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NEE Files Complaint at PRC to Hold Ratepayers Harmless for PNM's Investment in Four Corners

Updated: Dec 14, 2020

SANTA FE, NM – On October 30th, 2020, New Energy Economy filed a request with the Public Regulation Commission for a formal investigation into PNM’s continued reliance on the Four Corners Power Plant (FCPP) for uneconomic and climate altering coal powered energy. (NMPRC Case No. 20-00210-UT) Our complaint requests that the PRC hold ratepayers harmless from this date forward, and to decide whether allowing any continued investment in FCPP is responsible, given the fact that alternative investments in solar and wind plus storage are more cost effective and better for the environment, our health, jobs and the economy.


In July 2016, PNM extended the life of one of the largest polluting coal plants in the southwest by extending their ownership in the plant, agreeing to pay for pollution controls and an “APS’ System Health Process” just to keep the plant functioning. PNM invested approximately one billion dollars of New Mexico ratepayer money, including the execution of a fifteen-year “take or pay” coal supply contract for 200 MW from Four Corners Power Plant (FCPP).


On May 23, 2017 PNM and a dozen other parties signed a Revised Stipulation (settlement) seeking an increase in rates to recoup the costs associated with this renewed investment. New Energy Economy lodged the sole Opposition to the Stipulation, claiming foremost that PNM’s re-investment in the Four Corners coal plant was “imprudent” and was a ratepayer subsidy of PNM losses at the 50-year old plant. Despite initially ruling in our favor, however, PRC Commissioners (Lyons, Jones, and Lovejoy) were successfully lobbied and reversed their decision, ruling on January 10, 2018 that “The issue of PNM’s prudence in continuing its participation in FCPP shall be deferred until PNM’s next rate case,” which was at that time scheduled for 2019.


Years after the last rate case, we are still waiting to have our day in court to prove that PNM invested in the Four Corners polluting plant to enrich their shareholders at the expense of ratepayers: PNM did NO contemporaneous financial analysis, did no comparison with other renewable resources, and invested in it despite its unreliability and poor performance. Although the Commission promised ratepayers that they would revisit the imprudence of PNM’s investment in FCPP and whether we should be on the hook for PNM's shady and costly business investments, PNM continues to defer a formal rate case to avoid facing the music (disallowance of all FCPP costs in the rate base). If this Complaint is not investigated in a timely fashion, Four Corners will continue to be included in rates until at least July 2022, for a total of six years![1]


To be included in rates, expenditures on utility plants must (1) have been prudently incurred; and (2) be used and useful.[2] In other words, ratepayers are not to be charged for negligent, wasteful or imprudent expenditures, or to pay for management’s lack of honesty or poor business judgment. [3] Coal generated power is now by far the most expensive available resource. What does that mean? It means that customers are paying more for coal, not including the environmental and climate costs which are “externalized.”


Access to energy is a basic need and a human right - the pandemic has made that painfully clear. Unnecessarily expensive energy is an economic justice issue. Nineteen percent of New Mexicans live at or below the poverty level. Even before the COVID-19 pandemic hit, many New Mexicans were already struggling to pay their utility bills. PNM's continued investment in the Four Corners plant is also an environmental justice issue. The plant emits more than one million tons of CO2 into the atmosphere annually, and consumes more than six million gallons of water per year. Despite the clear trend toward higher temperatures and more arid conditions across the Southwest, PNM continues to invest in resources that warm the atmosphere and use vast amounts of water. We can’t continue to allow the can to be kicked down the road. As long as PNM can continue to pass the costs of coal power at FCPP to ratepayers, they will continue to disregard the public interest and the health and welfare of New Mexicans in the name of shareholder profit.


PNM is trying to offload its toxic coal assets not only onto ratepayers but onto Navajo Nation. On October 28, 2020, PNM announced that it was selling its 13% share of FCPP to Navajo Transitional Energy Co. in 2025. “There will be a $100 million benefit to customers to get out early,” PNM spokesman Ray Sandoval said. This is a textbook example of environmental injustice. In 2016 PNM opted to continue polluting the air and exacerbating environmental damages when it decided to extend the life of the Four Corners plant, and now, on the verge of its acquisition by Avangrid, it wants to offload its coal liabilities onto the Navajo Nation. The Diné people have already borne the brunt of that pollution for decades. For shame! PNM should be held responsible for its irresponsible investments and it should be PNM shareholders who pay - not ratepayers and not Diné communities.


[1] 20-00121-UT, Direct Testimony of Mark Fenton, p. 12. “PNM plans to file a rate case in mid-2021, with new rates to be effective in July 2022.

[2] (Case No. 2146, Part II, Final Order 53; Accounting for Pub. Utils., § 4.03). [3] Case No. 2146, Part II, Final Order 50 (4-5-89).)

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