New Mexico Regulators Approve PNM’s Plan to Exit San Juan Coal Plant

The New Mexico Public Regulation Commission on April 1 approved the Public Service Company of New Mexico’s request to abandon the San Juan Generating Station and use securitization bonds through the Energy Transition Act, or ETA, to finance its remaining investment in the plant. The move follows the state Supreme Court’s ruling that the commission must apply the ETA to the closure and replacement of the plant.

The ETA, which took effect in June 2019, includes provisions to issue energy transition bonds for the retirement and workforce training and transition assistance to affected communities. The law requires the state’s utilities to derive at least 50 percent of their electricity from renewable sources like solar and wind by 2030 and 80 percent by 2040 while the remaining share would come from zero-carbon sources by 2045.

The PNM Resources subsidiary filed a consolidated application on July 1, 2019 — after the law became effective — to retire the coal plant in 2020 and replace it with a portfolio of cleaner generating resources. Subsequently, New Mexico Governor Lujan Grisham, Navajo Nation President Jonathan Nez, and the legislators who sponsored the act filed the petition with the Supreme Court following a decision by the commission in July 2019 that placed the abandonment portion of the company’s plan in a January 2019 docket to proceed under the prior law. The “PRC is acting to disrupt ETA implementation and is posturing its dockets to accommodate an ultimate finding that the ETA does not apply to PNM’s Application,” according to the petitioners.

PNM’s integrated resource plan calls for retirement of the utility’s remaining units at the San Juan Generating Station by 2022 and withdrawal from the Four Corners coal plant when the its contracts with that facility end in 2031. To replace the retiring coal capacity, the plan includes solar and wind energy additions, along with the potential for energy storage capacity. The plan would retain the utility’s stake in the Palo Verde nuclear plant.

The company reiterated its commitment to phase out coal-fired generation and is now developing plans to facilitate the exit of its 200-megawatt ownership interest in the coal-fired Four Corners Power Plant.