PRC to consider extra time for PNM coal contracts

Jun 16 - Santa Fe New Mexican, The (NM)

State regulators are scheduled to decide Wednesday whether to grant the state's largest electric utility more time to finalize ownership and coal-supply agreements for its San Juan Generating Station before the Public Regulation Commission votes on the company's controversial plan for how it will meet power supply demands in coming years.

Commissioners are likely to get an earful from clean-energy advocates who say PNM's need for an extension indicates deeper problems with its plan to shut down two of the massive power plant's four units and rely on a mix of sources, including coal, nuclear, solar and natural gas.

The utility's plan for the San Juan power plant resulted from combined efforts with the New Mexico Environment Department and the Environmental Protection Agency to reduce coal-fired emissions. Utility representatives say it will meet federal haze regulations under the Clean Air Act, increase cost savings to ratepayers and balance the utility's energy portfolio by minimizing reliance on one energy source.

But before Public Regulation Commission members can vote up or down on the plan, the utility has to get approval for agreements outlining a new ownership structure and a coal supply contract for the generating station, located in Northwestern New Mexico .

PNM spokeswoman Jodi McGinnis said that has required a labyrinthine and time-consuming process. The plant's nine owners are spread across four states, and some are municipalities and cooperatives that have to get sign-offs from their governing bodies. Meanwhile, PNM only recently secured a supply agreement with Westmoreland Coal Company , the new owner of the mine that feeds coal to the San Juan plant.

Attorneys for Western Resource Advocates, a nonprofit environmental law center, said in their formal response to the utility's request for more time that they fear a decision could be "forced upon New Mexicans by default because it is too late, or there is too little evidence, to do anything else."

The group also asked that PNM be required to provide information about its ownership agreement and coal supply contract discussions, both of which have been kept under wraps.

"Important evidence in this case has been withheld from public disclosure under the claim that it would disrupt sensitive negotiations," Western Resource Advocates attorneys Steven Michel and Erin Overturf said in a June 10 response. "With the negotiations concluded, that record evidence should be available for public scrutiny. As the commission has acknowledged, this case will have a very important impact to the public interest. It must not be decided under a veil of secrecy."

They went on to state that there's a fundamental contradiction in PNM's plan to reduce overall coal capacity at the San Juan plant by boosting production in one of the two coal-fired units that would stay online after the others are retired. "One would think that if PNM's claims were valid, power suppliers throughout the West would be lining up to acquire an interest in this presumably valuable asset. Rather, the plant appears to have as much appeal as a Superfund site."

McGinnis wrote in an emailed statement that the accusations are unfounded and "an attempt to divert the conversation away from the facts, which clearly support the PNM plan as being the best and most affordable for PNM customers and the environment."

She pointed to January testimony before a hearing examiner by James Dauphinais with the New Mexico Industrial Energy Consumers, an organization of large and industrial ratepayers. The group used PNM's cost-modeling software to test multiple power replacement plans, including one developed by New Energy Economy, a local clean-energy advocacy group that has been among PNM's most vocal critics. The utility's replacement plan outperformed the others, Dauphinais said.

McGinnis added that the coal supply agreement reached with Westmoreland Coal Company runs through 2022, with an option to extend, "and provides customers with significant cost savings beginning in 2016. If the PNM plan is approved, we expect the mine will continue to operate."

Commissioner Valerie Espinoza , the only PRC member who voted against holding Wednesday's hearing, told The New Mexican on Monday that she did so out of concern that PNM's request for more time indicates both insufficient planning and reluctance by the partners in the agreements. Commissioners Karen Montoya , Pat Lyons and Lynda Lovejoy did not immediately respond to requests for comment.

Contact Margaret Wright at 986-3011 or mwright@sfnewmexican.com . Follow her on Twitter @MargaretWrite.

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