Don’t leave the workers in the cold
What happens when the coal-fired power plant in San Juan County closes down, as Public Service Company of New Mexico says will occur in 2022? Will the shutdown actually occur, thereby eliminating a huge source of pollution in New Mexico? Will PNM shift to renewable energy or gas? Will any help be given to the workers who will be displaced and to the county and schools that lose tax base?
Senate Bill 489 deals with these issues, and it is imperative that this bill becomes law.
If this bill does not pass, the community will be out in the cold, because the Public Regulation Commission has no authority to create funding for a safety net for them. That’s a key purpose of this legislation — to use the savings from the refinanced bonds to help the community that will endure an economic loss when the San Juan Generating Station closes.
Here’s what SB 489, the Energy Transition Act, does:
u Requires 50 percent renewable energy in New Mexico by 2030, 80 percent by 2040 and 100 percent carbon-free energy by 2045. This applies to PNM, El Paso Electric and Southwestern Public Service. Co-ops get five years longer to comply. This is a big step toward dealing with climate change and protecting public health.
u Stops the pollution from coal-fired San Juan Generating Station for good by requiring that any facility on the San Juan premises meets pollution requirements that coal plants are unable to meet. This ensures the plant will not reopen.
u Provides significant reinvestment in the Four Corners community. This is why this bill exists. Low-rate refinancing of the costs customers are already paying for San Juan creates funding to reinvest in workers and the community. These funds become available through reissuing bonds (called securitization) at a much lower interest rate due to the closure of the plant.
The Energy Transition Act directs $20 million to San Juan County economic development and requires 450 megawatts of replacement power in the same school district as the plant to replace the lost property taxes.
u San Juan plant and mine workers receive some needed help. The bill provides another $20 million in severance payments and retraining for the plant and mine workers. This will all be lost without this bill.
When PNM or other utilities build plants and invest in them (for new equipment or pollution controls, etc.w), it’s a bit like making a loan to ratepayers, and PNM gets to charge customers, plus a rate of return of about 10 percent. The Energy Transition Act would allow PNM to sell low-interest bonds to recoup the principle on its San Juan investments at 3 percent to 4 percent instead of the 10 percent customers are currently paying. PNM gets its principle back but loses that entire 10 percent return. That’s a loss of about $16 million in profit yearly on this deal. Under any scenario of San Juan closure, fuel costs and other plant expenses will also go down considerably. (We just learned recently that some investors are trying to keep the San Juan plant open; this is a rapidly changing scenario.)
u It makes it much less likely that PNM will replace San Juan coal with gas. The bill’s renewables requirements make PNM much more likely to replace their coal power with renewable energy, but there’s also language in the bill requiring replacement power to be the most environmentally friendly and cost-competitive option, meaning the PRC is more likely to reject gas as a replacement source if the Energy Transition Act passes.
It is imperative that this bill passes this year.
Karl Braithwaite is conservation chairman of the Sierra Club Rio Grande Chapter and former assistant director at Los Alamos National Laboratory. He lives in Albuquerque.