December 24, 2019

2019 Top Stories #5: The Energy Transition Act’s rocky start

2012_05_06_SanJuanGeneratingStation_06 (CC BY 2.0) by dsearls

The San Juan Generating Station, west of Farmington, New Mexico.

When Gov. Michelle Lujan Grisham signed the Energy Transition Act into law in March, she called the law “transformational” and “a really big deal.”

“The Energy Transition Act fundamentally changes the dynamic in New Mexico. This legislation is a promise to future generations of New Mexicans, who will benefit from both a cleaner environment and a more robust energy economy with exciting career and job opportunities,” she said at the time in a statement.

But the first attempt to implement the new law hasn’t been smooth.

The investor-owned utility PNM announced in 2017 that it planned to close the San Juan Generating Station, a coal-fired plant located outside Farmington. But PNM didn’t formally submit to the Public Regulation Commission (PRC) its consolidated application for abandonment, securitization and replacement power for the power plant until July 2019, weeks after the Energy Transition Act had been signed into law. Doing so ensured the new law would apply to PNM’s proposal, and also ensured that the PRC would have less authority to deny requests from PNM to recoup losses related to abandoning the plant.

The Commission voted to split the consolidated filing into two dockets to add the abandonment and securitization proposal to an existing docket the Commission had opened earlier in the year in response to PNM’s announcement that it would close the San Juan plant. Because the existing docket was filed before the ETA became law, the PRC doesn’t believe the ETA should apply to it.

Meanwhile, clean energy advocacy organization New Energy Economy and six other groups filed a lawsuit challenging the constitutionality of portions of the ETA, which the organizations argue removes the PRC’s authority to regulate rate increases that PNM may impose on customers to help pay for the costs of abandoning the San Juan coal plant.

“New Mexicans have only one shield against monopoly predation and that’s review and regulation by the PRC,” Mariel Nanasi, executive director of New Energy Economy, told NM Political Report at the time. “That constitutional protection cannot be bargained away by legislators, no matter how noble their overall goals.” 

Both the lawsuit and the PRC’s decision to split the docket drew criticism from the Governor and consternation among fellow clean energy advocates worried that ETA’s implementation could be derailed in its first year.

PNM, New Energy Economy and the Governor have all asked the state Supreme Court to weigh in on the matter. So far, the court has declined to rule on the constitutionality of the ETA and on whether the ETA should apply to PNM’s consolidated filing for the San Juan plant. In early December, Lujan Grisham and other political leaders asked the Supreme Court to direct the PRC to apply the ETA to PNM’s plans for the San Juan plant. No word yet if the court will take up the issue.

The PRC held a two-week administrative hearing on the issue in December, in which concerned residents from all sides of the debate appeared to offer public comments. The Commission plans to hold more hearings in January on PNM’s proposals for replacing the power generated by the coal plant with renewable resources and natural gas. 

See all of this year’s top stories here.