Ruling preserves $8/month savings for average customer, immediate issuance of community funding when San Juan Generating Station closes Sept. 30
For immediate release: July 21, 2022
The New Mexico Public Regulation Commission on Thursday denied PNM’s motion for a stay on the commission’s June 29 order, meaning the utility must credit customers for the savings from closing the San Juan Generating Station coal-fired power plant. The commissioners said PNM’s motion did not fulfill any of the four requirements for a stay.
The commission in June agreed with environmental and consumer groups and blocked PNM’s plan to keep charging customers for San Juan Generating Station long after the plant is closed, resulting in $134 million in profit for the utility. The PRC also required PNM to issue the community and worker funding that Energy Transition Act funds would create as soon as the coal plant closes, though PNM plans to delay the bond issue.
During the meeting, Commissioner Steve Fischmann called PNM’s plan a “scam” and spoke of the higher interest rates customers will likely have to pay because of PNM’s delay in issuing the Energy Transition bonds. “That will all be PNM’s fault,” Fischmann said.
Chair Cynthia Hall noted testimony by Western Resource Advocates’ expert Larry Blank, who said that between the delay in issuing ETA bonds and collecting profits from customers while not paying for San Juan, PNM shareholders would earn a 34% return, “far above what is appropriate. It just represents a transfer of wealth from ratepayers to PNM shareholders.”
Commissioner Joe Maestas noted “Our order will make whole the $40 million in community assistance. That was the pressing issue leading up to the decision on the financing order,” Maestas said. “We are sending the message that this money has to get to the community, to the appropriate state agencies, to begin mitigating the impacts of the closure immediately.”
In response, organizations in Coalition for Clean Affordable Energy issued the following response:
“We are pleased the PRC today denied PNM’s motion for a stay, reaffirming the prior order that customers receive the 10% rate reduction they are due when the San Juan Generating Station closes,” said Pat O’Connell, deputy director of Western Resource Advocates’ Clean Energy Program. “The state’s Energy Transition Act provides important credits for ratepayers as well as economic transition assistance for the communities around the coal plant, and the PRC decision today will ensure those benefits occur as New Mexico works to reap the opportunities of clean energy and reduce the harmful fossil-fuel emissions that cause climate change.”
“PNM customers using the average 600 kilowatt hours a month will see a bill savings of more than $8 per month, and hundreds of dollars over the next 18 months,” said Ona Porter of Prosperity Works, which advocates on behalf of low-income consumers. “Energy poverty is a real thing, and these savings will make a difference.”
“PNM claimed it will suffer ‘irreparable harm’ if ordered to stop charging ratepayers for the San Juan Generating Station costs that will no longer exist when PNM exits the plant. PNM has been gaslighting ratepayers, telling them that continuing to charge them for these non-existent costs would somehow benefit ratepayers in the end, but its filings at the Public Regulation Commission and the New Mexico Supreme Court tell a different story. PNM complains it needs to keep charging after the plant closes in order for PNM to be able to earn a 9.5% return on its investments — even though it will no longer have an investment in the plant it wants to keep charging for. Coalition for Clean Affordable Energy, Prosperity Works, the Sierra Club and utility division staff submitted evidence of harm that would result to ratepayers, particularly the poorest amongst us, which unfortunately are too many of us. The commission correctly determined ratepayers would suffer harm if PNM is allowed to continue to charge them for the San Juan Generating Station, and PNM would not suffer if denied the opportunity to continue to profit from the plant after they abandon it. Coalition for Clean Affordable Energy supports a just transition. The Energy Transition Act sought to create a win-win-win solution — a solution for everyone. This included new clean-energy investments, new jobs, and assistance to the utility in paying off their stranded assets. It is important to CCAE to ensure the benefits of abandoning coal are given to ratepayers and the affected workers and community, not PNM shareholders. This is all of our energy transition.”
— Cara Lynch and Stephanie Dzur for the Coalition for Clean Affordable Energy and Prosperity Works.
“Dozens of New Mexicans, including many from the impacted Four Corners region, offered public testimony last month urging transition from deadly coal pollution, immediate rate credits reflecting the savings of transition from coal to clean, and immediate investment of ETA transition funds for the community and workers,” said Sierra Club Rio Grande Chapter’s Mona Blaber. “Coal is expensive, unhealthy and causes ever graver climate consequences. Ratepayers should be able to see the immediate savings of transition from coal to renewables, and the impacted community should .”
The Energy Transition Act allows for utilities to sell low-interest bonds to pay off remaining debt in coal plants it plans to close. PNM customers have been paying off those expenditures for decades, plus a 10% rate of return to PNM.
The AAA-rated bonds enabled by the ETA would pay off the debt at a considerably lower interest rate, dramatically lowering customer payments for the stranded debt and funding $40 million in investments in the impacted Four Corners community. But PNM announced recently it planned to stall the bond issue until after its next rate case, nearly two years from now. That would deprive customers of more than $8 of savings monthly for 18 months and likely cause customers to have to pay off the bonds at higher rates because of rising interest rates. The PRC in June required PNM to provide rate credits to customers in roughly the amount of the bill reduction that the ETA bonds would provide if they were issued when the plant closes.
Stephanie Dzur, CCAE, firstname.lastname@example.org, (505) 730-5295
Ona Porter, Prosperity Works, email@example.com
Photo of San Juan Generating Station by Scott Mosher