State regulators moved forward with approving the Public Service Company of New Mexico’s application for new solar and battery storage despite concerns that there are not enough new energy projects in the Central Consolidated School District to replace property tax revenue lost when the San Juan Generating Station closed.

On Thursday, the New Mexico Public Regulation Commission unanimously approved a recommended decision from the hearing examiner, Hans Muller, with one amendment.

The case stems from a 2023 application to add 100 megawatts of solar through a power purchase agreement with the Quail Ranch solar project as well as three energy storage agreements for a total of 250 megawatts of four-hour storage at different sites. The application also requested approval of a utility-owned battery storage facility known as BESS Sandia Storage Project. PNM requested the additional resources, including the contract with Quail Ranch, as a way to meet peak energy load requirements in 2026.

However, concerns arose during the case that the Quail Ranch project is intended to replace the Rockmont Solar Project that the PRC approved to replace the San Juan Generating Station.

The Rockmont project is located in northwest New Mexico and within CCSD boundaries. But it ran into delays and ultimately PNM canceled its contract with the developers.

Commissioner James Ellison noted that PNM never asserted that Quail Ranch was intended to replace the Rockmont project. However, replacing Rockmont with Quail Ranch is mentioned in Muller’s recommended decision.

Ellison said that the possibility that Quail Ranch would replace Rockmont was “never really litigated in this case.”

“I think it would be a mistake to reject the resources before us now over concerns that there is not a replacement in the school district,” Ellison said. “Rejecting them or delaying the process does risk these contracts falling apart and, given the timelines around the procurement process, it really leads to big questions about will we have resource adequacy in 2026 if we do that.”

CCSD and San Juan County maintain that the Energy Transition Act requires PNM to install 450 megawatts of generation or storage capacity within the school district’s boundaries to replace at least some of the property tax that was lost when the power plant closed.

They say that, without Rockmont, PNM is short of meeting that obligation.

Quail Ranch is located in Bernalillo County and the other resources in the application are in Valencia, Cibola and Bernalillo counties.

Former PRC Commissioner Steve Fischmann, who was on the PRC when the replacement resources were decided, said that part of the portfolio of solar and battery projects that PNM proposed in the current case needs to be treated as replacement for the San Juan Generating Station.

“In our commission, we took very seriously the need to get replacement resources into the San Juan community and the Central Consolidated School District to help ease the economic pain caused by the closing of the San Juan coal plant,” he said during public comment.

He said that he feels that the San Juan County community is “getting hosed” because the PRC did not discuss the current solar and battery projects in relation to replacing the San Juan Generating Station.

“It appears that all parties in the case failed to recognize the San Juan replacement aspect that needed to be considered in the record,” he said.

Fischmann was not alone in those concerns. Two members of 350 New Mexico who were involved in drafting the Energy Transition Act also spoke during public comment.

“I remember very clearly that one of the negotiated agreements was that PNM, in return for very favorable bond financing provisions, was to build about 450 megawatts of replacement resources in ‘the school district in New Mexico where the abandoned facility is located,’ meaning the San Juan Central Consolidated School District,” Tom Solomon with 350 New Mexico said.

He said only 300 megawatts of the 450 have been built and that PNM has no apparent plans to add another 150 megawatts in the CCSD boundaries.

The location of replacement resources and how many megawatts must be located within the CCSD has been a subject of debate since the passage of the Energy Transition Act in 2019. 

This is because the ETA states that replacement resources means that “up to 450 megawatts” identified as a replacement for San Juan Generating Station “provided that such resources are located in the school district in New Mexico where the abandoned facility is located, are necessary to maintain reliable service and are in the public interest as determined by the commission.”

San Juan County and CCSD have maintained that the law means that PNM is required to locate 450 megawatts of replacement power such as solar arrays and battery storage in CCSD boundaries.

But PNM and some others have said it only requires that up to 450 megawatts must be located in the CCSD boundaries. During the replacement power case, the PRC ultimately ordered close to 450 megawatts of replacement power to be built in the CCSD boundaries. Those replacement projects were the San Juan Solar Project and the Rockmont Solar Project. 

Commission Chairman Pat O’Connell said the issue of replacing the Rockmont project is important and that PNM has testimony on the record in this case that addresses the efforts the utility made and explains why none of the projects are located within the CCSD boundaries. O’Connell said there are challenges in getting projects within CCSD boundaries.

“It’s an important issue. It’s also, for me, an issue where we’re in a world of multiple truths,” he said.

He said that PNM’s system is short on capacity.

“Do we delay or postpone a decision on these resources now because another important decision is not being addressed?” he said.

O’Connell said he couldn’t support that.

But, he said, PNM is developing a request for proposals for an integrated resource plan. The IRP essentially serves as a roadmap for the utility and O’Connell said there will be opportunities for stakeholder engagement during that process. He encouraged PNM to reach out to the people who have expressed concerns about the Rockmont project not being completed during the IRP process.

O’Connell said that moving forward with the case that the PRC was hearing on Thursday does not negate the need to address the San Juan Generating Station replacement resources.