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The "Billion Dollar Bungle" - PNM admits to errors of more than a billion dollars in potential cost

to consumers

January 12, 2015

Billion Dollar Bungle:

In PRC case, PNM admits to errors of more than a billion dollars

in potential costs to consumers

SANTA FE, NM – In its replacement power case at the Public Regulation Commission, PNM has now admitted to errors and omissions that total more than a billion dollars. Had those “mistakes” not been exposed by New Energy Economy and other opponents of PNM’s plan, consumers would likely have been on the hook for more than a billion extra dollars over the next 20 years.

The errors:

  • PNM’s initial December 2013 proposal to the PRC included 78 MW of additional coal from San Juan coal plant. A forecasting mistake forced PNM to boost the amount of new coal to 132 MW – increasing the cost of the plan by $222 million.

  • In August 2014, opponents of the plan discovered that PNM had failed to include $532 million in ongoing capital expenditures at Palo Verde nuclear plant and San Juan coal plant.

  • In late November 2014, opponents exposed a $366 million error in PNM’s coal cost calculations, which PNM has since referred to as an “inaccuracy.”

Together, these errors add up to $1.12 billion dollars in mistakes – all of which PNM has admitted. The result is that PNM’s plan is now proven to cost more than either New Energy Economy’s renewable energy-based alternative, or a scenario that shuts down the San Juan coal plant entirely.

Attached are exhibits and testimony documenting the mistakes and the cost comparisons of PNM’s proposal and alternate scenarios.

Excerpt from Cross Examination of Pat O'Connell, PNM Director of Resource Planning







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