A former official with the state Public Regulation Commission questioned Wednesday whether the 2019 Energy Transition Act is fulfilling its purpose.
Without rendering an opinion, former commission hearing examiner Carolyn Glick made it clear she wonders if it is.
Glick said via a text after her presentation that she didn’t give the talk in connection with her current contract work for the commission, and she intended it to be an objective discussion “to provide information for people to assess the ETA” for themselves.
Near the end of her one-hour Zoom presentation to a New Mexico Bar Association group, Glick said it’s generally understood that a key intent of the law was to hasten Public Service Company of New Mexico’s abandonment of two coal-fueled power plants. And that might not happen soon.
“While the apparent purpose of the ETA is to accelerate the elimination of coal-fired generation, the ETA surprisingly does not require that a coal plant stop operating after being abandoned by a utility,” she said.
Glick also said it’s unclear whether the law will save electric utility customers money.
She retired as a hearing examiner from the regulation commission in August but is doing contract work for the commission’s general counsel office. A hearing examiner is a quasi-judge who makes recommendations to the five-member commission.
Glick said the law in effect applies primarily to PNM and its abandonment of two coal plants in Northwest New Mexico.
She noted the New Mexico Supreme Court has found the law constitutional and rejected the argument it is special legislation for one entity’s benefit.
The court also rejected the claim that the law violates due process and equal protection by removing the Public Regulation Commission’s authority to determine whether a utility can recover from customers “stranded costs” in coal-fired power plants.
At San Juan Generating Station, she said, the city of Farmington hopes to work with a company after PNM leaves this year to create a carbon-capture power plant. The other plant affected by the law, the Four Corners Power Plant, is expected to continue after functioning PNM departs, probably after 2024, under the control of other utility companies.
As for whether the Energy Transition Act might help PNM customers save money, Glick said that is unknown. The law gives PNM the opportunity to use low-interest, 25-year energy transition bonds to cover capital costs it incurred before leaving the San Juan and Four Corners plants. Those are known as “stranded costs” — expenses that remain after departing from the plant.
In the San Juan case, PNM requested permission from the commission in 2013 to leave behind two of four power-plant units and to recover $257 million in undepreciated, or stranded, costs. The commission and PNM agreed the company should pay for half of those costs with ratepayers’ money and half with its shareholders’ money, she said.
This year PNM is expected to leave behind the remaining two units of San Juan. Glick said the utility company expects $283 million in undepreciated costs involving those units. Glick said that in its application, PNM maintained it would issue energy transition bonds shortly after leaving the plant behind.
The commission approved but also ordered PNM to remove San Juan costs from customers’ base rates and give them a credit for the costs they previously paid when it starts asking them to pay off the bonds.
Glick said the Energy Transition Act gives PNM the right to recover undepreciated assets and that the commission has no authority to deny this or to require PNM’s shareholders to absorb some of that burden.
Western Resource Advocates has formally protested to the commission that PNM doesn’t intend to issue the bonds until early 2024. By delaying the issuance of bonds, Western Resource says, PNM seeks double recovery of some costs. PNM denies this.
PNM, Glick said, also has argued there is nothing in the commission’s order or in the Energy Transition Act requiring it to credit the costs as soon as it leaves the plant.
Glick said the Energy Transition Act is often cited as the law that requires electric companies to rely increasingly on renewable energy such as sun and wind. In fact, she said, the goals and timeline are cited in the Renewable Energy Act, which was in the same bill as the Energy Transition Act.