March 4, 2019

Plan for reducing utility carbon output heads to Senate floor

Doc Searls

The San Juan Generating Station, flanked by its surface coal mines on the desert north of the San Juan River west of Farmington, New Mexico. Flickr cc

Thanks to a positive recommendation Monday from a Senate committee, the full Senate will hear a bill that would dramatically decrease the amount of carbon coming from electric utilities in the state and help Public Service Company of New Mexico recoup its investments in the coal-burning San Juan Generating Station near Farmington.

Despite Republican opposition, the Senate Corporations and Transportation Committee voted 5-2 to endorse the Energy Transition Act, which would mandate electric utilities in the state to have 50 percent renewable energy sources in their portfolios by 2030, with a goal of 80 percent renewables by 2040.

The vote came at the end of a two-hour debate, which followed four hours of public input on Saturday.

The committee, on a partisan split, rejected an amendment to Senate Bill 489 by Sen. Bill Sharer, R-Farmington, that would have given the city of Farmington, a part owner of the power plant, more time to negotiate a sale of the plant to a New York hedge fund.

The potential buyer, Acme Equities LLC, has proposed refitting the aging power plant with technology city officials say would reduce carbon emissions by 90 percent and help pay for itself by shipping captured carbon to oil fields through a pipeline.

But the “carbon capture and sequestration” technology being touted by Farmington and Acme Equities is controversial and has never before been used in an operation as large as the San Juan plant.

Sharer said Monday he expects the bill to pass the Senate and hinted that he might sue the state if the proposal becomes law. “What is my option?” he asked rhetorically. “To sue the state of New Mexico.”

The San Juan Generating Station and an adjacent coal mine constitute a major source of employment in northwestern New Mexico.

If Sharer is right and the Senate passes the bill, it would still have to get through the House — where Democrats enjoy an even larger majority — and be signed by Gov. Michelle Lujan Grisham, who strongly backs SB489, sponsored by Sen. Jacob Candelaria, D-Albuquerque.

Though they voted in favor of the bill, two Democrats said they still have strong reservations. One was committee chairman Clemente Sanchez of Grants, who echoed some of the concerns of Republicans, saying he worries whether there would be enough non-carbon energy available to handle demand for electricity if the renewable energy sources were not sufficient. “I hope I didn’t make a big mistake,” he said.

And fellow Democrat Sen. Bill Tallman of Albuquerque said he believes SB 489 is a “sweetheart deal” for PNM.

The Energy Transition Act is supported by an unlikely coalition that includes the state’s largest utility and several major environmental groups, as well as business and labor groups. The opposition, also a “strange bedfellows” situation, includes various local officials in Farmington and San Juan County and some environmentalist groups, most prominently the Santa Fe-based New Energy Economy.

PNM issued a statement after the vote, saying “New Mexico’s cleaner energy future is one step closer to being realized. … It is clear that our customers, communities, and state want reliable, affordable, and environmentally friendly energy and this energy policy will give them that.”

Meanwhile, New Energy Economy released a statement praising senators for amending the bill to include $2 million for the state Department of Indian Affairs to study how the transition to renewable energy would affect Native Americans. A large portion of miners digging coal for the plant are members of the Navajo Nation.

But the New Energy statement also said, “There are some bad new amendments that include that the renewable energy generated does not have to be located in New Mexico for either co-ops or investor-owned-utilities. Although it looks to be an uphill battle, we will continue our efforts to amend the bill and prevent it from becoming the `gift that keeps giving’ (to PNM) for decades to come.”

SB 489 would allow PNM to issue securitized bonds to pay off old debts for the San Juan plant. Such bonds allow lower borrowing costs. Candelaria said these bonds have rates as low as 2 or 3 percent.

The bill would set up a $20 million economic redevelopment fund to help Farmington and surrounding towns aid displaced workers, and would mandate that any energy sources that replace the San Juan plant’s output be located in the Central Consolidated School District in the Farmington area — which, Candelaria said, would mitigate the loss of property tax revenue to schools.