Earlier this year, the Public Regulation Commission (PRC) opened a docket on the San Juan Generating Station Abandonment Case in order to begin to explore the complicated and critical issues associated with one of the largest and most important regulatory cases in the last decade.
Warning - this post may cause you to shake your head in bewilderment.
PNM filed for an Emergency Stay of the case in order to pursue the Energy Transition Act. They argued that the PRC doesn’t have the authority to initiate a regulatory proceeding and require PNM to file an abandonment application.
We have joined the case to argue for the Public Regulation Commission’s duty to regulate and protect ratepayers and the public interest. On July 9, 2019 New Energy Economy will argue before the New Mexico Supreme Court in support of the January 2019 Public Regulation Commission (PRC) decision to open a case concerning PNM’s abandonment of the San Juan Generating Station (SJGS).
Argument commences at 9am sharp
ORAL ARGUMENT IN SUPPORT OF PRC AUTHORITY
BACKGROUND: SJGS is closing in 2022 and the PRC wanted to give parties a chance to get started right away to address all of the complex issues that will arise as the coal plant closes - such as financial issues, replacement power for the 450+ megawatts of electricity being produced at San Juan, and clean up costs.
PNM is arguing that the PRC didn’t have the authority to begin discussing the issues surrounding abandonment. In their filings, PNM tells the Court that “no compelling or exigent circumstances require PNM to immediately apply for abandonment” of the aging, uneconomic, and polluting coal plant. PNM believes they have the right to tell the PRC when and how they will abandon the coal plant AND not the other way around.
Are you shaking your head already? Hang on, it gets wilder.
PNM also argued that they are “not presently relinquishing any rights in SJGS or its continued operation to serve retail customers” despite making public statements and other PRC filings to the contrary.
On July 3, 2017, PNM filed its Integrated Resource Plan (IRP) and on page 1-2, PNM announced its “key findings.” Its number 1 key finding was abandonment of “PNM’s 497 MW share of SJGS in 2022 would provide long-term cost savings for customers” (meaning it is no longer cost effective to run the plant post 2022). PNM’s IRP was accepted by the PRC in December 2018;
On June 28, 2018, PNM vice president of generation, Thomas Fallgren, sent a letter to SJGS owners stating PNM would not extend the Coal Supply Agreement and, pending an authorizing order from the PRC, would abandon its interest in SJGS. Without a coal supply agreement how would anyone run the coal plant?!;
On December 31, 2018, PNM filed with the PRC their required “Verified Compliance Filing” giving notice to the other SJGS participants that PNM did not intend to continue use of SJGS beyond 2022;
Repeated articles in the press, starting as early as March 2017, quoting PNM’s CEO and other top management as planning to close SJGS;
Four of the five owners at SJGS, including PNM, (with City of Farmington being the sole hold out), have confirmed they will not continue their respective ownership in the plant after 2022.
Clearly, PNM has already taken concrete steps to abandon its interests. But PNM doesn’t want the PRC regulating them by opening up a docket and requiring PNM to file an abandonment application. While it’s not surprising that PNM doesn’t want to be regulated, it is surprising that even PNM would try to explicitly argue against regulation in the Courts.
Even crazier than that, PNM is including in their claims that the 1st Amendment protects them from having to “speak” and the PRC is forcing them to “speak” by requiring them to file for Abandonment.
Crraaazzy? Yes, if this last argument were to win, it would essentially mark the end of regulation in the U.S. Don’t forget PNM agreed to be a “regulated monopoly.”
So, the PRC argues that they not only have the responsibility to regulate PNM, they have a Constitutionally mandated obligation to do so. In exchange for having no competition and being a monopoly, PNM must comply with regulation. This is known as the regulatory compact. The PRC also argues that they didn’t force PNM to abandon their SJGS interests, but that PNM decided last summer to do so, and it is now well past time to roll up our sleeves and dig into the issues.
This case matters. Not just in so far as it affirms the regulatory compact and regulatory charge of the PRC - but because it’s conclusion will inform whether or not the docket opened by the Public Regulation Commission in January qualified as a pending case before the Court. For if it did, the Energy Transition Act’s passage could be interpreted as unconstitutional, which helps explain why PNM filed the Emergency Writ in the first place.
The struggle continues - be part of this next round at the New Mexico Supreme Court. Join us at 8:30 am at the New Mexico Supreme Court, Tuesday July 9. Argument commences at 9am sharp. Be there or be square.