Director’s update: good news and concerns


In this note you’ll find three important updates – Good news on Albuquerque Energy Conservation Codes for buildings, an update on the PRC hearings on replacement energy for coal at San Juan, and finally a concern regarding an ALEC driven attempt to raise fees punitively for Electric Vehicle owners.

First, the exciting news.  On Monday night the Albuquerque City Council voted unanimously to order the City to update its energy-efficiency building code to the latest version — moving from the long-outdated 2009 international codes to the 2018 version. The final standard will be approved by the council, so we’ll want to make sure there aren’t significant line-by-line variances that reduce energy savings. We’ll keep you posted. Thanks to all of those who called and attended the meeting. Now we need to ensure that the state, which is also still using the 2009 code, update. We are pushing for action from the state Construction Industries Board.

We also want to update you on the latest regarding the hearings at the Public Regulation Commission (PRC).

Over the last two weeks, the commission held evidentiary hearings in the case concerning what type of energy should be used to replace the coal-fired San Juan Generating Station, if PNM is allowed to exit the plant. Here are some of the highlights:

PNM has asked the commission to approve its Scenario 1, which consists of roughly 280 MW of new gas, 350 MW of solar, and 130 MW of batteries. Sierra Club has recommended alternatives that use 100% solar and batteries, with no new gas. PNM conducted modeling for us that found that our proposed portfolios would meet PNM’s reliability criteria and would be cost-effective.

Unfortunately, a number of parties have advocated for replacement resources that would be far more destructive than even PNM’s Scenario 1. Commission staff asked the Commission to approve Scenario 2, which has roughly 440 MW of new gas. The City of Farmington, Westmoreland Mining, and the San Juan legislative delegation want the Commission to order PNM to buy power from Enchant, the company hoping to retrofit San Juan with carbon capture and continue burning coal, an alternative that our testimony to the Commission has shown to be wildly expensive and risky.  (Yesterday this Company made an informational presentation filled with misinformation to members of Senate Finance. You can see our live fact check here.)

To make things even more complicated, NEE has asked the Commission to order PNM to get new pricing for all of the bids that PNM received. For background, after PNM’s 2017 Integrated Resource Plan (IRP), PNM issued a Request for Proposals (“RFP”), and received hundreds of bids for projects that could replace San Juan.  The replacement-resource options in this case are different combinations of the bids PNM received in response to that request for proposals. NEE’s proposal would delay the case, and there likely would not be enough time to conduct a new case and have replacement resources online by June 2022, when PNM wants to leave ownership of San Juan. So NEE’s proposal threatens to make abandonment (and retirement of the plant) by June 2022 impossible, which is why we are opposing it.

On January 23, PNM announced that it had re-contacted bidders of the projects that make up the portfolios that parties recommended.  25 out of 29 bidders offered to extend their bids, at the same price as they originally bid, through the end of April. Sierra Club’s recommended carbon-free portfolios relied on one of the bids (a battery bid) that was not extended, but we were able to replace that bid with two smaller battery projects, so we still have a viable portfolio that meets reliability metrics and consists of only solar and batteries.  New bids would not necessarily be cheaper since federal tax credits for wind and solar are ramping down.

A lot of the testimony at the evidentiary hearing focused on battery storage technology.  PNM set two arbitrary and unreasonable limits on batteries: PNM limited each potential battery project to a maximum of 40 MW; and PNM limited the total battery projects to 5% of its peak demand.  No other utility in the country has used these limits. Sierra Club and many other parties criticized PNM for imposing these limits and unfairly restricting the amount of batteries that were available in the modeling that PNM ran. We hope to see the Commission accept one of our portfolios that have larger amounts of battery storage than PNM’s portfolios.

The next step in the case is that the parties submit two rounds of briefs, ending in early March.  The Hearing Examiners will then issue a recommended decision, and the parties will submit another round of briefs. Then the Commission will issue a final decision.

It is unclear what the Commission will ultimately decide in this case.  If the Commission denies PNM’s request to leave ownership (abandonment) of San Juan, then the replacement resources case will go away, because PNM won’t need any replacement resources; it will continue to use coal. If the Commission approves abandonment, there’s a very real risk that it could also approve the portfolio that is almost all new gas (Scenario 2, which Staff supports) or order PNM to buy power from Enchant (which the City of Farmington, Westmoreland, and others support).  The Commission might also approve some resources now, and delay deciding what other resources to add. Finally, the Commission could tell PNM to get new price information from bidders, which would delay the case and create the risk that abandonment will not happen in June 2022 and PNM will be forced to continue to burn coal at San Juan.

Sierra Club’s attorneys continue to advocate for portfolios of 100% solar and batteries. Our attorneys are also arguing that if the Commission is inclined to approve some new gas, that it should be less new gas than PNM has asked for.  We are doing our best to prevent the construction of new gas and, if we don’t see a path forward with the Commission, to limit the amount of new gas that is built.

On a final legislative topic, I want to call out an issue taking place.  You may know that we’ve worked for years on state tax credits for electric vehicles (EV). I’ve attached a fact sheet on the bill.  Members of the State Senate have taken on a damaging ALEC concept that EV drivers should have to pay high fees to cover road repairs that other drivers pay as part of a tax on gas that feeds the New Mexico Road Fund.  While EV drivers should pay into the road fund, Senate Corporations has added a punitive $100 yearly fee for all EV drivers to the bill. Please contact members of Senate Finance and tell them to at least bring the fee down to $50.

Please email me directly if you want to be part of our rapid-response grassroots lobby list.

Thanks for all your help!

Director’s update: good news and concerns