To: Brian Egolf, NM Speaker of the House and Peter Wirth, NM Senate Majority Leader
Protect ratepayers from PNM's $350 million coal bailout!
Public Service Company, PNM, a privately held electric monopoly, has made hundreds of millions of dollars off their aging polluting San Juan coal plant and now wants $350 more million to close the plant “early.” Even though PNM will literally produce no electricity from the plant, it claims it is still entitled to the profit it hoped to get from ratepayers. Senate Bill 47, PNM's "Energy Redevelopment Bonding Act” will force ratepayers to pay the $350 million to Wall St. bondholders (who have paid PNM up front) from a monthly increase on everyone's electric bill. It’s time to hold PNM accountable, to protect ratepayers from PNM’s greed, and deny PNM a bailout resulting from their utility management malpractice!
Why is this important?
In advance of approval by the Public Regulation Commission (PRC) for the closure of PNM's San Juan coal units 1 & 4 PNM is seeking to recoup $353 million from ratepayers for the money it planned to make on those assets. In this legislation, PNM is seeking 100% recovery for its failed assets. Here's what's wrong with PNM's bill to recoup failed assets at ratepayers expense:
1. Failed assets recovery has been awarded when there is an external cause (EPA Regulation, like the Regional Haze Rule) causing unexpected early retirement of a plant. In those instances, the PRC has held that the burden must be shared 50/50 between shareholders and ratepayers. But in the instant case, PNM is not closing San Juan because of some unanticipated cause, it is closing San Juan because: a) all the other co-owners want out; and b) PNM cannot meet its burden to show that the San Juan coal plant is cost-effective against alternative resources (wind & solar); and c) PNM's internal senior management and Board assessment is that PNM can make more money (their estimate is $532 million) closing San Juan than running it.
2. PNM is making an end run around the very regulatory body established by the Legislature to regulate the utility: the Public Regulation Commission. PNM is afraid that the PRC may award PNM nothing - zero dollars because of the reasoning behind "early” closure. San Juan will be more than 50 years old at that time, is poorly performing (only runs about 68% of the time), and is more expensive for ratepayers and more damaging to the climate and environment than alternatives. At maximum, the PRC will award PNM 50%, because that is what PRC precedent is and that is what was awarded when there was a legitimate external cause that forced early retirement.
3. This bill is premature. PNM will file its case to close San Juan in July 2018 and it is important to allow various parties used to challenge PNM to fully use the legal process (discovery) regarding replacement power, energy ownership, clean up, reparations for San Juan County residents and workers, etc. There is much to be understood and the upcoming Abandonment Case provides a critical opportunity to establish the evidentiary basis from which decisions about these issues should be determined – under the regulatory framework with all interested parties involved.
4. This bill bakes in PNM ownership of ALL replacement power resources on PNM-owned land to the detriment of a robust competitive renewable energy RFP process that could produce ten thousand new jobs in New Mexico. So this is problematic for a number of reasons: a) violates anti-trust provisions, is anti-competitive, and is inherently unfair stifling (if not killing) the market for other power producers; and b) will NOT result in the lowest cost renewable energy for consumers; and c) the reason Colorado's economy is booming is yes, of course, because of marijuana, but also because there are more than 12,000 people employed in the renewable energy market - and we have better resources than Colorado. If PNM was NOT the gatekeeper in charge of ALL renewable energy then other independent power producers would be creating jobs, thousands of jobs here and we could diversify and grow our economy.
5. The bill does not include any provisions for the compensation of workers, impacted communities, or a full accounting of the remediation and cleanup costs of the site. It allows PNM to recoup its costs but does nothing for the employees and local community members impacted by the plant closure.