The Santa Fe New Mexican, February 1, 2018
Public Service Company of New Mexico can’t help being controversial, what with its monopoly in providing electricity for much of the state. Now, PNM is using its clout to attempt to push through legislation that, to some degree, passes costs for bad investments on to consumers rather than utility company shareholders.
With the shutdown of the San Juan Generating Station, PNM is leaving behind some $353 million in investment — so-called stranded costs that can no longer be recovered. Previously, the coal-fired plant in northwest New Mexico was to close in 2053; the market has altered that goal, leading PNM to realize that the plant no longer makes financial sense. Now, PNM wants to shut the plant down some three decades earlier, by 2022, leaving behind the dollars it would have made with the plant up and running.
But how to recover those dollars? Enter Senate Bill 47 and House Bill 80, the Energy Redevelopment Bond. The legislation has bipartisan support but broad opposition from a variety of consumer and energy groups. More than 40 groups are opposing the bill, which would allow PNM to recover its stranded investments by floating low-cost bonds. In the Senate, Sen. Jacob Candelaria, D-Albuquerque, and Sen. Steven Neville, R-San Juan, are sponsors. The House version is sponsored by Democratic Rep. Bobby Gonzales of Taos and GOP Minority Whip Rod Montoya of Farmington.
Critics question whether the bill is burdening ratepayers with costs that should be borne by the company and its shareholders and whether the language of the bill removes too much authority from the Public Regulation Commission, the body charged with regulating monopoly utilities. Those are important points to debate.
While we will not go so far as to call the legislation a “bailout” of an irresponsible energy producer, the issues in this legislation are complicated and far-reaching. They deserve a wider discussion than is likely to happen during a short legislative session.
At the heart of the conversation must be consideration of how best to support the Four Corners region as it transitions away from an economy based on fossil fuels, as well as keep rates down for consumers. It is unfair for ratepayers to shoulder too great a portion of the costs for the company’s abandoned investments.
PNM’s closure of the San Juan Generating Station will have economic ripple effects, not just for PNM but for the entire state, especially the Four Corners region. Any legislation that allows PNM to recover its costs through issuing bonds must contain the strongest protections for the region, with focus on investments that will lead to jobs and steady economic support for the area.
This bill is an important step in determining ways to pay for the transition from coal to other kinds of energy, but 30 days might not be enough time to debate its long-term implications. This is too important to rush.