Posted: Friday, January 2, 2015 9:00 pm | Updated: 1:48 pm, Mon Jan 5, 2015.
By Ron Flax-Davidson
On Monday, the New Mexico Public Regulation Commission will hold a hearing to determine New Mexico’s primary source of electric power for at least the next 10 years.
Last year, Public Service Company of New Mexico, the privately owned yet state-sanctioned monopoly electric power provider for most of New Mexico, submitted a stipulation setting forth a plan for its future supply of electricity to its customers in New Mexico.
In it, PNM seeks approval from the PRC to retire two units (2 and 3) at the coal-fired San Juan Generating Station and replace the power with a mix of coal-fired generation from one of the plant’s other units (Unit 4) and with electricity generated by its Palo Verde 3 nuclear plant in Arizona. If the PRC approves this, New Mexico would continue its reliance on dirty coal and nuclear power into the foreseeable future, at huge cost to New Mexico’s electric ratepayers.
New Energy Economy and other independent observers are contending that the PNM plan violates the law because it is not the “least-cost alternative” for New Mexico ratepayers as required by law. However, an environmentally dirty and expensive energy supply benefits PNM shareholders at the expense of New Mexico ratepayers. New Energy Economy has shown in its filings that an alternative energy supply portfolio, based on a mix of locally produced wind and solar power, would reduce the cost of electric power for New Mexico ratepayers by more than $300 million over the next 10 years.
Additionally, if PNM were to use local wind and solar resources, these would create additional jobs and economic development in New Mexico, as well as reduce the pollution from coal and nuclear plants. EPA findings have shown that coal-fired power from the Four Corners San Juan Generating Station, proposed by PNM as one source of power under the stipulation, is creating much of the pollution and haze affecting Central New Mexico, and shutting the plant would have multiple benefits (including reduced respiratory illness and haze reduction) for New Mexico citizens. Nuclear waste concerns have plagued the Palo Verde 3 nuclear plant proposed by PNM as the other source of additional power for New Mexico.
PNM’s plan is to have the PRC bail out its shareholders, who have invested in dirty coal and nuclear plants that are no longer cost-effective. Under PNM’s stipulation, New Mexico ratepayers would pay PNM nearly three times what it is currently earning from Palo Verde 3 electricity sales on the open market. (Current market sales of nuclear power from Palo Verde 3 are at 3.5 cents per kilowatt-hour, while PNM proposes to charge captive New Mexico ratepayers at a proposed over 8 cents per kilowatt-hour.) Additionally, the stipulation, if approved, also would require New Mexico ratepayers to take on the inevitable and expensive costs of retiring the Palo Verde nuclear power plant when it has aged out of service.
The PNM plan also would seek approval for New Mexico ratepayers to cover the cost of coal-fired generation from the San Juan Generating Station, a cost estimated by PNM at nearly 10 cents per kilowatt-hour, without assurances regarding the future costs of such coal generation, whether due to increasing coal fuel prices, maintenance expense or future environmental and decommissioning costs. NEE estimates these costs would raise electric prices to New Mexico rate payers far beyond alternative market sources, and far above the cost of electricity from local wind and solar sources that are currently under 7 cents per kilowatt hour.
New Mexico is blessed with some of the best wind and solar resources in the nation. Current law provides federal tax incentives that significantly lower the cost of these resources, if they’re developed before expiration of the tax incentives, likely at end of 2016. New Mexico can ill afford to lose this opportunity to develop these lower cost and environmentally beneficial energy sources.
New Energy Economy is encouraging New Mexico ratepayers to attend the PRC meeting at 9 a.m. Monday, Jan. 5, in Santa Fe (1120 Paseo de Peralta) and tell the PRC that the PNM plan is not acceptable to New Mexico ratepayers and that PNM needs to go back to the drawing board and develop a plan for sourcing electric supply from local wind and solar sources at far less cost and risk to New Mexico.
The PRC needs to reject the PNM replacement power plan and require PNM to develop a lower-cost plan based on local wind and solar sources and without use of PNM’s dirty coal and nuclear plants.
Ron Flax-Davidson builds wind farms in Latin America and is a member of the Finance Subcommittee of the Santa Fe Climate Action Task Force.
Editor's Note: A shorter version of this column appeared in print.