Amid yearslong, ongoing disputes over transitioning away from Four Corners Power Plant, the state's last remaining coal plant continues to spew emissions and lose money.
As the state's largest electric utility attempts to secure its steepest-ever rate hike, a significant fraction of the proposed increase involves refinancing the charges to customers related to Four Corners.
A decision in the rate case by the three-member Public Regulation Commission will determine whether the electric utility is allowed to raise rates to collect more than $170 million more each year, which would increase average household bills by more than $23 per month over two increases in 2025 and 2026.
The Public Service Company of New Mexico has said much of the increase will go toward costs for transmission, operations and maintenance of the grid, and updates for the energy transition.
The rate case has attracted attention from many players in the state, including attorneys representing the state Department of Justice, Walmart, Kroger, Bernalillo County, the city of Albuquerque and several trade groups, environmental advocates and renewable energy companies.
At issue once again are the costs associated with Four Corners Power Plant, a coal-fired plant in San Juan County that still provides power to PNM customers. The utility owns a 13% stake in the plant as well as a nearby coal mine, along with Arizona Public Service Company and others.
PNM has requested "accelerated depreciation" for the plant, which would bump up the retirement date for PNM's ownership of Four Corners from 2041 to 2031 at a cost of $20 million per year to customers. The accelerated retirement makes up about 11.5% of the cost of the rate hike request.
The utility has also asked to collect more than $40 million for improvements that are "necessary to maintain safe and reliable operations" at the plant, according to PNM's application.
Meanwhile, the aging plant has become uneconomic for electricity generation compared to other sources like solar and gas. The think tank Rocky Mountain Institute estimated Four Corners is among the most uneconomic coal plants in the U.S., with more than $1 billion in losses over the last nine years.
PNM executives wrote in recent testimony the utility "has evaluated available opportunities for an early exit from Four Corners and PNM has determined it is in the interest of customers for PNM to remain as a participant in Four Corners until the expiration of the current [coal supply agreements] in July 2031."
A plan proposed by the utility for an exit from Four Corners was rejected by previous commissioners in 2021, a ruling that was upheld by the state Supreme Court last year. The most recent rate case saw the commission disallow PNM from recovering $85 million from customers per year for costs to improve Four Corners that were deemed "imprudent."
Regulators have indicated particular interest in PNM's plans for abandoning Four Corners in the current rate case. A recent bench request issued by the commission orders the utility to provide data showing the costs related to abandonment of the plant — either in 2031 or in 2041 — including the associated funds that would be applicable per the state 2019 Energy Transition Act, which allows the utility to pay for remaining costs at the plant with bonds that are repaid by customers.
Commissioners pointed out PNM has not committed to seeking low-interest securitized bonds, as allowed by the law, for the eventual abandonment of Four Corners.
"PNM has not made any final determination on whether PNM will file for securitization of any remaining Four Corners energy transition costs under the ETA at this time," a PNM executive said in testimony for the pending rate case. "What is known is that PNM plans to exit Four Corners at the end of the current coal supply agreement in 2031."
Commissioners wrote securitizing the plant's investments "may offer PNM the opportunity to ensure favorable financing while ensuring that economic transition assistance is delivered to communities impacted by the closure of Four Corners," adding "the Commission intends to closely monitor this issue."
The stacks of the San Juan Generating Station came down in recent months, after the last units of that coal plant were turned off in 2022.
PNM customers have expressed near-unanimous opposition to the proposed rate increase in dozens of pages of public comments submitted in the case. The rate hike would "far exceed the current inflation rate and pose a hardship for many New Mexico families, including my own," one person wrote.
Some noted the case includes proposed decreases for some customer categories, including the commercial category, that would serve data centers the utility might hope to attract. Others have noted experiencing increasing numbers of power outages per year.
PNM's most recent rate change came earlier this year, but that case has been appealed by both the utility as well as other parties. The case is pending before the state Supreme Court; oral arguments have not been scheduled.
