March 13, 2019

Energy bill’s passage portends end of coal era in NM

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

The Legislature has moved to Gov. Michelle Lujan Grisham’s desk a controversial bill designed to dramatically increase the amount of renewable energy used to produce electricity in New Mexico while also helping the Public Service Company of New Mexico recoup its investments in the coal-burning San Juan Generating Station near Farmington.

Following a three-hour debate Tuesday, the House passed Senate Bill 489 by a margin of 43-22. It was a mostly party-line vote, with almost all Democrats in favor of the bill and almost all Republicans voting against it. The measure goes now to Lujan Grisham, who has enthusiastically supported it.

How PNM’s electrical rates will be affected was a major point of contention during debates over the bill in the Legislature. Advocates said monthly bills will go down because the bill allows the utility to issue new bonds to pay off those issued for the San Juan power plant and the new bonds will be financed at lower interest rates. However, opponents argued ratepayers will end up paying more.

Just minutes after the House vote was counted, a statement from the Governor’s Office called the bill’s passage “a promise to future generations of New Mexicans. When we were presented the chance to move toward cleaner sources of energy, we took it, boldly charting a course to a carbon-free future, permanently centering our commitment to lower emissions and setting an example for other states.”

The bill calls for a 50 percent renewable energy portfolio standard in the state by 2030, with a goal of 80 percent by 2040.

The measure, sponsored by Sens. Jacob Candelaria, D-Albuquerque, and Rep. Nathan Small, D-Las Cruces, was supported by an odd coalition that included PNM and several major environmental groups, as well as business and labor groups.

The opposition, also an unusual group of allies, included various local officials in Farmington and San Juan County and some environmental groups — most prominently, Santa Fe-based nonprofit and frequent PNM critic New Energy Economy.

In a statement, PNM said the bill “will create a greener energy economy and supports our state’s reforms to become a national leader in cleaner energy.”

But Mariel Nanasi, executive director of New Energy Economy, called the bill’s passage “debt for decades for PNM ratepayers. … This is a PNM bailout for imprudent financial business decisions.”

And Farmington-area Republicans, including House GOP Whip Rod Montoya, argued the higher renewable energy portfolio standards will increase electricity costs. He pointed to the example of California, which has high renewable standards and has seen increased costs to consumers.

However, Steve Michel of Western Resource Advocates said California’s high energy costs are not from renewable energy but rather from long-term contracts signed with energy producers in the early part of the century when there was a serious energy shortage in that state.

The House — like the Senate — rejected proposed amendments to the bill that would have given the city of Farmington, a part owner of the power plant, more time to negotiate the sale of the San Juan facility. A New York hedge fund called Acme Equities LLC is talking with Farmington officials about refitting the aging power plant with “carbon capture and sequestration” technology that 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.

Montoya made an emotional pitch against the bill, calling the people who are employed by the power plant and adjacent coal mine “my friends, my workmates, the people I hang out with.” He and others lamented the loss of tax revenue to the Central Consolidated School District, which serves San Juan County communities including Shiprock, Newcomb and Kirtland.

The bill would set up a $20 million fund to aid displaced workers and mandates any energy sources that replace the San Juan plant’s output be located in the Central Consolidated School District, which covers about 3,000 square miles.

While the bill was in the Senate, Sen. Bill Sharer, R-Farmington threatened to sue if the bill becomes law

Throughout the debate of the bill during the session, opponents gave various figures for the numbers of employees who would lose their jobs if the power plant closed. A PNM spokesman said last month the utility has about 200 workers at the plant, while the coal mine has about 225.