New Mexico regulators have approved an application by the state’s largest electric utility to abandon its interest in a major coal-fired power plant in the Four Corners as the state works toward emission-free mandates and more renewable energy.
The Public Regulation Commission voted unanimously Wednesday in favor of letting Public Service Company of New Mexico divest from the San Juan Generating Station. The panel also approved an order allowing the utility to issue $360 million in bonds that will be repaid by customers to fund decommissioning costs, severance packages for displaced workers and job training programs.
The San Juan case has taken many twists and turns in recent months, ending up at one point before the New Mexico Supreme Court, which ordered regulators to apply the state’s new energy transition law to their decision making. Wednesday marked the last day the commission could vote on PNM’s application to abandon the power plant. The decisions chart out how liability will be shouldered by PNM customers and utility shareholders.
Chairwoman Theresa Becenti-Aguilar said many public hearings were held, hearing examiners carefully prepared their recommendations and commissioners have asked many questions. “As we’re making a decision today, we’re also dealing with an extraordinary time but we still have to move forward, protecting the rights of PNM customers,” she said. Becenti-Aguilar and other commissioners wanted to ensure the panel could still balance the interests of both customers and shareholders in future rate cases and would have the authority to determine whether PNM requests to recover costs are reasonable and prudent.
San Juan would be just the latest coal-fired power plant in the U.S. to close as regulatory pressures mount and New Mexico and other states enact more ambitious renewable energy targets.
PNM plans to replace San Juan with a mix of natural gas, wind, solar and battery storage, but regulators have yet to sign off on that plan.