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New Mexico regulators to review coal plant financing dispute

Water flows into an evaporation pond Oct. 28, 2019, at the south side of the coal-fired San Juan Generating Station in Waterflow, N.M. The upcoming closure of one of the few remaining coal-fired power plants in the southwestern U.S. has generated a feud over financing and customer electricity rates. (Hannah Grover/The Daily Times via AP file)

ALBUQUERQUE – It will be up to New Mexico regulators to settle a feud over financing and customer electricity rates stemming from the upcoming closure of one of the last remaining coal-fired power plants in the southwestern U.S.

The state Public Regulation Commission voted Wednesday to clear the way for its hearing examiners to review the case and make a recommendation.

Consumer advocates have said anticipated savings should be passed on to customers of New Mexico’s largest electric provider when the San Juan Generating Station closes this fall. They also are concerned that Public Service Co. of New Mexico plans to delay the use of bonds to recover lost investments in the power plant.

Customers will pay back those bonds through their bills over 25 years, but the amount is expected to be less because of lower interest rates on the bonds and because the utility will forego profit on its investments.

The utility had delayed seeking a rate increase in 2020 because of economic hardships posed by the coronavirus pandemic and again in 2021 as part of merger negotiations that are now the focus of a legal battle before the state Supreme Court.

Officials with Public Service Co. of New Mexico, known as PNM, reiterated the company’s opinion that it would be more appropriate to credit customers for San Juan-related fees when rates are reconsidered next year as part of a lengthy process before the commission.

The utility also said it already has used shareholder money to pay for half of the $40 million in economic development aid aimed at reducing the economic sting of transitioning away from coal for communities in northwestern New Mexico.

PNM Resources chairman, president and CEO Pat Vincent-Collawn said in a statement that the company has worked over the last several years to “do the right thing for customers.”

“While our exit from San Juan was approved two years ago, we have been able to delay an increase in customer rates despite investing $1.2 billion throughout this period,” she said. “We will always to look at the big picture and continue to propose solutions in our customers’ best interests.”

Commissioner Stephen Fischmann said he was dismayed with how the case has played out and accused the utility of “keeping the commission in the dark.”

“Now we have to scramble to make a decision quickly,” he said.

PNM officials denied the accusations, saying plans for how the financing would be handled were outlined during testimony in 2019 in which utility executives said the issuance of bonds would occur with a rate case.

At the time, the utility noted that customers might not necessarily receive an overall decrease in their monthly bills because the utility still needed to recover investments to modernize the grid and to pay for solar and battery storage projects to replace the San Juan plant.

Mariel Nanasi, executive director of the New Energy Economy group that promotes renewable energy, said the utility and its supporters told the state Legislature, regulators and the courts in legal filings that New Mexico’s Energy Transition Act would bring an end to coal, result in customer savings and increase renewable energy development.

While those goals have yet to be realized, she said she’s confident that the hearing examiners will protect the public interest.

It’s unclear how soon the commission could decide the matter, but the first of the plant’s two remaining units will close at the end of June. The other one is scheduled to shut down at the end of September.