PNM Proposes Another $1 B Bailout–Buying 10% of Palo Verde Nuclear & Selling it to You Plus–AOC Video on the Green New Deal

By paulgibson51 on April 18, 2019 • ( 1 )

Today’s post will be brief, a few comments on an interesting Legislative Panel last night, a guest post from New Energy Economy about the latest PNM offense, and a really uplifting and inspiring animated video produced by Naomi Klein and written by AOC and Avi Lewis (husband of Naomi Klein and activist in his own right).It will make you smile.

Legislative Panel Proclaims Does Victory Lap & Indeed There Was Much To Celebrate, But…

I will have more thoughts on last night’s Legislative Panel on Saturday, but there was a clear sense of accomplishment from the legislators on the panel: Rep. Matthew McQueen, Rep Linda Trujillo, Rep Andrea Romero, Rep. Jim Trujillo, Sen. Nancy Rodriquez and Sen. Leader Wirth and House Speaker Egolf. I admit that when you go beyond the major bills that Retake followed and supported, there were a goodly number of important measures that became law to the significant benefit of NM communities. With over 300 bills passed into law it would be impossible to analyze each and assess their impact, but suffice to say this session was a quantum leap into the future from the past eight years.

And if these were not times dwarfed by the specter of climate change and an ever closer deadline imposed by physics, not politicians, then I’d be exulting in what was accomplished. But there is a political and economic calculus in NM that looks insolvable in the near term and difficult even in the long-term. We were only able to pass and fund so many good important bills because of gas and oil revenue. To sustain the good just accomplished requires a revenue base that is either gas and oil based, or invented, cultivated and grown and that will take time and political will. Both are in short supply. We have many moderate to conservative districts in our state who are not eager to forego the economic benefits of gas and oil and their elected representatives in the Senate and House are strong enough to block bills like Community Solar and Local Choice Energy. I will write more about the implications of the challenges we face in the Senate and with the power of the gas, oil and energy industries over the next few weeks. But for now, on to another battle with PNM.

PNM Asks Ratepayers for Another $1 B (actually far more) to Buy Palo Verde Nuclear and Sell It & Its Decommissioning …..to YOU

In 1977 PNM asked and was granted authority by the PRC to invest 10% in each of the 3 units at Palo Verde Nuclear Generating Station in Arizona. Palo Verde was completed in 1985, but the capital costs for construction turned out to be so high that PNM had to come up with an alternative financing mechanism to avoid “rate shock.” For units 1 & 2, PNM agreed to sell its interests to Wall St. investors and PNM would “lease” it back and use our rate payments to make the lease payments. This was called “sale/leaseback”. For unit 3 PNM was not allowed to include those megawatts in New Mexico rates (and it sold that nuclear generated electricity on a loss on the open market.)

Importantly, under the sale/leaseback agreements, PNM is responsible for paying all decommissioning costs and capital improvement costs. (In 1977 computers used floppy discs so when capital upgrades are necessary, and Palo Verde has extremely high ongoing capital improvements, PNM is responsible. This is very different than a normal lease arrangement – think apartment rental: tenant has to pay for light bulbs but when the roof starts leaking the “owner” landlord has to fix it. But PNM was on the verge of bankruptcy and so it didn’t have much negotiating power and so it agreed to pay all the upgrade and clean-up costs. Likely,long ago they had in their back pocket the solution to that long-term fiscal nightmare. You.

PNM has purchased back all of the leases from the Wall St. leaseholders, except the two leases that are at issue in a Joint Petition to the Public Regulation Commission being filed by New Energy Economy. Retake Our Democracy is signing on as a co-petitioner. There are 2 main reasons PNM has purchased back all the Palo Verde leases: 1) when PNM spends more PNM gets to charge us more money in rates, plus a guaranteed profit of 9.575%; and 2) if PNM uses the Palo Verde nuclear to serve NM customer’s electric needs then WE are responsible for the decommissioning costs and capital improvement costs, plus 9.575%. If PNM doesn’t buy back the leases PNM, but NOT NM ratepayers are responsible for those decommissioning and capital improvement costs. Those costs could be many hundreds of millions and PNM is seeking to shield its investors from those costs!

In addition to nuclear being the highest cost energy resource and foisting decommissioning and capital improvement cost risk on to ratepayers there are other reasons why we shouldn’t buy the nuclear:

As of 2016, ratepayers have paid PNM $2.083 billion to make those lease payments. Because the plant is in Arizona, not one job has been created in New Mexico, as a result of ratepayers’ $2B payment.
Our financial expert states that the 114 megawatts that are at stake here will cost us more than $1.1B, just for the electricity alone for the next 22 years. If we spent that money in New Mexico we could buy a lot of solar and wind and create thousands of jobs here at home!
There are serious health and environmental concerns (including high levels of water use) with supporting nuclear, including that there is a violent legacy of racism and injustice against Indigenous people! While this petition will not shut down nuclear – it will protect NM ratepayers from the cost abuse, freeing up financial resources to invest in locally generate renewable energy. It is important that we make clear our opposition.
20% of New Mexicans live in poverty, 83% of those people are people of color. Higher nuclear generated electricity costs disproportionately hurt them. In some cases people facing poverty spend between 20-50% of their household income on electricity causing enormous hardship.

PNM has purchased the leases with the expectation that, as usual, it will get its way and be allowed to shift the cost of those leases and the future decommissioning costs upon ratepayers. Retake agrees with New Energy Economy that this act of public theft must be opposed. We are proud to have joined NEE as a co-petitioner. We will keep you posted, as NEE is also now investigating the other PNM move on the near horizon: a new gas plant in Farmington.

This state owes a huge debt of gratitude to Mariel Nanasi, Bianca Sopoci Belknap, Miles Conway and the rest of the NEE staff and also to David Van Winkle (energy and finance guru and volunteer). Their smarts, values and endless energy needs to be commended. They take principled stands over and over again. Some more moderate forces, more willing to compromise on outcomes and principles to get something, may find NEE difficult, but I, for one, feel we owe them a huge debt of gratitude. If you agree, click here and make a contribution right this minute.

In solidarity,

Paul & Roxanne