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Utility financing bill clears New Mexico Senate panel

February 18, 2021 GMT

SANTA FE, N.M. (AP) — A measure aimed at saving customers money when utilities opt to close power plants and recover the lost investments has narrowly cleared its first legislative hurdle.

The Senate Conservation Committee voted 5-4 Thursday to advance the bill, which faces a long road through the New Mexico Legislature as lawmakers hit the midway mark of the 60-day session.

Supporters of the legislation say it would clear the way for other utilities to use the same financing mechanism that was afforded Public Service Co. of New Mexico under the state’s landmark Energy Transition Act. In the case of the coal-fired San Juan Generating Station, PNM was allowed to recover its lost investments with $361 million in low-cost bonds that will be paid for by ratepayers.

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Democratic Sen. William Soules of Las Cruces, the bill’s sponsor, said the goal is to give state regulators another tool when deciding how a utility can recover assets that will be stranded when a power plant closes. He said it would be up to the Public Regulation Commission to decide whether issuing low-cost bonds — a mechanism known as securitization — would be the best option for ratepayers.

Soules has said the Energy Transition Act is specific to PNM’s closure of the San Juan plant and the legislation would expand the option for future power plant closures.

For PNM, the bonds will cover its lost investments in San Juan, decommissioning and reclamation costs and $40 million in assistance for laid-off workers and for economic development initiatives in the area. Customers will repay the bonds through a surcharge on their monthly bills.

Utility officials have said those additional charges will be offset by the savings from abandoning the coal-fired power plant and replacing it with renewable energy and battery storage systems.

Some lawmakers raised questions about potential risks in the bond market overall, while others said the legislation could conflict with existing state laws that deal with bankruptcy and property rights.