PNM Resources : Revised Procedural Order

BEFORE THE NEW MEXICO PUBLIC REGULATION COMMISSION

IN THE MATTER OF THE APPLICATION OF )
PUBLIC SERVICE COMPANY OF NEW	)
MEXICO FOR DECERTIFICATION AND	)
ABANDONMENT OF 114 MW OF LEASED	)
PALO VERDE NUCLEAR GENERATING	)
STATION CAPACITY AND SALE AND	)	Case No. 21-00083-UT
TRANSFER OF RELATED ASSETS AND FOR )
APPROVAL TO PROCURE NEW	)
RESOURCES UNDER 17.9.551 NMAC	)
	)
PUBLIC SERVICE COMPANY OF NEW	)
MEXICO,	)
	)
Applicant.	)
	)

REVISED PROCEDURAL ORDER

THIS MATTER comes before Carolyn R. Glick, Hearing Examiner for the New Mexico Public Regulation Commission, as a follow-up to the May 6, 2021 prehearing. This Revised Procedural Order differs from the Procedural Order issued on May 10, 2021, only with respect to changes to the attached Notice to more accurately reflect the revenue and bill impacts of PNM's proposals. The Hearing Examiner FINDS AND CONCLUDES:

1. On April 2, 2021, Public Service Company of New Mexico (PNM) filed an Application for approval to:

• Abandon PNM's 104 MW of Leased Interests in Palo Verde Nuclear Generating Station (PVNGS) Unit 1 upon termination of the leases on January 15, 2023, and abandon PNM's 10.4 MW of Leased Interest in PVNGS Unit 2 upon termination of the lease on January 15, 2024 (collectively, the Leased Interests);
• Sell PNM-owned assets related to PVNGS which include PVNGS switchyard facilities, transmission facilities, common or "excluded" assets under the PVNGS leases in the Unit 1, Unit 2, and common facilities as necessary for the operation of the 114 MW of Leased Interests, and nuclear fuel associated with the Leased Interests (collectively, the PVNGS Assets). PNM says that it proposes to sell the PVNGS Assets to the Salt River Project

Agriculture Improvement and Power District (SRP), a current co-owner of PVNGS that will purchase the Leased Interests from the lessors when the leases terminate;

• Create regulatory assets in the amounts of the remaining undepreciated investments in leasehold improvements for the Leased Interests, and associated costs, with consideration of their recovery in a future rate case. The proceeds of the sale of the PVNGS Assets will be used to reduce the amounts of the regulatory assets to be recovered;
• Enter into the following purchased power agreement (PPA) and two energy storage agreements (ESAs) pursuant to 17.9.551 NMAC (Rule 551), titled "Prior Approval for Purchased Power Agreements," for resources to replace the PVNGS leased capacity: an agreement with Jicarilla Solar Energy Center I, LLC for 150 MW of solar energy from the Jicarilla Solar Energy facility; an agreement with Jicarilla Energy Storage Center I, LLC for 40 MW of four-hour energy storage capacity from the Jicarilla Energy Storage Facility; and an agreement with Sandia Peak Grid, LLC for 100 MW of two-hour energy storage capacity from the Sandia Peak Grid facility; and
• Enter into the following PPA and ESA for resources for system reliability: an agreement with Atrisco Solar, LLC for 300 MW of solar energy from the Atrisco Solar Facility and an agreement with Atrisco Energy Storage, LLC for 150 MW of four-hour energy storage capacity from the Atrisco Energy Storage Facility.
• 1. Rule 551 states that the Commission shall issue a final order on an application for approval of a PPA within six months after the date the application is filed. Rule 551.10(B). However, Rule 551 also states that the Commission may grant a request for a procedural variance from the Rule. Rule 551.12(B).
  2. In its Application, PNM requests that the Commission issue a final order by October 4, 2021 because the PPAs and ESAs involve time-sensitive commercial transactions with third parties. Application at 4.

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1. On April 21, 2021, the Commission issued its Initial Order Assigning Hearing Examiner (Initial Order). The Initial Order states that PNM's requests for approval of replacement resources depend on the Commission's approval of its requested abandonment of the Leased Interests. Therefore, the Order concludes that the six-month deadline in Rule 551 does not begin until after the Commission acts on PNM's request for abandonment approval. Initial Order, ¶¶ 6-7.
2. In its Initial Order, the Commission recognized two competing considerations. First, it noted that PNM requests approval of several resources, which, the Commission said, "may impose sufficient significant additional burden on the resources of the Commission and parties to justify possibly waiving the time limitations of 17.9.551.10(B) at some point in this proceeding." Id., ¶ 8. Second, the Commission recognized PNM's request for expediency to meet Commercial Operation Dates in advance of the 2023 Summer Peak. Id., ¶ 9. Thus, the Commission said:

In order to balance these considerations and provide sufficient opportunity for full consideration for PNM's total Application, at this time the Commission will not defer consideration of PNM's requests for approval of the proposed PPAs to a separate proceeding, but will address them in this docket together with the abandonment request subject to a finding above that the six-month time limit of 17.9.551.10(B) NMAC has not been triggered.

Id.

6. Decretal Paragraph C of the Initial Order says:

The issues reserved to a separate proceeding from Case 15-00261-UT by the order on Remand concerning whether PNM's acquisition and renewal of leased PVNGS capacity exposed ratepayers to additional financial liability beyond that to which ratepayers would have been exposed had PNM chosen to abandon the leased PVNGS capacity and obtained non-nuclear replacement generating capacity and whether PNM should be denied recovery of such additional amount of future additional decommissioning costs as a remedy for PNM's imprudence established in this case shall be addressed in this proceeding. PNM shall file testimony addressing these issues in accordance with the procedural order to be issued by the hearing examiner.

• 7. The Commission appointed the undersigned to preside over this case. Id.,

• D.

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Case No. 21-00083-UT

1. The Hearing Examiner scheduled a prehearing on May 6, 2021.
2. The procedural schedule developed at the May 6, 2021 prehearing, set forth below, should be adopted.

IT IS THEREFORE ORDERED:

1. A public hearing shall be held beginning on October 12, 2021, commencing at 9:00 a.m. MDT, and shall continue as necessary through October 22, 2021. At a later date, the Hearing Examiner shall decide whether to hold the hearing in person, at a location to be determined, or through the Zoom videoconference platform.
2. On or before June 4, 2021, PNM, at its own expense, shall publish the notice attached to this Procedural Order once in a newspaper of general circulation in every county where PNM provides service.
3. On or before May 14, 2021, PNM shall post a copy of the Notice attached to this Procedural Order on its website (http://www.PNM.com/regulatory).
4. On or before June 4, 2021, PNM shall mail or email to its customers (by bill stuffer or separately) a copy of the Notice attached to this Procedural Order.
5. On or before June 25, 2021, PNM shall file Supplemental Testimony in response to Paragraphs 10 and C of the Commission's Initial Order Assigning Hearing Examiner, issued on April 21, 2021. Additionally, PNM shall answer the following questions in its Supplemental Testimony:1
   1. For each PVNGS leased interest that PNM seeks authority to abandon in
   this case:

1 If PNM has answered any of these questions directly in its prefiled testimonies, it may cite to the page of the prefiled testimony or attached exhibit for the answer rather than repeat that response in its Supplemental Testimony.

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1. 1. identify the "facility" or portion of "facility," if any, that PNM seeks
      authority to abandon;2
   2. identify the initial cost to PNM of any such facility or portion of
      facility;
   3. identify the date that the facility or portion of facility began
      providing service;
   4. identify PNM's book value of the facility or portion of facility as of
      May 1, 2021; and
   5. state whether PNM owns the facility or portion of facility. If PNM does not own the facility or portion of facility, identify the owner of the facility or portion of facility.
2. Why does PNM need Commission approval to abandon its Leased PVNGS Interests when PNM has already given irrevocable notice to the PVNGS lessors of its decision to return the Leased Interests?
3. Does the Commission have the authority to deny PNM's request to abandon its Leased PVNGS Interests (if such approval is required), when PNM has already given irrevocable notice to the PVNGS lessors of its decision to return the Leased Interests?
4. Page 83 of the Corrected Recommended Decision issued in Case No. 15-

00261-UT states:

For all of the leasehold improvements paid for in part by PNM, title or ownership to the improvements has belonged to the Lessors when such improvements were installed. Tr. (6-28-16) 4077, 4122-23 (Eden). PNM said that if it did not extend a lease or purchase Leased Assets at the end of the initial lease term, title to and possession of improvements would remain with the Lessor. NEE Exh. 30.

2 See NMSA 1978, § 62-9-5 (2005) ("No utility shall abandon all or any portion of its facilities subject to the jurisdiction of the commission, or any service rendered by means of such facilities, without first obtaining the permission and approval of the commission.").

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