FARMINGTON – Leading New Mexico legislators reaffirmed support of a historic energy law while denouncing state utility regulators for slowing the process and challenging their authority on Thursday.
The Energy Transition Act, passed by the New Mexico Legislature this year and signed into law by Democratic Gov. Michelle Lujan Grisham in March, set goals to divest from coal and support new state investments in renewable energy. The law includes funds to lessen the economic burden on communities affected by the transition to renewables.
Yet, the Public Regulation Commission, which oversees utility, communications and motor carrier companies to ensure fair and reasonable rates for consumers, is debating whether the law applies over their ongoing assessment of the Public Service Co. of New Mexico’s plans to close the coal-powered San Juan Generating Station in 2022.
During Thursday’s legislative hearing of the Water and Natural Resources Committee, Democratic House speaker Brian Egolf said PRC challenged New Mexico’s legislative authority and overstepped its authority when it decided not to implement the law in its entirety. Egolf said state utility regulators have caused costly delays by questioning parts of the ETA, which, the legislator pointed out, had already been debated and signed into law.
“It’s not the PRC’s role to decide constitutionality. They are subject to the law just like every other commission,” said Camilla Febelman, director of the Rio Grande Chapter of the Sierra Club.
Leading environmental groups and supporters of the ETA worry the delay could jeopardize funds to communities like Farmington, which will be hurt by the generating station’s closure. “Being unwilling to implement the ETA won’t allow PNM to securitize these funds, then the $40 million for local communities won’t exist,” said Febelman.
Included in Thursday’s legislative panel was one of the law’s most vocal critics, New Energy Economy, consumer group. Executive Director Mariel Nanasi testifed that PRC “must balance the interests of consumers and the interests of investors.” She also claimed the new law unfairly requires ratepayers to shoulder the cost of the transition to renewables and allows PNM shareholders to avoid accountability to consumers, which is overseen by the PRC.
“The only protection ratepayers have against the lies and greed of PNM is the PRC,” Nanasi told The Durango Herald on Friday.
The New Energy Economy, Nanasi’s group, has challenged utility company’s proposals to recover lost investments at the San Juan Generating Station. The ETA allows utility plant owners like PNM to recover investments through bonds that are eventually paid off by utility customers.
Yet, many backers of the law say the ETA plan to transition away from coal would save ratepayers money.
“The whole point of securitization is to put it into low rate bonds, which saves customers money,” said Febelman. “Plus you replace it with cheap renewables and battery storage.”
Deputy Director of Clean Energy for Western Resource Advocates, Steve Michel, who also testified Thursday, said it was an opportunity to remind legislators of the good provisions in the bill.
“This was a bill that really did set a benchmark for other states,” Michel said. Nevada and Colorado passed similar legislation shortly after New Mexico, according to Michel.
A major misconception surrounding the ETA, Michel said, is that PNM’s shareholders won’t contribute and the burden will fall to ratepayers.
“PNM does have skin in the game,” he said. “Their shareholders are taking a hit, and the customers are getting a substantial financial benefit aside from the environmental benefit.”
The ETA also requires utility companies to have half their electricity from renewable energy sources by 2030, and 80% by 2040. Five years later, a 100% carbon-free mandate would kick in for utility companies.
The renewable energy goals are not being questioned by either the PRC or critics of the ETA such as New Energy Economy. Supporters of the bill, like Jim Mackenzie, co-coordinator of 350 New Mexico, say compromise was inevitable for the bill to pass with the support of environmental groups and utility companies like PNM. 350 New Mexico was one of many groups consulted in drafting some of the ETA’s. The law’s supporters say the alternative – namely the lack of $40 million toward community support – would be worse for the state and communities involved.
“They (PNM) were going to leave everyone high and dry, so we made major progress in supporting the Farmington community,” said Mackenzie.