PNM is reeling from a string of defeats in the PRC, had its Santa Fe solarization deal stalled, has its rate deal still in the Supreme Court and has lost most of its leverage in seeking payment for ‘stranded assets,’ from closing half San Juan Generating Station. But Trump holds some aces up his sleeve.
PRC Finally Says NO to PNM, But Trump Has Other Plans
This post will examine a series of decisions made by the PRC that suggest that PNM may have a far rougher time having its way in hearings before the PRC. This explains PNM’s efforts to get redress from the Roundhouse, as PNM now fears that the rightful governing body, the PRC, will not provide the level of compensation it is seeking in stranded assets–$355 million. Lurking in the background is the Trump administration that has unhatched a plan that would allow utilities like PNM to continue to operate wasteful and toxic coal plants…and make ratepayers pay the costs. As you will see, Trump’s effort is essentially trying to turn back the clock and reverse market forces that have made coal an energy dinosaur. But defying logic and truth have never been a hindrance to Trump and his cronies. Read on as Trump’s efforts could have a significant and terrible impact on NM.. Unbelievable. But before we consider Trump’s dirty work, let’s see how PNM appears to be losing its iron grip on all things related to energy policy in NM.
“It was not a difficult call,” wrote Hearing Examiner Carolyn Glick in her Recommended Decision after submitting her recommendation that the PRC not allow the solar partnership between PNM and Albuquerque, a solarization deal very similar to what PNM has just proposed to Santa Fe. The same reasons that Glick gave for recommending that the PRC not approve the agreement, apply to Santa Fe, where we are still awaiting the ‘amendments’ to the resolution originally introduced by Mayor Gonzales.
According to a Counterpunch report: “Glick had the benefit of arguments laid out in a 45-page brief submitted by New Energy Economy, a nonprofit whose mission is the “just transition” to renewable energy. It exhaustively catalogs how PNM deformed the procurement process to capture that irresistibly tantalizing 10% premium in defiance of well-established rules, laws, principles and precedents. Written by NEE president Mariel Nanasi, whose staff bio states that she’s an experienced rhythmic skier, the brief reads like a fast cold ride down a slippery slope.” Click here for more from Counterpunch. Kudos to New Energy Economy for getting coverage from this national blog.
Glick wrote in her Recommended Decision: “The Hearing Examiner agrees with the opponents that PNM failed to show, as required, that the Affordable Solar Project is PNM’s most cost effective solar resource procurement among available alternatives because the 2017 RFP process did not give PPA bidders a fair opportunity to participate and compete. I found that allowing bidders only 31 days to respond to the RFP was insufficient and that the provision in the RFP allowing turnkey bidders, but not PPA bidders, to use PNM-controlled sites was unfair and uncompetitive.” This is one of many issues raised by Retake Our Democracy in lobbying at the Public Works Committee two weeks ago, when the Committee asked the Mayor to withdraw his resolution. For more on PNM’s offer to solarize Santa Fe facilities, click here.
The PRC has also just ruled 4-1 that PNM is not entitled to any more than half (and possibly none) of the $355 million that PNM is claiming in projected lost profits (stranded assets) for closing half of San Juan Generating Station. Over the past year, the PRC Hearing Officers have been routinely calling out PNM for making unsubstantiated claims for increases in rates and for improper procurement processes (as per above). But too often PRC Commissioners have ignored the recommendations of its own Hearing Officers, hence New Energy Economy becoming a regular presence at the Supreme Court to appeal these votes.
But in this most recent PRC San Juan Generating Station ruling the vote was not close and two longtime PNM supporters, Patrick Lyons and Sandy Jones voted with the majority. PNM can’t help but fear future decisions from the PRC and so has decided to try to bypass the PRC’s authority and is turning to the legislature to seek redress. In a meeting with Speaker Egolf yesterday, I was told that he expects PNM’s legislation to be introduced soon, perhaps as early as next week. In the discussion, he noted his fear that if they simply killed PNM’s bill without trying to seek a mutually beneficial deal, PNM could renege on its planned SJGS closure, find another owner and continue to operate the plant. In dialog with Mariel Nanasi Director of New Energy Economy, she countered that PNM can’t find another buyer. Even when they offered shares for $0 they had no offers. This is likely to remain the case as long as coal continues to be more costly to produce than renewables.
This is where Donald Trump could come into the picture, as Speaker Egolf pointed out. While he didn’t specify what he thought Trump might do to alter the economics of coal, after the meeting I did some research and found that the Trump administration is indeed working to make coal a viable source of energy despite its being more expensive and more impactful on the environment. How? From this Oct. 2017 Slate report: “The administration’s proposal, now being considered by the Federal Energy Regulatory Commission (FERC), would essentially require utility companies to purchase electricity from coal and nuclear plants at prices guaranteeing them a profit, even if there are cheaper alternatives available on the market.”
The report goes on to capture the reaction of an attorney for the National Resource Defense Council: “The actual, legal regulatory details of this are not clear at all, because the proposal is poorly drafted and incredibly vague on a bunch of key details,” Miles Farmer, an energy attorney with the NRDC, told me. “The only thing that is clear is that it’s an attempt to save coal and nuclear plants.”
The challenge here is that, as usual, Trump’s logic involves a goodly mix of alternative reality and false claims. On the campaign trail he indicated he would reverse Obama regulations on coal production and that would result in coal’s being able to compete economically. But this is false thinking. From Slate: “While stricter environmental rules certainly didn’t help coal’s fortunes, the sector has mostly declined over the past decade because power companies turned to cheaper natural gas. Competition from increasingly affordable renewables like wind and solar isn’t helping either. To keep coal afloat, Trump would have to go to war against the free market—which seemed a bit unlikely.”
But that is precisely what Trump’s FERC resolution would do: go to war with the free market and make ratepayers pay the cost. Trump’s claims are that coal and nuclear are ‘stable’ energy sources with plants that generate energy 24-7 and that during crises situations this could be important to stabilizing the grid. But this is largely a spurious claim, as these energy crises tend to be the result of hurricanes or extreme freezes. During hurricanes it isn’t energy generation that causes instability, it is fallen energy lines. During frost, coal freezes and is not a viable energy source. Then there is the profound irony of subsidizing the coal industry to stabilize the energy grid during climate change triggered crises. The other inconvenient truth is that there is currently no real evidence of any energy grid instability. Trump’s FERC effort defies all the facts related to the status of the grid, the economics of energy generation, and science of climate change. Nonetheless, defying science and facts has never deterred Trump and he is moving forward with a FERC plan that would produce vast benefit to the coal industry at the expense of all else: people, planet, logic, truth. Click here to read the excellent Slate summary of what Trump is trying to do to subsidize the coal industry.
So here we are, poised for a short Roundhouse Session, perhaps the last with a GOP governor. According to Speaker Egolf, there is $200 million in unexpected revenue that will be used to fund small but valuable Democratic initiatives. With the surplus revenues, the Governor really lacks much leverage for claiming a fiscal emergency. Egolf was not anticipating much difficulty in beating back the Governor’s crime and abortion bills. In short, Egolf had been expecting a session with perhaps less drama and better outcomes than in the past. But the PNM bill could turn into quite a battle. Environmental groups have been divided in the past, with some more moderate voices being willing to accept incremental concessions and in the end enabling PNM to claim support from environmental advocates. It will be very interesting to see whether a unified coalition emerges with a united position that would require a good deal from PNM if it is to get anything from the Roundhouse.
This will be an important battle to watch and we will continue to report on this issue as the bill is introduced and environmental advocates take their positions.
Paul & Roxanne
The rap below, “Sol Not Coal” is performed by Hakim Bellamy and is provided by New Energy Economy.