SANTA FE – New Mexico regulators have denied a request by the state’s largest electric provider to divest itself from one of the Southwest’s few remaining coal-fired power plants by transferring its shares to a Navajo energy company.
The New Mexico Public Regulation Commission on Wednesday voted unanimously to reject the plan, saying Public Service Co. of New Mexico didn’t specify how the lost power would be replaced.
Commissioners also had concerns about investments that the utility known as PNM sought to recover through bonds that would be paid back by customers over a 25-year period.
The utility could appeal the decision or it could come back to the commission with more information.
The decision marked the commission’s second major rejection involving PNM in recent weeks. Regulators also denied a proposed multibillion-dollar acquisition of PNM by global energy giant Iberdrola and its U.S. subsidiary, Connecticut-based Avangrid.
Supporters of PNM’s exit from the coal plant named Four Corners Power Plant had argued that the move would translate into savings for customers, reduce emissions from the utility’s portfolio and strengthen the Navajo Nation’s position when it comes to determining the future of the plant.
Environmentalists had criticized the proposed transfer, suggesting it would prevent an early closure. However, there hasn’t been any willingness by the plant’s majority owner – Arizona Public Service Co. – to end operations before 2031 because doing so could undermine the reliability of that utility's network.
The commission deliberated the power plant issue behind closed doors for hours. Chairman Stephen Fischmann said after Wednesday’s vote that the panel lacked information needed to make a good decision and that the commission was open to PNM following up with details.
PNM officials called the vote disconcerting, saying that after months of proceedings that the outcome created uncertainty about the regulatory environment in New Mexico and that it made the company’s transition to more renewable energy more difficult.
PNM President and CEO Pat Vincent-Collawn pointed to New Mexico’s Energy Transition Act, saying the commission ignored the law's requirements for balancing shareholder responsibility, customer savings, economic aid and environmental benefits.
“We will need to carefully review the order rejecting abandonment to determine next steps, including a possible appeal to the New Mexico Supreme Court,” she said in a statement.
Under the proposal, Navajo Transitional Energy Co., known as NTEC, would have taken over PNM’s interest in Four Corners, becoming the second largest owner of shares in the plant. PNM shareholders would have paid NTEC $75 million to assume its obligations under a coal supply agreement.
By transferring its shares, PNM could have exited Four Corners about seven years ahead of its previously scheduled departure and would have been closer to meeting New Mexico renewable energy and emissions mandates. The Energy Transition Act requires public utilities to be carbon free by 2045.
Located on tribal land, the Four Corners plant has been a huge economic driver for the Navajo Nation for decades. The plant and the neighboring mine that feeds it provide hundreds of jobs for tribal members and the operations account for nearly a quarter of the Navajo Nation’s annual general fund revenues.
Navajo President Jonathan Nez and other tribal leaders spoke in favor of PNM’s plan.
“As we determine how to transition to a post-coal economy, we continue to rely on these jobs and revenue for the foreseeable future,” Nez said. “This is not going to be an easy task.”
