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PNM announces progress on San Juan contracts

PNM has announced that they will file all necessary coal contracts and their restructuring agreement at San Juan by August 1. Though the case has been closed for months, the documents are critical for the PRC to consider before making a final decision. Other intervening parties have requested that the contracts be made public once they are submitted, though PNM has resisted the idea. New Energy Economy claims that the ever-changing deadlines are just a distraction from the real issues the plan represents.

By Kevin Robinson-Avila / Journal Staff Writer PUBLISHED: Wednesday, June 24, 2015 at 12:05 am

Copyright © 2015 Albuquerque Journal

Public Service Co. of New Mexico announced more progress on Tuesday in finalizing ownership restructuring and coal supply agreements for the San Juan Generating Station.

In a new filing with the state Public Regulation Commission, the company said most documents will be submitted to the PRC by July 1 and the final ones by Aug. 1, assuming commissioners approve a PNM request to extend the deadline for completing those documents to the latter date.

The commission is expected to rule on that request today.

Other parties oppose the time extension because the record in the case has been closed since March. A month-long hearing took place in January, and a new hearing will have to be held to review any new evidence submitted by PNM.

“Before and during the hearings in January, we repeatedly asked that the proceedings be suspended until PNM comes forward with final ownership and coal agreements and PNM always opposed that,” said Steve Michel, chief counsel for Western Resource Advocates. “Now PNM wants to reopen this case with new evidence and start all over again.”

The forthcoming contracts are considered critical for the PRC to decide on PNM’s plan to shut down half of the coal-fired power plant near Farmington to meet federal environmental regulations. The company wants to replace lost coal generation with a mix of nuclear, natural gas and solar energy, while still keeping two of the coal plant’s four generating units open until at least 2022.

But environmentalists, clean energy advocates and others, such as the cities of Albuquerque and Santa Fe, oppose PNM’s plan because the company and its parent firm, PNM Resources, would together acquire an extra 197 megawatts of coal generation in one of the two units that remain open to absorb capacity left by departing plant owners.

In early April, case hearing examiner Ashley Schannauer recommended that commissioners reject most of PNM’s proposals, largely because the utility had not submitted a final owner restructuring agreement or a new coal supply contract that would allow the commission to fully assess the costs and benefits of keeping two of the plant’s four units open.

In late May, the commission granted PNM an extension until July 1 to submit those agreements, with the possibility of extending that deadline one last time to Aug. 1 if PNM showed sufficient justification, something the company now says it has.

The PNM board of directors approved a new ownership restructuring contract on Tuesday, and all the other eight plant co-owners are now expected to do the same by Aug. 1, PNM said in its new filing on Tuesday.

In addition, Colorado-based Westmoreland Coal Co.’s board of directors on Monday approved its purchase of the San Juan Mine – which supplies the power plant – from BHP Billiton. A new coal supply contract will be filed with the PRC by July 1, along with new agreements between Westmoreland and PNM on mine reclamation and coal-ash disposal.

PNM says the new coal agreement will save ratepayers between 15 and 20 percent compared with the previous contract with BHP, translating into a 5 percent reduction in the average monthly residential bill after 2016.

“Everything is in place to deliver the final, fully executed agreements by Aug. 1, if the commission permits us the additional time,” said PNM Resources Chairman, President and CEO Pat Vincent-Collawn. “The record we established during the January hearing clearly shows that the PNM plan is the most cost-effective and provides significant environmental benefits. The new coal agreement makes the plan even more cost-effective for our customers.”

If the PRC does approve PNM’s filing extension to Aug. 1, Western Resources wants the commission to make all materials related to the ownership and coal agreements public, something PNM has resisted. The agreements themselves have remained confidential, with only the parties directly litigating the case allowed to review them.

The documents were publicly disclosed this week by one of San Juan’s co-owners in California as part of that entity’s public deliberations about signing the agreement. But Western Resources wants all internal memos, emails, meeting minutes and other materials that led to the final agreements open to the public as well.

“A case like this demands that the public be able to scrutinize all the evidence,” Michel said.

Meanwhile, New Energy Economy protested PNM’s extension request in a separate filing on June 10, claiming that the ongoing discussion about final contracts has diverted public attention from the deeper issues of whether it’s in the public’s best interests to allow PNM to absorb more coal generation to keep two of the San Juan units open.

“Other issues include the high costs associated with PNM’s proposal and their enormous economic impact on ratepayers, its negative health, environmental and climate impacts,” said New Energy Executive Director Mariel Nanasi. “We are undergoing a structural economic shift away from coal and those who blindly continue to invest in assets that are increasingly in danger of becoming stranded will put the public at enormous financial and climate risk. The fate of coal should serve as a warning to the commission.”

PNM spokesman Pahl Shipley responded that the facts “clearly show that the PNM plan is in the best interests of our customers the state as a whole.”

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