February 28, 2022
Western Resource Advocates (WRA), the Coalition for Clean Affordable Energy (CCAE), and Prosperity Works today asked the New Mexico Public Regulation Commission (PRC) to enforce the finance provisions of the PRC’s own orders and the Energy Transition Act and prevent Public Service Company of New Mexico (PNM) from overcharging its customers $125 million.
In a legal motion filed today, WRA, CCAE, and Prosperity Works requested that the commission order PNM to explain why its rates should not be reduced when San Juan Generating Station is abandoned this year. PNM now plans 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 is 18 months after San Juan Unit 1 is to be abandoned, and 15 months after Unit 2 is slated to close in September this year.
“PNM’s plans to delay refinancing San Juan will profit the utility’s shareholders at the expense of New Mexico ratepayers and delay economic transition assistance from flowing in a timely manner to the communities around the coal plant,” said Steve Michel, deputy director of Western Resource Advocates’ Clean Energy Program. “The rate reduction from closing the coal plant and refinancing pursuant to the ETA is not trivial. It is 10%.”
PNM’s overcharges will result from its intention to delay issuing low-cost bonds and thereby withhold a roughly 10% rate decrease that its customers are entitled to receive when the San Juan Generating Station closes later this year. 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.
PNM’s plan to purposefully delay the bond issuance by 18 months, however, turns this legislative solution on its head, because during that delay PNM will collect all its San Juan costs in rates, even though the plant is no longer serving PNM customers and PNM is no longer incurring costs to operate the plant. The delay would also allow PNM to deprive communities impacted by San Juan’s closure of $14.9 million in transition funding for 18 months after the closure date.
New Mexico’s landmark Energy Transition Act, passed in 2019, sets some of the strongest climate-action targets in the nation, ensuring that 50% of New Mexico’s electricity is generated from renewable energy resources by 2030, and that utilities completely decarbonize 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 a low-cost financial tool that substantially reduces the cost of closing coal plants and replacing them with clean energy.