PRC orders PNM to file amended application for Four Corners Power Plant ownership transfer

AZTEC — A spokesman for Public Service Company of New Mexico says the utility is pleased to have a chance to present evidence that past investments into the Four Corners Power Plant were prudent.

This comes after a hearing examiner for the New Mexico Public Regulation Commission gave PNM until March 15 to refile its application to abandon its 13% ownership of the Four Corners Power Plant, citing deficiencies in its January application. 

The order filed on Feb. 26 requires PNM to submit an amended application and supplemental testimony that addresses the prudence of past investments into the Four Corners Power Plant.

This goes back to a 2016 rate case. PNM spokesman Raymond Sandoval said during that rate case there were questions about some of the environmental upgrades made at the Four Corners Power Plants.

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Those questions were supposed to be addressed in the next rate case. That rate case has not yet happened, however PNM has reached an agreement to transfer its shares of the Four Corners Power Plant to Navajo Transitional Energy Company.

Several of the parties involved in the 2016 rate case said that the unanswered question about the prudence of those investments should be addressed before granting the abandonment application, which will allow PNM to transfer ownership.

The abandonment application also includes securitization, which would allow PNM to refinance past investments into the power plant through low-interest bonds. Advocacy groups like New Energy Economy have argued that PNM should not be allowed to recoup imprudent investments and pass those costs on to ratepayers. The Energy Transition Act, which created the tool of securitization, would allow the cost of the bonds to be paid off by a non-bypassable charge on ratepayers’ bills.

Sandoval said PNM did not include information about the past investments into the plant in the filing that it made in January to abandon its share of the Four Corners Power Plant because the order in the 2016 case stated that it should be evaluated in a rate case.

He said the current docket is an abandonment filing rather than a rate case, but once those concerns were made, PNM supported having the question answered in the abandonment docket.

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Sandoval said PNM maintains that the past investments into the power plant were prudent.

However, Mariel Nanasi, executive director of New Energy Economy, argues that El Paso Electric did a financial analysis about Four Corners Power Plant around the same time that PNM chose to make the investments into the power plant. At that time, El Paso Electric chose to exit its shares of the Four Corners Power Plant, transferring them to NTEC.

Nanasi describes the Feb. 26 order as dismissing the case and requiring PNM to refile with additional information. However, Sandoval said it is not a dismissal of the case but rather a request for more information that PNM is willing to provide.

"Do I think it should have been dismissed? Yes, I think it should have been dismissed, not only because of this. I think it should have been dismissed because PNM's application is contrary to the (Energy Transition Act)," Nanasi said.

She argued that it is contrary to the Energy Transition Act because it is a sale of the coal-fired asset that will allow it to remain open and could potentially keep the power plant open until 2031.

At the same time, ratepayers would be paying for the securitized bonds, which includes some funding for the community that would be impacted if the power plant was closing. Those funds would still be made available for economic diversification and workforce training for displaced workers despite the fact that they would still have jobs after 2024 when the transfer is supposed to be complete.

Nanasai argues that PNM wants to transfer its ownership because of the merger with Avangrid, which does not want to own coal-fired power plants.

Hannah Grover covers government for The Daily Times. She can be reached at 505-564-4652 or via email at hgrover@daily-times.com.

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