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OFFON

PNM RESOURCES, INC.

(PNM)
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PNM Resources : Recommended Decision on Sale and Abandonment

11/12/2021 EST

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

Disclaimer

PNM Resources Inc. published this content on 12 November 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 15 November 2021 16:44:31 UTC.


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Mike Mertz Chief Information Officer & Vice President
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