NM Supreme Court Denies Electric Utility Abandonment Plan of Coal-Burning Facility

The New Mexico Supreme Court recently rejected Public Service Company of New Mexico’s appeal of a 2021 decision by state regulators denying its plan for abandoning the coal-burning Four Corners Power Plant.

In an opinion written by Justice Briana Zamora, the court found the Public Regulation Commission “reasonably and lawfully” denied the electric utility’s plan to transfer its ownership of the plant to a Navajo power company.

The future of the northwestern New Mexico coal plant and Public Service Company’s stake in it remain uncertain, though a spokesman for the electric utility said it will delay the company’s plan to leave the plant by 2024.

The Public Regulation Commission unanimously denied the utility provider’s proposal to leave the Four Corners Power Plant in December 2021, citing the utility’s lack of an adequate plan to replace the electricity generated at the plant with other sources. The company filed an appeal in January 2022.

PNM had proposed to turn over its 13% interest in the plant’s power generation capacity to Navajo Transitional Energy Co., which owns the coal mine that serves as the sole supplier of fuel to the plant. Public Service Company also sought to recover $300 million of its investments in the plant through securitized bonds that are repaid by utility customers.

Environmental advocates argued that Public Service Company’s plan to offload its shares to the Navajo company — while also paying the company $75 million — would not lead to the coal plant’s closure and would allow the company to recoup “imprudent” investments using a financing tool made available by New Mexico’s 2019 Energy Transition Act.

Camilla Feibelman, director of the Rio Grande Chapter of the Sierra Club, said Thursday that Public Service Company’s plan rivaled the intent of the Energy Transition Act.

“The longer these utilities wait to transition, the more it costs the companies, the customers and our climate as well as the health of adjacent communities,” said Feibelman.

The New Mexico Supreme Court case included intervention from the Sierra Club, along with environmental advocacy groups including Western Resources Advocates, the Coalition for Clean Affordable Energy and New Energy Economy.

Ray Sandoval, a spokesperson for Public Service Company, wrote the company was “disappointed” in the court’s decision to uphold the commission’s order, which he said delays (the company’s) “exit from the coal plant from 2024 until possibly 2031 and postpones savings for customers as well as significant annual carbon emission reductions from coal through seasonal operations.”

Former Public Regulation Commission member and Sierra Club attorney Jason Marks had argued before the New Mexico Supreme Court that the utility provider had rushed the application to transfer its shares of the plant because of requirements in its proposed merger with Connecticut-based power company Avangrid, a subsidiary of Spanish renewable energy giant Iberdrola, to disinvest in coal.

Public Service Company shut down its remaining two units at New Mexico’s San Juan Generating Station last year. This facility, located in the northwestern part of the state, is also a coal-fired operation.

A week before the Public Regulation Commission rejected the company’s plan for the Four Corners plant in December 2021, it also unanimously rejected the proposed merger with Avangrid. An appeal by the utilities is pending before the state Supreme Court, with oral arguments currently set for Sept. 12.

Both Public Service Company and Avangrid most recently extended the deadline for their proposed merger in June, hoping a new panel of commissioners appointed in January will hold new proceedings on the multi-year long case.

A ruling in favor of the utilities could bring the merger case back before the commission, where two of the three governor-appointed members would be eligible for the rehearing. The third commissioner, Pat O’Connell, has recused himself because he testified before the previous commission in favor of the merger in his role as clean energy director for Western Resource Advocates.

If the justices reject the appeal, the companies could file a request for a new, potentially lengthy merger proceeding with the commission.