525,000 not including his testimony), admitted that the ETA could NOT guarantee a AAA bond rating. The AAA bond rating, hence lower interest rate, is one of the ETA’s most seductive features.
Additionally, because the numbers included in PNM’s filing were estimates (and PNM has been notoriously terrible about financial forecasting) and therefore could NOT be trusted admitted: Ratepayers could be stuck with an “extremely steep yield curve where -- where interest rates in the longer years are quite, quite high.”
There are many more admissions (but we mustn’t go further in the weeds) … but one of the most significant, and last interactions in the whole case unearthed that under the ETA PNM could receive the $361 million and give it to their parent company that would distribute compensation to senior management AND Wall St. shareholders and then turn around and borrow money (from Wall St.) to re-invest in new energy resources, gas renewables, or battery storage. Bailout, yes. We didn’t even contemplate how sinister the ETA was.
Lastly, (and we gotta have some family time and sleep) PNM admitted that the ETA will give PNM a full bailout for ALL its coal and nuclear investments and gas plants and related decommissioning costs without “any” possibility that the PRC can deny PNM’s requested costs.
This is WHY we fight! This is WHY we resist. The ETA facilitates the extraction of financial resources from the poorest people to the wealthiest corporate elites – it also places financial risks and liabilities at the feet of ratepayers that have been and should be the responsibility of shareholders. Not only should we hold big monopoly utilities responsible if they poison the air, land and water but we should stand up for ourselves when they attempt to offload their financial responsibilities onto ratepayers. Corporate accountability is not about punishing companies, it's about fairness, equity, and justice.
What’s next: We have an expedited briefing schedule: Briefs due by January 8, Response briefs follow that. The Hearing Examiners make their recommended decision about whether the ETA applies to this pending case, and the ramifications of PNM’s San Juan abandonment under fair just and reasonable evaluation OR the ETA. Their recommendation decision goes to the full PRC for a vote. We will definitely need your presence then!
It’s time our State had a vision for energy, a vision that could inspire New Mexico to join together in support of local responsible energy development that benefits the lives of all us not that gives electric monopolies out-sized control and shareholder profit. We stand with Indigenous impacted communities and believe that cleanup costs should be paid by the industry who caused the contamination. Any additional pressures caused by the polluters — such as climate-related vulnerabilities should also be at the feet of PNM.
We have many challenges ahead: ecological, social, democratic, and the list goes on. Independent, public-interest, resistance organizations like New Energy Economy are more important than ever to unearth facts and spark the conversations we need to have.