The New Mexico Public Regulation Commission denied Public Service Co. of New Mexico's application proposing to abandon its 200-MW ownership interest in the Four Corners coal-fired plant and to securitize an estimated $300 million unrecovered investment in the plant and other energy transition costs.
The PNM Resources Inc.-owned utility failed "to identify adequate potential new resources sufficient to provide reasonable and proper service to retail customers," regulators concluded in a Dec. 15 order, though they noted that the company still has "sufficient time ... for approval of the replacement resources" if it refiles the application (21-00017-UT).
The 5-0 vote rejecting Public Service Co. of New Mexico's, or PNM's, abandoning its 13% ownership stake in units 4 and 5 of the 1,540-MW plant also prevents PNM Resources from transferring that stake to the Navajo Transitional Energy Co. LLC at the end of 2024 per plans announced in November 2020.
The plant will 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. The utility would recover energy transition costs by issuing customer-backed securitization bonds as provided for in the New Mexico Energy Transition Act of 2019.
"The commission's actions aim to penalize the utility for complying with federal environmental standards while ignoring shareholders' commitment to pay $75 million to relieve customers from coal obligations," PNM Resources Chairman, President and CEO Pat Vincent-Collawn said in a statement. "This also ignores shareholders' commitment to forgo previously authorized returns to provide a fair transition away from coal."
Vincent-Collawn said the parent company is reviewing next steps and may appeal to the New Mexico Supreme Court for a ruling on the exit, which PNM Resources said would have reduced carbon emissions from the plant by 20% to 25% "under seasonal operations."
Arizona Public Service Co., which owns a 63% stake in Four Corners, has also faced obstacles to recovering investments in the facility. The Arizona Corporation Commission voted Nov. 2 to disallow a $215.5 million recovery of pollution control costs. Arizona Public Service parent Pinnacle West Capital Corp. plans to sue the commission if it denies a request for rehearing about the costs of installing selective catalytic reduction equipment at the plant.
"I ... don't think that the actions we've taken in connection with the [selective catalytic reductions] warrants a $215.5 million write-off," Pinnacle West Chairman, President and CEO Jeffrey Guldner said during the commission's Oct. 26 open meeting.
However, an amendment to Arizona Public Service's contentious rate case submitted by Commissioner Jim O'Connor on Oct. 25 blamed Arizona Public Service for staying the course on the pollution control costs.
"We believe that as a large and sophisticated electric utility, [Arizona Public Service] knew (or reasonably should have known) that the economic assumptions ... had changed," O'Connor wrote.
