New Mexico regulators deny PNM's Four Corners abandonment, transfer to NTEC

The New Mexico Public Regulation Commission denied Dec. 15 Public Service Company of New Mexico's application to abandon its 200-MW share in the 1.54-GW Four Corners coal-fired power plant because of "the complete lack of evidence identifying adequate replacement resources."

The approved order asks PNM for information on the issue of prudency and replacement portfolio, which is "information what we need to make a good decision," Commission Chairman Stephen Fischmann said. "What we're asking for is pretty straightforward."

PNM failed to identify sufficient resources to replace the Four Corners power plant, which required the commission to deny the abandonment application, Michael Smith, Commission general counsel, said as he read the full order and staff comments.

Staff said PNM declined to propose actual replacement resources, instead choosing to defer such a proceeding, Smith said, adding the availability and adequacy of service to be substituted remains critical for the commission to review an abandonment application.

"Staff asserts PNM's failure to identify and propose actual known replacement facilities prevents the commission from granting approval to abandon [the] Four Corners power plant," Smith said.

The commission asked PNM to follow up with the information.

The abandonment is part of the state's transition to a cleaner, more diverse energy mix through the Energy Transition Act, signed by the governor in March 2019. The ETA set a statewide renewable energy standard of 50% by 2030 and 80% by 2040, with 100% carbon-free electricity by 2045. It also sets a path for a low-carbon energy transition away from coal.

Background

PNM, the state's largest electric utility, filed Jan. 8 an application with the commission for abandonment of its 13% ownership stake in Units 4 and 5 of the 1.54-GW coal plant at the end of 2024. The plant would not be fully depreciated until the end of 2031, which is the current operating life of the plant for the utility's planning purposes, according to PNM.

"PNM's most recent economic analyses ... prove there are available adequate replacement resources that cost less than and will be available to replace PNM's existing Four Corners share, which is needed to serve customers," according to PNM's filing.

Four Corners-4 came online in 1969, while unit 5 came online in 1970, according to PNM's filing. Units 1, 2, and 3 retired in 2010 and were wholly owned by Arizona Public Service Company.

APS-operated Four Corners is located in Fruitland, New Mexico, on lands leased from the Navajo Nation, according to PNM's filing. PNM sought to transfer its interest in the Four Corners plant to the Navajo Transitional Energy Co.