PNM Resources : Recommended Decision on Sale and Abandonment

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 POWER PLANT AND ISSUANCE	)
OF A SECURITIZED FINANCING ORDER	)	Case No. 21-00017-UT
	)
PUBLIC SERVICE COMPANY OF NEW MEXICO,	)
	)
Applicant.	)
	)

RECOMMENDED DECISION

ON PNM'S REQUEST FOR APPROVAL OF THE SALE AND ABANDONMENT

OF ITS INTEREST IN THE FOUR CORNERS POWER PLANT

AND TO RECOVER NON-SECURITIZED COSTS

12 November 2021

		TABLE OF CONTENTS
I.	STATEMENT OF THE CASE ...................................................................................................	1
II.	BACKGROUND AND LEGAL FRAMEWORK...................................................................	13
	A. PNM's Proposed Sale and Abandonment of the Four Corners Power Plant..................	13
	1.	The Four Corners Power Plant.................................................................................	14
	2.	Proposed sale of PNM's ownership interest to NTEC ............................................	15
	3.	The proposed transferee: Navajo Transitional Energy Company, LLC..................	17
	4.	The Four Corners Purchase and Sale Agreement ....................................................	18
	5.	Four Corners seasonal operations agreements ........................................................	19
	B. Legal Standards Applicable to Sale and Abandonment of the FCPP .............................	21
	1.	Energy Transition Act ..............................................................................................	21

2. Standards governing abandonment and sale and transfer of PNM's interest in

FCPP.........................................................................................................................

23

3. Order on Sale and Abandonment of PNM's Interest in the FCPP and costs

		ineligible for securitization ......................................................................................	28
	4.	Evidentiary Standards ..............................................................................................	28
III.	INTRODUCTION ....................................................................................................................	29
	A. Summary of Parties' Positions.........................................................................................	29
	1.	PNM .........................................................................................................................	30
	2.	Intervenors................................................................................................................	32
	3.	Staff ..........................................................................................................................	34
IV.	DISCUSSION, ANALYSIS, AND RECOMMENDATIONS .................................................	35
	A. Abandonment of PNM's Interest in the Four Corners Power Plant ...............................	35
	1.	Claimed savings to customers..................................................................................	36
	2.	Increased flexibility on PNM's system....................................................................	49
	3.	Progress towards reducing portfolio emissions consistent ETA goals....................	50
	4.	Reduced overall emissions from Four Corners via seasonal operations.................	54

RECOMMENDED DECISION ON	- i -
FCPP SALE AND ABANDONMENT
Case No. 21-00017-UT

5.	Reduction in abandonment costs using securitization.............................................	57
6.	Future environmental impacts in the cost-benefit equation ....................................	60
7.	Decommissioning and remediation obligations ......................................................	61

8. PNM's alleged failure to perform a cost-benefit analysis of an early exit from

	Four Corners pursuant to the stipulation in Case No. 16-00276-UT. .....................	64
9.	Four Corners closure date: 2031 or earlier? ............................................................	68
10.	Commuters' Committee factors ................................................................................	71
11.	Adequacy of replacement resources pursuant to the Energy Transition Act ..........	74
12.	Whether Section 62-18-3 of the ETA is applicable to this case ..............................	76
13.	PNMR's proposed merger with Avangrid as the purported "driving force" for
	the FCPP abandonment and transfer........................................................................	81
B. Sale and Transfer of PNM's Interest in the Four Corners Power Plant to NTEC ..........	84

1. Preservation of Navajo Nation voice in future of Four Corners through transfer

of the plant to NTEC ................................................................................................

84

2. Mitigation of adverse economic impact to local workforce and community

through ETA's Section 16 funds ..............................................................................

92

1. PSA Article 6.1(d)(i) - PNM's compulsory veto of plant owners' potential unanimous consensus to cease operations or reduce production at Four Corners..95
2. Hearing Examiner's application of the "no net detriment" standard to PNM's

	sale and transfer of its interest in Four Corners to NTEC .....................................	101
	C. Recovery of Costs Ineligible for Securitization ............................................................	104
	1. PNM's proposal to recover non-securitized costs through regulatory assets .......	104
	2. Analysis of contested issues and recommendations..............................................	108
	a. Stranded materials and supplies ...................................................................	108
	b. External legal costs	.......................................................................................	109
	D. Hearing Examiner's Recommendations on the Proposed Sale and Abandonment ......	110
V.	FINDINGS OF FACT AND CONCLUSIONS OF LAW .....................................................	114
VI.	DECRETAL PARAGRAPHS.................................................................................................	116
RECOMMENDED DECISION ON	- ii -
FCPP SALE AND ABANDONMENT
Case No. 21-00017-UT

GLOSSARY OF ACRONYMS AND DEFINED TERMS

Acronym/Defined Term	Meaning
2015 Rate Case	Case No. 15-00261-UT
2016 Rate Case	Case No. 16-00276-UT
ABCWUA	Albuquerque Bernalillo County Water Utility Authority
ACC	Arizona Corporation Commission
APS	Arizona Public Service Company
Agreement or PSA	Four Corners Purchase and Sale Agreement between PNM
	and NTEC dated as of Nov. 1, 2020
Application or App.	Amended Application filed by PNM on March 15, 2021
Attorney General or NMAG	State of New Mexico, ex rel. Hector H. Balderas, Attorney
	General
Avangrid	Avangrid Networks, Inc. and Avangrid, Inc., collectively
Br.	Brief in chief or initial brief
City	City of Albuquerque, New Mexico
County	Bernalillo County, New Mexico
CCAE	Coalition for Clean Affordable Energy
CCN	Certificate of Public Convenience and Necessity
CCR	Coal combustion residuals or coal ash
CCSD	Central Consolidated School District
CERCLA	Comprehensive Environmental Response, Compensation,
	and Liability Act
CFRE	Citizens for Fair Rates and the Environment
CSA	Four Corners Coal Supply Agreement
Certification of Stipulation	Certification of Stipulation in Case No. 16-00276-UT issued
	Oct. 31, 2017
RECOMMENDED DECISION ON	- iii -
FCPP SALE AND ABANDONMENT
Case No. 21-00017-UT

Acronym/Defined Term	Meaning
CO2	Carbon dioxide
Commission or NMPRC	New Mexico Public Regulation Commission
Community Groups	SJCA, Diné C.A.R.E., Tó Nizhóní Aní, and NAVAEP
COVID-19	Coronavirus disease
Cumbre	Cumbre Court Reporting Services, L.L.C.
DG	Distributed Generation
Diné C.A.R.E.	Diné Citizens Against Ruining Our Environment
EIA	U.S. Energy Information Administration
EPA	Environmental Protection Agency
EPE	El Paso Electric Company
ETA	Energy Transition Act
ETCs	Energy transition charges
Exh.	Exhibit
FCPP or Four Corners	Four Corners Power Plant
FCPP Assets	PNM's 13% interest in FCPP and associated PNM-owned
	assets such as the FCPP switchyard, inventory, and fuel
	inventory)
FERC	Federal Energy Regulatory Commission
FPA	Federal Power Act
GWh	Gigawatt-hour
IRP	Integrated resource plan
Iberdrola	Iberdrola, S.A., a corporation (Sociedad Anónima) organized
	under the Laws of the Kingdom of Spain and ultimate parent
	company of Avangrid.
kW	Kilowatt
RECOMMENDED DECISION ON	- iv -
FCPP SALE AND ABANDONMENT
Case No. 21-00017-UT