UPDATE: The Energy Transition Act passed the House on March 12 and is on its way to Gov. Michelle Lujan Grisham’s office to be signed into law! Congratulations to all those who contacted their legislators for an equitable transition to 100% carbon-free electricity in New Mexico!
The most critical piece of state legislation this year and the biggest progress for climate ever in New Mexico gets a crucial vote today, March 11, in the House Judiciary Committee. Please call or write your state representative to ask for a “YES” on SB489, the Energy Transition Act.
The Energy Transition Act creates an equitable transition from fossil fuels to a clean-energy economy. It also lowers rates, provides significant reinvestment in the Four Corners community, creates a safety net for coal workers and ensures San Juan coal plant is retired.
Labor and community groups like AFSCME, Building Trades and Somos Un Pueblo Unido join the Sierra Club and almost every other environmental organization in enthusiastic support of the Energy Transition Act, but the bill’s few foes, like the hard-right Rio Grande Foundation, are making a lot of noise.
This legislation has passed the state Senate Conservation Committee and Corporations Committee, and now it heads to the Senate floor for its biggest vote yet. Please email your state representative and urge support SB 489 for an equitable transition to 100% carbon-free energy in New Mexico. Our opponents will be there; let’s show our support for a renewable-energy-powered New Mexico in much greater numbers.
Here’s what the Energy Transition Act does:
— Requires 50% renewable electricity in New Mexico by 2030; 80% by 2040; and 100% carbon-free energy by 2045. Those mandates are for our state’s investor-owned utilities (PNM, El Paso Electric and Southwestern Public Service). Co-ops get five years longer to comply. That is huge progress toward protecting our children from the biggest crisis facing humanity: climate change.
— Stops the pollution from coal-fired San Juan Generating Station for good by requiring that any facility on the San Juan premises meet pollution requirements that coal plants are unable to meet. Without this legislation, there is a real danger that this plant could remain open, and no other bill or scenario requires this plant to stop burning coal.
— Provides significant reinvestment in the Four Corners community. This is why this bill exists. Low-rate financing of the costs customers are already paying for San Juan creates funding to reinvest in workers and the community. The Energy Transition Act directs $20 million to San Juan County economic development and requires 450 MW of replacement power in the same school district as the plant to replace the lost property taxes.
— Provides a safety net for San Juan plant and mine workers. The bill provides another $20 million in severance payments and retraining for the plant and mine workers. Again, securitization provides funding to ensure an equitable transition for workers. Without this bill, there will be no means to take care of employees who have worked hard to keep our lights on all these years.
— Lowers rates. Yes, the Energy Transition Act would lower your PNM bill. This is another benefit of securitization. The costs that are being refinanced in this bill are costs you’re already paying if you’re a PNM customer. You would continue to pay them until 2053 if San Juan didn’t close.
When PNM or other utilities build plants and invest in them (for new equipment or pollution controls, etc.), it’s a bit like making a loan to ratepayers, and PNM gets to charge customers, plus a rate of return of about 10%. The Energy Transition Act would allow PNM to sell low-interest bonds to recoup the principle on its San Juan investments at 3-4% instead of the 10% customers are currently paying. PNM gets its principle back but loses that entire 10% return. That’s a loss of about $16 million in profit yearly on this deal. Under any scenario of San Juan closure, fuel costs and other plant expenses will also go down considerably.
— It makes it much less likely that PNM will replace San Juan coal with gas. The bill’s renewables requirements make PNM much more likely to replace their coal power with renewable energy, but there’s also language in the bill requiring replacement power to be the most environmentally friendly and cost-competitive option, meaning the PRC is more likely to reject gas as a replacement source if the Energy Transition Act passes.
Answers to questions some of our supporters have had:
Does this take power from the Public Regulation Commission? The PRC will decide PNM’s case for abandoning San Juan coal plant regardless, but if the Legislature doesn’t pass the Energy Transition Act, the PRC doesn’t have the tools to provide financial relief and job training for mine and plant workers and redevelopment funds for San Juan County, as the ETA does. The PRC can’t require 50% renewables by 2030 and 80% by 2040, and 100% carbon-free electricity by 2045, as this bill does. The PRC can’t direct replacement power to be sited in San Juan County to replace lost property taxes for schools. That puts the Legislature in a much, much better position than the PRC to guide this transition.
Would rates be lower if the PRC decided all the details of San Juan cost recovery? Probably not, and even in the best-case scenario for ratepayers, not by much. The Energy Transition Act would lower a typical $100 electricity bill by about $7-$8, according to the Albuquerque Journal. Even if the commission significantly lowered PNM’s recovery of its “stranded costs” on San Juan (about $320 million) — making the company pay 50% of those costs — that would cut rates slightly LESS than the Energy Transition Act would, but more importantly, it would leave workers and the Four Corners community out in the cold.
Isn’t PNM getting everything it wants? No. That’s why this legislation took a year to negotiate from what PNM wanted last year (a bill we and other groups opposed). All the ownership guarantees in last year’s bill have been removed. PNM loses well over $100 million in profits over time. Funding for the Four Corners community and workers more than doubled. The renewables standard means PNM and New Mexico’s other utilities and co-ops must transform their energy portfolios for the better.
Would a “clean” Renewable Portfolio Standard be better? The Energy Transition Act does a lot more than just a renewable portfolio increase (which was also filed this session), and that’s why we’re strongly supporting this legislation. This bill has an even more robust renewables requirement, but as pointed out above, the bigger benefit is that it also protects workers, the community and ratepayers.
This is rare legislation that benefits all stakeholders — a win-win-win-win for our children’s health and safety, for ratepayers, for workers, and for the Four Corners community.
We won’t get this opportunity ever again. Please attend at 9 a.m. Saturday in Room 322 of the State Capitol, 490 Old Santa Fe Trail, Santa Fe, to support SB 489, the Energy Transition Act.
Thanks for being part of a big moment of hope for New Mexico and future generations.
Sierra Club Rio Grande Chapter director
P.S.: Check out my explainer on SB489 here