PNM Study: closing coal plant will save ratepayers $445 million
A new analysis by PNM shows that divesting from the Four Corners Power Plant will save electricity ratepayers $445,682,093, says Santa Fe-based New Energy Economy.
For more than a decade, Santa Fe-based New Energy Economy has been pushing New Mexico’s largest electric utility to divest from coal and convert to a 100% renewable energy portfolio. NEE has always argued that doing so wasn’t just the environmentally responsible thing to do, it was cheaper for electricity users (ratepayers) like you and me, too.
But New Energy Economy says PNM refused to do the analysis that proved it so New Energy Economy pressed the state’s Public Regulation Commission to order PNM to provide the data. It turns out, NEE was right.
From New Energy Economy and the Public Regulation Commission:
New Energy Economy requested that PNM provide financial evidence that its choice to continue to invest in the plant was fair, reasonable, and just. PNM refused. New Energy Economy was forced to file a Motion to Compel against PNM to perform an economic analysis of the impact to ratepayers if they divested from the plant instead.
The PRC ruled in New Energy Economy’s favor stating:
“It is beyond reasonable dispute that the Strategist runs NEE formulated in Interrogatory 6-1 are crafted to elicit information relevant to PNM’s request in this case to recover additional capital costs for the Four Corners Power Plant. It is also beyond rational debate that the Strategist runs NEE is requesting are performable. In fact, PNM appears to have already agreed to perform analyses like these at a later date. Furthermore, PNM’s insistence that NEE cannot force it perform the analyses is unavailing. Indeed, it is not as if PNM hasn’t been required to produce similar analyses in cases before this Commission, including this one. The Hearing Examiners therefore find that PNM should provide the Strategist runs requested in NEE Interrogatory 6-1 in a timely fashion.” June 27th Order, attached.
PNM handed over the analysis, which shows that divesting from the Four Corners Power Plant will save ratepayers, $445,682,093. Meaning that their choice to continue to invest in Four Corners is at least a $445 million liability for ratepayers. Not to mention the climate and health impacts of continuing to keep the plant going.
NEE has been advocating for the closing of coal for 10 years. PNM’s own evidence verifies that what we have been saying is true. “We need to transition our economy to 100% renewables, not invest in dirty energy that exports profits and socializes loss and risk. The naked reality is that New Mexicans will pay $450 million extra for coal that makes it harder for us to breathe unless the PRC votes against PNM’s request. PNM’s greed translates into a burden of about $1000 per family. A cost that makes us angry because it is manifestly unfair,” said Mariel Nanasi, Executive Director, New Energy Economy.
The law requires that a utility perform an analysis before it recovers costs from ratepayers. Whenever a utility makes a significant investment the utility must demonstrate that it evaluated its investment against other alternatives and considered risk. Just like any sound business does before making a large-scale investment.
But PNM CEO Pat Vincent-Collawn and current President of the Edison Electric Institute (EEI) dispensed with the pesky requirement to analyze its investment decisions. There’s a perverse incentive for investor-owned utilities in NM like PNM to embrace spending ratepayer money – because when they do they not only receive cost recovery from ratepayers but a guaranteed 9.575% profit. The regulatory requirement to provide a cost evaluation is supposed to protect us against the abuse of the provision for a return on equity.
But there are no timely evaluations that show that PNM’s investment was beneficial for ratepayers. “PNM went rogue,” said Nanasi. “Despite being the law and industry standard PNM chose to ring every last dollar from New Mexican families for short-term profit for PNM Executives and Wall St. investors; now the chickens are coming home to roost: The PRC has now required PNM to conduct the analysis that it didn’t conduct in 2013 and the evidence is quite clear.”