Western Resource Advocates today praised the New Mexico Public Regulation Commission’s (PRC’s) June 29 decision to require PNM to comply with the finance provisions of the PRC’s prior order as well as the Energy Transition Act and reduce rates when the San Juan Generating Station is abandoned in September.
“The PRC made the right decision to uphold the terms of its own 2020 financing order and enforce the Energy Transition Act,” said Pat O’Connell, deputy director of Western Resource Advocates’ Clean Energy Program. “This decision will provide PNM customers the 10% rate reduction they are due when the San Juan Generating Station closes, saving ratepayers $134 million between now and the end of 2023. Enforcing the ETA also ensures important economic transition assistance will flow to the communities around the coal plant. The ETA creates opportunities for clean energy and the benefits of reducing the greenhouse gas emissions that cause climate change.”
PNM had planned to delay its refinancing of San Juan until the conclusion of a yet-to-be-filed next general rate case, likely in January 2024. This would have been 18 months after San Juan Unit 1 is to be abandoned, and 15 months after the plant’s last remaining unit is slated to close in September this year.
Shortly after learning about this plan, Western Resource Advocates, the Coalition for Clean Affordable Energy, and Prosperity Works last February filed a motion with the PRC, requesting that the PRC enforce the finance provisions of its 2020 orders and the Energy Transition Act.
On June 17, the PRC’s hearing examiners recommended the commission disallow PNM’s plan, which they said would allow PNM to continue to collect costs associated with San Juan Generating Station after that facility is no longer providing service to PNM’s customers. The hearing examiners said PNM had planned to require customers to keep paying for San Juan costs after the plant’s closure, and PNM then also aimed to issue low-interest bonds under the Energy Transition Act later and recover those same costs. This would have delayed cost savings due PNM’s customers and resulted in double collection of some costs.
The PRC’s June 29 decision requires PNM to pass the cost savings to customers in July when San Juan Generating Station Unit 1 closes and also after the plant’s last unit closes in September. Under the Energy Transition Act (ETA), in exchange for being allowed to recover its remaining San Juan investment by issuing low interest bonds, PNM is to forego shareholder earnings on that investment. By October, these credits will be roughly a 10% rate decrease.
New Mexico’s landmark Energy Transition Act, passed in 2019, sets some of the strongest climate-action targets in the nation, ensuring 50% of New Mexico’s electricity is generated from renewable energy resources by 2030 and calling for utilities to reach zero-emission electricity generation by 2045. The law also provides economic development funds to lessen the local impacts of closing the San Juan Generating Station and takes advantage of securitization bonds, a low-cost financial tool that substantially reduces the cost of closing coal plants and replacing them with clean energy.