Photo of San Juan Power Plant for Sierra Club article on PNM's utility rate hike proposal rejected by the NM PRC

ALBUQUERQUE – PNM’s plan to double down on burning coal at the San Juan Generating Station faces a new hurdle after a New Mexico Public Regulation Commission hearing examiner recommended that the commission reject PNM’s request to increase its share of coal at the plant’s Unit 4.

In his April 8 recommendation to the PRC commissioners, Ashley Schannauer, the independent hearing examiner overseeing PNM’s request to the Commission, found that PNM’s proposal to acquire an increased portion of the San Juan Generating Station “is not fair, just and reasonable and in the public interest.” Schannauer specifically cited two concerns raised during the proceeding regarding the reliability of San Juan Generating Station: the future ownership of the plant after a contract expires in 2022, and uncertainty about where the plant will get its coal after a supply agreement expires in 2017.

Schannauer also expressed his concern that customers would be harmed by PNM’s plan. “The stipulation as a whole does not produce net benefits to the public,” said Schannauer. “The dollar impact of the risks … appears to significantly exceed the dollars saved.”

The recommendation highlighted the risk that customers may be left holding the bag for a plant that is proving to be a far greater liability than previously disclosed. “PNM’s increasing ownership and responsibility for San Juan may pressure PNM to continue to act as the owner of last resort, absorbing exiting owners’ shares to protect its investment even if the plant has become uneconomic – in a version of the ‘too big to fail’ syndrome,” Schannauer continued.

In response, Nellis Kennedy-Howard, Senior Campaign Representative for the Sierra Club’s Beyond Coal Campaign, issued the following statement:

“PNM’s plan to spend more customer money and to continue burning more coal at the San Juan Generating Station is unreliable, risky, and expensive for customers. We applaud the hearing examiner for recognizing the huge risks that PNM’s plans would pose to New Mexico families and customers, and we support his recommendation that the Public Regulation Commission reject this misguided proposal

Rather than lock our state into a future of more dirty, expensive coal, the PRC should protect ratepayers from this risky gamble and seize this opportunity to commit to a future powered by clean, renewable energy like wind and solar. Now, in accordance with the hearing examiner’s recommendation and with the support of thousands of New Mexico residents who have raised their voices on this critical issue, it’s time for the Public Regulation Commission to act quickly to adopt the recommendation of the hearing examiner and protect ratepayer interests as soon as possible.”


Support for continued burning of coal at the San Juan Generating Station has fallen as admissions by the company have revealed serious financial risks for the future of the plant, including the uncertainty of where the plant will get its coal after 2017. Last month, the home city of the plant, Farmington, New Mexico, announced it would not acquire an increased stake in the plant due to reliability concerns and the huge costs that would be passed on to the community. Other New Mexico stakeholders have also pulled away from an agreement that would continue PNM’s use of coal at the plant, citing the overall uncertainty about San Juan’s operations. The Albuquerque City Council passed a resolution on April 6 formally opposing PNM’s plans and urging the New Mexico Industrial Energy Consumers, of which the City of Albuquerque is a member, to withdraw its support.

In addition, PNM announced that due to a cost accounting error, the total bill for their plan to increase reliance on dirty coal and other expensive fuels had jumped by over $1 billion, with those costs likely being passed onto local ratepayers. This comes just weeks after PNM introduced a rate proposal that if approved would result in nearly a $10 month increase to the average residential home bill due to utility’s plans to continue burning coal at the plant for the foreseeable future.

Over 1,300 New Mexico residents have sent petitions to the New Mexico Public Regulation Commission (PRC) urging them to protect ratepayers by rejecting PNM’s proposal to continue burning coal at the San Juan Generating Station, according to figures released last month by the Sierra Club.

Hearing examiner gives PNM’s San Juan coal plan thumbs-down