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New Mexico Energy Law Tested as Four Corners Power Plant Prepares to Close

(AP Photo/Susan Montoya Bryan, File)

New Mexico’s new landmark energy law is facing its first legal challenge as a coalition of environmental and consumer advocacy groups filed a petition Monday with the state Supreme Court over concerns that certain provisions are unconstitutional.

The groups contend language within the law signed by Governor Michelle Lujan Grisham earlier this year erodes the state’s ability to regulate utilities and puts electric customers at risk of having to pay unchecked costs.

Aside from mandating that utilities provide emissions-free electricity by 2045, the law charts a course for the closure of the Four Corners Region coal-fired San Juan Generating Station by 2022. It includes a financing mechanism aimed at easing the economic consequences of closing the power plant. The Energy Transition Act resulted from a year of negotiations that included utility executives, unions and environmental advocates.

State officials touted it as one of the strongest packages of its kind in the U.S., and it marked a win for Lujan Grisham, a first-year governor who campaigned on boosting the number of wind turbines and solar panels around the state. However, critics say the law will be a boon for Public Service Company of New Mexico, which operates the San Juan power plant.

The law allows the utility and other owners of San Juan to recover investments in the plant by selling bonds that will be paid off by utility customers. In addition to paying for decommissioning costs, the bonds will fund severance packages and job training for workers who will be displaced by the closure of the plant and the coal mine that feeds it.

Regulatory and market pressures have pushed many utilities across the U.S. to move away from fossil fuels, including in neighboring Arizona where one of the region’s largest coal-fired plants will shut down before the end of the year.

PNM is no exception. Executives with the New Mexico utility have said that despite the new law, they already were on a path that would increase the percentage of renewable and carbon-free energy sources in their portfolio.

The petition filed Monday centers on the Public Regulation Commission’s role in balancing the interests of utility shareholders and ratepayers.

It will be up to the New Mexico Supreme Court whether to take up the petition.

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