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We filed a motion to dismiss. You may remember a previous post from us about PNM's deficient application for "abandonment" of the Four Corners Power Plant, an abandonment that would in fact prevent the coal plant from closing early through the terms of its sale to Navajo Transitional Energy Company (NTEC). On February 26th the Hearing Examiner required PNM to submit an amended application and supplemental testimony that addresses the prudence of past investments in the Four Corners Power Plant.

Last week New Energy Economy (NEE) and Citizens for Fair Rates and the Environment (CFRE) filed a Motion to Dismiss the amended application on the basis that PNM’s application is incomplete and omits material evidence relevant to the case and does not comply with legal mandates set forth by the ETA. Specifically:

1. PNM seeks to sell Four Corners Power Plant not because it is in the public interest, but because its merger agreement with Avangrid requires sale of the plant. The Motion argues that PNM has misled the Commission as to the real reason that Joint Applicants are seeking to abandon, sell and securitize financing of $300 million of the FCPP, which is not to serve the public interest or comply with the law but to satisfy its merger agreement with Avangrid - the agreement requires PNM’s departure from Four Corners as a condition precedent.

2. The application omits material evidence necessary to determine whether the proposed sale is a net public benefit. When determining “Public Interest” the Commission is entitled to have all the material evidence before it. Failure to disclose information about the merger’s requirement, and the specific condition precedent requiring FCPP divestiture and $300 million from ratepayers, is a material omission and gives the Commission an inaccurate and incomplete understanding of the case. Also omitted from the evidentiary record is the “Seasonal Operation” Agreement for Four Corners, even though PNM witnesses claim that the agreement is proof of how the abandonment and sale of Four Corners results in a public benefit. Without the actual restructuring agreement and associated contractual conditions PNM has failed to meet its burden of proof.

3. The application is unlawful. PNM’s Amended Application requests that the Commission approve PNM’s proposed sale of its ownership interest in Four Corners to another entity, the Navajo Transitional Energy Company, LLC (“NTEC”). This is expressly prohibited by the ETA which stipulates “the commission shall prevent carbon dioxide emitting electricity-generating resources from being reassigned, redesignated or sold." (NMSA § 62-16.4.B(4) (2019))

PNM’s Amended Application violates not only the letter of the ETA, but also the clear intent and purpose of the law. PNM’s Direct Testimony acknowledges that PNM’s proposed abandonment and sale of FCPP will allow NTEC and the other remaining owners of that plant to continue operating the full capacity of that plant until at least 2031, if not longer. In fact, Section 6.1 of PNM’s sale agreement to NTEC prevents an early shutdown of FCPP and is therefore a net detriment to the public interest.

The clear intent and purpose of the ETA was to serve the public interest by accelerating the reduction of carbon dioxide and other greenhouse gas emissions from fossil fuel energy plants, including FCPP. Sale of PNM’s ownership interest in FCPP to NTEC is antithetical to that purpose.

PNM’s Amended Application also requests Commission approval of PNM’s recovery from customers of an estimated $300 million as ETA-defined “abandonment and other energy transition costs,” which include an estimated $271.3 million in undepreciated investments in the FCPP, plus other costs. That $271 million includes investments made in 2016 to pay for pollution controls and an “APS’ System Health Process” just to keep FCPP functioning.

On May 23, 2017 PNM and a dozen other parties signed a Revised Stipulation (settlement) seeking an increase in rates to recoup those costs. 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 because PNM had conducted no contemporaneous financial analysis and NO comparison to other alternative energy resources, like low-cost solar and wind. Our NM Supreme Court has held that PNM’s failure to conduct an alternatives analysis is a fundamental flaw that puts ratepayers at risk for wasteful expenditure. The high Court also held that ratepayers are to be held harmless for the imprudent actions of utility management.

“The application clearly is incomplete or incorrect” due to fundamental deficiencies, and because “the Commission is charged with protecting the public interest,” the Commission should dismiss the Amended Application. PNM has failed to meet its burden of proof and has failed to comply with legal mandates.



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