ALBUQUERQUE, N.M. (AP) - Environmentalists have lined up behind the shift to renewable energy required by the state’s energy transition act, but some are challenging language in the law that they say derails due process and eliminates standards of regulatory review meant to protect customers.
New Energy Economy and Citizens for Fair Rates and the Environment filed a brief this week with the state Supreme Court.
Legal wrangling has been ongoing since the state adopted the landmark legislation in 2019. Aside from mandating more renewable energy, the law includes a financing mechanism that supporters say is necessary for the 2022 closure of a major coal-fired power plant in northwestern New Mexico.
The law allows Public Service Co. of New Mexico and other owners of the San Juan Generating Station to recover investments in the plant by selling bonds that will be paid off by utility customers. The bonds will raise roughly $360 million to fund decommissioning costs, severance packages for displaced workers and job training programs.
Mariel Nanasi with New Energy Economy said the state constitution requires that a utility such as PNM be regulated but that the Public Regulation Commission was forced under the energy transition law to approve without modifications the amount the utility requested for undepreciated investments and decommissioning costs.
“PNM cannot decide for itself what it wants to charge ratepayers when it closes an old polluting plant. That’s what regulation is for - to protect the public,” she said in a statement.
Nanasi has maintained that the financing structure places the burden on customers rather than utility shareholders.
Gov. Michelle Lujan Grisham and top Democrat lawmakers who helped shepherd the bill through the Legislature have argued in public statements and in court filings that the law doesn’t infringe on the Public Regulation Commission’s authority. Supporters also have said that customers will end up saving on monthly bills at least in the first year after the plant closes.
The appeal filed Monday contends that the state constitution can’t be interpreted to allow the Legislature to suspend the commission’s authority. It also suggests that the energy law violates the separation of power because it eliminates the fact-finding process used by the commission to determine the prudence of rate and recovery requests.
“We hope that the legislators who voted for the ETA were doing so because they were looking for an opportunity to facilitate the transition away from coal and increase the renewable portfolio standard - not to deregulate a monopoly utility and place the abandonment costs of all PNM’s gas, nuclear and coal plants onto ratepayers,” said Tom Manning, director of the Citizens for Fair Rates and the Environment.
Public Service Co. of New Mexico officials have said they plan to beat state mandates for zero-emissions electricity generation in the next two decades.
In July, the utility announced plans to prioritize up to $450 million of new investments over the five years in transmission and distribution infrastructure amid the shift from fossil fuels.
The Public Regulation Commission recently approved a plan for the utility to add 950 megawatts of solar and battery capacity to its portfolio to replace the capacity that will be lost with San Juan’s closure.
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