The New Mexico Supreme Court affirmed a regulatory decision approving a PNM Resources Inc. subsidiary's ownership restructuring and fuel supply agreements for the coal-fired San Juan Generating Station by rejecting an appeal.
In a March 5 opinion, the court turned back environmental and ratepayer advocate New Energy Economy's argument that Public Service Co. of New Mexico did not prove it had identified all feasible alternatives to the utility's plan to use coal and nuclear generation, as required by state law and Public Regulation Commission rules.
The PRC approved a multiparty stipulation on Dec. 16, 2015, that included a plant ownership restructuring agreement and a new coal supply agreement with the owner of a coal mine next to the plant. Specifically, the commission granted the utility permission to retire San Juan units 2 and 3 in 2017 and continue operating units 1 and 4 through mid-2022. The restructuring agreement also provided for PNM to increase its ownership share in the remaining plant capacity but reduce its overall share in the plant by 221 MW with the unit closures. PNM is the operator and one of five owners of the San Juan plant.
Also, the utility was allowed to obtain replacement capacity, including acquiring 134 MW from unit 3 of the Palo Verde Nuclear Generating Station.
New Energy Economy argued PNM was increasing ratepayers' risk by acquiring capacity from other departing partial owners of the San Juan plant instead of abandoning the plant and obtaining cheaper, cleaner resources.
However, the court concluded the San Juan agreements are based on an abundance of evidence presented in the two-year proceeding. The court pointed to the hearing examiner's conclusion the agreements save PNM customers $340 million, plus up to an additional $38 million concerning Palo Verde, eliminate half San Juan's capacity, thereby cutting greenhouse gas emissions and water use in half, and allow PNM and the state to comply with federal law.
New Energy Economy, referred to as NEE in the court's opinion, argued PNM should have issued bids to replace its entire stake in San Juan with renewable resources, but the court noted PNM's position that it needed dispatchable generation, not variable wind and solar.
"NEE makes many arguments that this court finds are unpersuasive or entirely without merit," the court said.
The group said in a news release the court's decision is a loss for ratepayers and the environment because it upholds PNM's purchase of coal and nuclear capacity, which the environmental and ratepayer advocate said are the most expensive energy resources.
