Win-Win Solution Found for San Juan Generating Station

Win-Win Solution Found for San Juan Generating Station

The City of Farmington and the people of San Juan County have found a win-win solution for the San Juan Generating Station that will make many of the costly and complex provisions in Senate Bill 489 unnecessary.

The City of Farmington currently holds the right to market the San Juan Generating Station to third-party buyers and is working with a buyer of the plant to:

• Purchase and operate the San Juan Generating Station
• Invest in advanced, proven carbon capture technology that will place the plant’s long-term CO2 emissions below the level of replacement solar generation with backup natural gas generation facilities
• Co-locate solar facilities near the plant to take advantage of existing transmission and switching equipment to further reduce the cost of transitioning to renewable energy

Advantages of this plan over the existing proposal contemplated by Senate Bill 489:

• Ratepayers in PNM’s service territory (primarily in Albuquerque and Santa Fe) will not have to fund transition costs in the $50 million-dollar range for worker transition and redevelopment costs in San Juan County.
• PNM will have more flexibility in the timing and implementation of replacement power development which will support an even lower cost transition for ratepayers.
• High paying jobs at San Juan Generating Station, Westmoreland Coal Mine and supporting contractors will be maintained.
• Property tax revenues currently supporting the Central Consolidated School District, San Juan College and San Juan County will be maintained. Maintaining these revenues will also avoid both massive property tax increases for area residents as well as the need for the State of New Mexico to guarantee CCSD’s $37 million bonds.
• State tax revenues in that amount of at least $50 million

All of these benefits can be achieved while still protecting the environment.

Tell your Senator and the Governor that you support amending Senate Bill 489 to implement this win-win solution.

Why SB489 is so bad for New Mexico utility customers

Why SB489 is so bad for New Mexico utility customers

Senate Bill 489 (click to download) bails out New Mexico’s largest public utility, PNM. This bill doesn’t even contemplate protecting electric customers from rapidly increasing electric rates. This bill is bad public policy that if enacted without adequate safeguard in place will come back to haunt the state’s economy and utility customers for years to come. Contact your legislators (look up here), and tell them New Mexico simply cannot afford to enrich utility shareholders by forcing rapidly rising electric rates on customers. Here’s why this bill is bad for New Mexico:

• SB 489 is bad for New Mexico and not only will increase rates statewide it will impact business, reduce jobs, and diminish state tax revenues needed for education, infrastructure and public safety.

• SB 489 gives PNM a blank check at the expense of ratepayers.

• If SB 489 is passed PNM will have the ability, completely unsupervised by PRC or any other regulatory body, to determine how much it includes in securitization of the undepreciated assets and other costs of San Juan Generating Station of an amount between $375 million and 150% of the value of those assets.

• SB 489 further requires that its customers will each pay the securitized amount back over the lifetime of the securitization bonds. Unlike last year’s bill, this year’s bill does not require PNM to show customer savings.

• SB 489 additionally requires coops (instead of Tri-State, their generation supplier) and all public utilities in the state to comply with drastic renewable energy mandates:
* An increase from 20% to 40% by 2025
* 50% by 2030
* 80% renewable by 2050 with the rest being composed of zero carbon resources (ie. Nuclear)

• The bill incentives utilities to further exceed these mandates by removing ratepayer protections and relaxing PRC oversight standards from what is in current law: reliable service at the least cost – to a standard that does not appear to actually protect increased cost to customers and is instead heavily weighted in building renewable generation at an alarming rate.

• Because renewables can only meet customer demand for 1/3 of the day, this means that customers will not only be paying for traditional generation, they will also pay for the rapid increase of renewables.

• California is only at 35% renewable and their rates have increased by 60 – 80%.

• This means in the next 5 years we can see a similar rise in rates, with rates continuing to skyrocket as mandates are increased.

• Further, by PNM’s own admission in the IRP case, renewables over 50% create excess energy that risks shorting out the grid and must be curtailed.

• Curtailment, just like in California, requires utilities to literally waste resources or pay other states to take their extra renewable power, especially solar generation.

• Anyway you slice it, this bill is bad for New Mexicans. It harms customers at the expense of increased profits for utility shareholders and renewable energy investors.

Add A Rate Cap to Senate Bill 489

Add A Rate Cap to Senate Bill 489

Senate Bill 489 has something for almost everyone, except the utility customers that will need to fund this monumental transition to renewable energy. The bill has a bailout for PNM to ensure that its shareholders don’t have to face the negative financial consequences of the plan.

The bill certainly has something for supporters of wind and solar energy. The renewable portfolio standard increases will ensure that more wind and solar facilities are built.

What Senate Bill 489 lacks is customer protection from rapidly rising electric rates like those that have been seen in California under a similar plan. If renewables are as cost effective as the supporters of this bill have been saying, adding a rate cap to protect customers shouldn’t be too much to ask for.

Tell your legislators that this bill needs to protect customers by adding a rate cap. The purpose of Senate Bill 489 shouldn’t be to enrich utility shareholders at the expense of utility customers during the transition to additional renewable energy.

Click or Right Click Here to Download SB489

Transition to renewables shouldn’t cost utility rate payers

Transition to renewables shouldn’t cost utility rate payers

Opinion Post from Farmington Daily Times. Paul J. Gessing, Rio Grande Foundation Published 5:33 a.m. MT Feb. 5, 2019 | Updated 12:51 p.m. MT Feb. 5, 2019.

Environmental groups, Governor Lujan-Grisham, and even Public Service Company of New Mexico want us to believe that their plans to rapidly increase renewable energy are cost-competitive.

New Mexicans voted for change in 2018 and, as a result, there are legislative initiatives to raise the State’s “renewable portfolio standard,” or RPS, from 20 percent to 80 percent. Unfortunately, what voters haven’t been told is that this extreme expansion of the RPS will dramatically increase our electric bills.

In order to make way for rapid expansion of the RPS and bolster shareholder profits, PNM has decided to shut-down the coal-fired San Juan Generating Station near Farmington more than 30 years early. For the last 50 years, PNM has credited this plant at the PRC as the reason why PNM has been able to provide New Mexicans with low-cost power for the last 50 years. The plant was also just retrofitted, at a cost of $635 million, to remove more pollutants from its emissions and is now one of the cleanest plants in the country. PNM even admits that closing SJGS will increase our electric bills.

Despite price declines in wind and solar, we believe the replacement of a coal-fired power plant with a combination of wind, solar, and gas (supplemented by battery backup with unproven effectiveness at large scale) will not be cheap. A 2016 study produced by the Foundation estimated that from 2011 to 2020, New Mexico’s RPS would cost rate payers an astonishing $2.3 billion above and beyond what they would otherwise pay for electricity.

We stand by this report and note that other sources indicate New Mexico’s electricity prices rose about 30% since the RPS took effect in 2005. This increase is attributable to the RPS because it occurred at a time when the prices of traditional electricity generation sources, like coal and natural gas, have declined.

The cost of switching to “cheaper” sources of renewable electricity shouldn’t be borne by ratepayers or taxpayers. One would hope that Governor Lujan-Grisham, the Legislature, and PRC share this view. After all, they represent average New Mexicans and ratepayers, not just utilities and environmental groups.

One other thing that needs to be considered is the economic viability of the Four Corners area of our State. We at the Rio Grande Foundation embrace free-market economics and have no qualms about market corrections and corresponding impacts. But closure of SJGS is different. PNM is shielded from market corrections because it has a monopoly over its customers and a guaranteed rate-of-return. In exchange, PNM is bound to provide customers with reliable low-cost electricity and to conduct its business in a manner that is not detrimental to the public interest.

Here, not only does PNM admit our bills will increase, but PNM’s actions are also detrimental to our state’s budget.

If the market truly is pushing PNM towards other electricity sources, policymakers, taxpayers, and ratepayers should welcome that transition, but they shouldn’t be forced to foot the bill in case their assertions prove to be wrong.

For the good of New Mexico’s economy and ratepayers, any effort to provide PNM a financial bailout for its move out of San Juan Generating Station should also include basic protections for New Mexico ratepayers. The best protection is a hard cap on electricity rates during the rapid RPS expansion.

Paul Gessing is the President of New Mexico’s Rio Grande Foundation. The Rio Grande Foundation is an independent, non-partisan, tax-exempt research and educational organization dedicated to promoting prosperity for New Mexico based on principles of limited government, economic freedom and individual responsibility.

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