Sonal Patel reports that the Supreme Court for the state of New Mexico affirmed a final order by state regulators to allow Public Service Company of New Mexico (PNM) to replace lost generation from two shuttered units at its 1,800-MW coal-fired San Juan Regional Generation Station with coal and nuclear resources. The decision resolves a lengthy dispute that involves a number of stakeholders, including state agencies, the governor, and the utility. As Nakamura noted in the court’s opinion, “The record in this case is comprised of seventy-six volumes that contain nearly 50,000 pages. It is, as PNM points out, ‘massive’.”
The court also thwarted a number of NEE’s arguments, including that PNM failed to consider or reasonably assess replacement resources such as wind, solar, and natural gas, which it said were “less costly and less risky” than coal or nuclear. “PNM did consider renewable resources when attempting to determine the most cost-effective replacement generation resources,” the court ruled. “The evidence presented persuaded the [hearing examiner] that utilizing Palo Verde Unit Three and obtaining additional power from San Juan Unit Four was the most cost-effective choice. We will not second-guess this determination.”
The decision also pointedly addressed NEE’s contention that solar and wind facilities would produce cheaper power than coal and nuclear, arguing that the hearing examiner should have considered the varying resources at a “levelized cost.” PNM responded that levelized costs analyses are inappropriate when “comparing technologies with different production profiles, such as dispatchable generation to variable or intermittent generation.” The court noted that the debate is a “paradigmatic fact inquiry that requires technical expertise to comprehend and resolve,” and it ruled: “NEE’s arguments give us no reason to second-guess the [hearing examiner’s] cost assessment for any given resource.”
In its ruling, the court also stood by the hearing examiner’s assessment that the supplemental stipulation provided “varying mechanisms” to cut risks associated with the San Juan coal and Palo Verde nuclear plants. NEE’s claims that “significant unknowns and unquantified risks that include financial, reliability, operational, and anticipated environmental regulations” affecting the two plants were inconsistent with the record, the court said.
For PNM, the court’s unanimous ruling affirms that “there was ample evidence to support the Commission’s approval of the settlement in our case, which was fairly negotiated by the parties involved and provides benefits to PNM customers and the state,” the company told POWER on March 6. “Additionally, the ruling shows that the Commission’s decision was reached through a transparent process in which the public could participate. PNM will continue to work in the best interests of our customers and the state as we transition to cleaner, more sustainable resources.”
As of December 31, the day that PNM shut San Juan Units 2 and 3, the company’s portfolio was 35% coal, 35% natural gas, 15% nuclear, and 15% renewables. Forecasts for 2018 call for renewables’ share increasing to 17%, nuclear 16%, natural gas 16%, and coal’s share falling to 29%.
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