PNM Resources : Order Denying Application for Abandonment, Sale and Issuance of a Financing Order

Sullivan-Leshin, Isaac, PRC

From:	Sullivan-Leshin, Isaac, PRC
Sent:	Wednesday, December 15, 2021 5:03 PM
To:	Records, PRC, PRC
Subject:	21-00017-UT; Filing Submission
Attachments:	21-00017-UT-12.15.2021-Commission-Order on Recommended Decisions on Request for Approval
	of the Sale and Abandonment of PNM's Interest in the Four Corners Power Plant and Issuance of a
	Securitized Financing Order.pdf

IN THE MATTER OF THE APPLICATION OF PUBLIC SERVICE COMPANY	)
OF NEW MEXICO FOR APPROVAL OF THE ABANDONMENT OF THE	)
FOUR CORNERS POWER PLANT AND ISSUANCE OF A SECURITIZED	) Case No. 21‐00017‐UT
FINANCING ORDER	)
	)

Please file the attached ORDER ON RECOMMENDED DECISIONS on request for approval of the sale and abandonment of PNM'S interest in the four corners power plant AND ISSUANCE OF A SECURITIZED FINANCING ORDERinto the above captioned case. Thank you.

Isaac Sullivan‐Leshin

Paralegal for Office of General Counsel

New Mexico Public Regulation Commission PO Box 1269

Santa Fe, New Mexico 87504‐1269 isaac.sullivan‐[e-mail]: (505) 670‐4830

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BEFORE THE NEW MEXICO PUBLIC REGULATION COMMISSION

IN THE MATTER OF THE APPLICATION OF PUBLIC	)
SERVICE COMPANY OF NEW MEXICO FOR APPROVAL	)
OF THE ABANDONMENT OF THE FOUR CORNERS	) Case No. 21-00017-UT
POWER PLANT AND ISSUANCE OF A SECURITIZED	)
FINANCING ORDER	)

ORDER ON RECOMMENDED DECISIONS ON REQUEST FOR APPROVAL OF THE SALE AND ABANDONMENT OF PNM'S INTEREST IN THE FOUR CORNERS POWER PLANT AND ISSUANCE OF A SECURITIZED FINANCING ORDER

THIS MATTER comes before the New Mexico Public Regulation Commission ("Commission" or NMPRC) on the November 12, 2021 Recommended Decision ("RD") issued by hearing examiner Anthony F. Medeiros ("HE") pertaining to the January 8, 2021 Application filed by applicant Public Service Company of New Mexico ("PNM"). WHEREFORE, the Commission, having reviewed the Certification, Application, testimony and pleadings, and being duly informed,

FINDS AND CONCLUDES:

1. On November 22, 2021, exceptions to the RD were filed by the Albuquerque Bernalillo County Water Utility Authority (ABCWUA) and the County of Bernalillo ("County') jointly, New Energy Economy ("NEE"), the New Mexico Attorney General ("Attorney General" or NMAG), the Board of County Commissioners of San Juan County ("San Juan County" or SJC), Sierra Club, NMPRC Utility Division Staff ("Staff") and the Coalition for Clean Affordable Energy (CCAE) and Western Resource Advocates (WRA) jointly.
2. On November 30, 2021, a response to exceptions was filed by PNM.
3. Staff's Exception argues that the RD errs in granting PNM approval to abandon the Four Corners Power Plant ("FCPP") "despite the complete lack of evidence identifying adequate replacement resources." Staff asserts "nothing in the Energy Transition Act, NMSA 1978, §§ 62- 18-1 to -23 (2019) ("ETA"), changed the legal standard for abandonment."

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1. Staff argues that the Commission analyzes abandonment requests using a test adopted from Commuters' Committee v. Pennsylvania Public Utility Commission, 170 Pa. Super.
   596 (1952) ("Commuters' Committee Factors"). The Commuters' Committee Factors consider: The extent of the carrier's loss on the particular branch or portion of the service, and the relation of that loss to the carrier's operation as a whole; the use of the service by the public and the prospects as to future use; a balancing of the carrier's loss with the inconvenience and hardship to the public upon discontinuance of such service; and the availability and the adequacy of service to be substituted.
2. Staff argues PNM failed to identify sufficient generation resources to replace FCPP and that this failure requires the Commission to deny the abandonment application. Staff notes PNM declined to propose actual replacement resources in this case and instead chooses to defer such a proceeding under NMSA 1978, § 62-18-4 (D).
3. Staff asserts the availability and the adequacy of service to be substituted remains a "critical component" of the Commuters' Committee Factors for the Commission to adequately review an abandonment application and PNM's failure to identify and propose actual known replacement facilities prevents the Commission from granting approval to abandon FCPP.
4. Staff argues the RD "basically ignores Staff's concerns" and instead finds PNM has "reasonably demonstrated" that replacement resources can be deployed prior to the abandonment of FCPP based on testimony from PNM witness Phillips stating that PNM has already conducted an RFP for replacement resources and will file a replacement resource case for FCPP in the first quarter of 2022.
5. Staff argues: "This is astonishingly thin evidence upon which to base a finding that will place an enormous risk on New Mexico's electric customers. PNM has already had to brief the

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Commission on the construction delays of the replacement resources for the San Juan Generation Station. Tr., 138:19-139:18. Given the difficulties in constructing resources approved well over a year ago, it would be irresponsible for the Commission to authorize PNM to abandon its interest in the FCPP without full confidence that adequate service will be able to be maintained. Self-serving assurances by PNM's witness without any supporting facts cannot justify the Commission accepting this risk."

1. Staff further argues that because abandonment of FCPP will not include shutting the plant down, but will instead involve PNM's transfer of its interest in the FCPP to Navajo Transitional Energy Company, LLC ("NTEC"), the requested abandonment of the FCPP will not further one of PNM's asserted purposes of the ETA - to accelerate the elimination of coal-fired generation from the State of New Mexico.
2. NEE's Exception joins in Staff's argument that PNM's proposed abandonment failed to satisfy the Commuters' Committee Factors test. NEE also focuses on the fourth factor: the availability and adequacy of substitute service. NEE asserts this is the first abandonment case that has not included a proposed replacement power package for Commission review and PNM has taken the position in a number of cases, including in argument to the New Mexico Supreme Court, "that without specific replacement portfolio options for the Commission review it could not adequately meet its burden of proof for abandonment" under the Commuters' Committee test. NEE argues that PNM is bound by its position and the Commission should find "PNM cannot meet its burden of proof without actual replacement power scenarios that can meet reliability, cost, environmental standards and adequately accommodate the whole of operations."
3. SJC also argues "[t]here is no dispute that FCPP is a qualifying generating facility as defined in 62-18-2(S)(4); that the FCPP was not operated by PNM prior to the effective date of

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the ETA and PNM proposes to abandon it prior to January 1, 2032, as provided in the Section 62- 18-2(S) definition." As part of that argument, SJC concludes that PNM is required to identify replacement resources satisfying the requirements of Section 62-18-3(F) in order "to avail itself of the rest of the ETA, otherwise the application should be denied."

PNM RESPONSE

1. PNM argues the HE correctly found that PNM has reasonably demonstrated that replacement resources can be deployed prior to its abandonment of Four Corners and the ETA explicitly permits the utility to "defer applications for needed approvals of new resources to a separate proceeding." PNM acknowledges it has already conducted an RFP for FCPP replacement resources, which it asserts "yielded robust results" and PNM intends to file a replacement resource case in the first quarter of 2022 based on this RFP.
2. PNM further argues that the Commission has taken the position that it is important to resolve the question of abandonment prior to considering replacement resources, pointing to the Commission's 5/21/21 Initial Order in Case 21-00083-UT.
3. PNM asserts: "A denial of abandonment at this stage will only delay a proceeding to obtain Commission approval for replacement resources, which will have the cascading effect of delaying replacement resource deployment. The advantage of addressing abandonment now and moving on to a replacement resources case is that a Commission order on a replacement resources case can be expected by the end of 2023 if the case is filed in early 2022, giving developers the better part of two years to bring resources online before the summer peak of 2025. As such, any projects chosen from PNM's RFP for FCPP will have a longer lead time to complete construction as compared to the developers of replacement resources for the San Juan Generating Station."

COMMISSION RESPONSE

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