PNM Resources : Statement of Issues filed in Appeal with New Mexico Supreme Court

Filed

Supreme Court of New Mexico

1/21/2022 2:02 PM

Office of the Clerk

IN THE SUPREME COURT OF THE STATE OF NEW MEXICO

PUBLIC SERVICE COMPANY OF NEW

MEXICO,

Appellant,

v.	NO. S-1-SC-39138

NEW MEXICO PUBLIC REGULATION COMMISSION,

Appellee.

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,

NMPRC Case No. 21-00017-UT

STATEMENT OF ISSUES

Appellant, Public Service Company of New Mexico ("PNM" or the "Company"), submits its Statement of the Issues pursuant to Rule 12-208(A) and (E) NMRA, and Rule 12-601 NMRA.

1. Statement of the New Mexico Supreme Court's Jurisdiction

This is a direct appeal by PNM of the Order on Recommended Decision 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 ("Order")

issued by the New Mexico Public Regulation Commission ("NMPRC" or "Commission") on December 15, 2021, in NMPRC Case No. 21-00017-UT.

PNM filed its Application in the proceeding below pursuant to the Energy Transition Act, NMSA 1978 Sections 62-18-1 to -23 (2019) ("ETA") for approval of the abandonment and sale of PNM's interest in the Four Corners Power Plant ("Four Corners") and approval of a financing order to recover PNM's associated plant abandonment costs. On November 12, 2021, the Hearing Examiner issued a Recommended Decision recommending that the Commission approve the abandonment and sale of PNM's Four Corners interest ("Abandonment RD"). Contemporaneously with the Abandonment RD, the Hearing Examiner issued a separate Recommended Decision pursuant to the requirements of the ETA, recommending that the Commission grant PNM's application for a financing order and for issuance of energy transition bonds to finance its requested costs of abandonment associated with Four Corners ("Financing RD"). Financing RD at 163-64, Ordering ¶¶ 2-3.

The Order rejected both recommended decisions of the Hearing Examiner and denied PNM's requests for the abandonment and sale of Four Corners and for a financing order. Order at 12-13, Ordering ¶¶ A-D. By its terms, the Order's "findings of facts and conclusions . . . are conclusive of PNM's application." Id. at

12, ¶ 44.

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The New Mexico Supreme Court has jurisdiction over this appeal pursuant to Section 62-18-8(B) of the ETA, and NMSA 1978, Section 62-11-1 (1993), Rule 12- 102(A)(2) NMRA and Rule 12-601 NMRA. Pursuant to Section 62-18-8(B), the Notice of Appeal was timely filed within ten (10) calendar days of the Order. Also pursuant to Section 62-18-8(B), the Supreme Court is respectfully requested to determine this appeal as expeditiously as practicable.

1. Background and Statement of the Case

PNM is a New Mexico public utility subject to the Commission's jurisdiction under the Public Utility Act, NMSA 1978, Sections 62-1-1 to 62-13-15 (1941 as amended through 2015) ("PUA"). The ETA also governs PNM's request as a qualifying utility to abandon and sell its interest in Four Corners.

1. Procedural History of Underlying Case.

On January 8, 2021, PNM filed its application ("Application") for approval to abandon its minority ownership share of 200 megawatts ("MW") of retail coal-fired generation resources at Four Corners, which would divest PNM from all coal generation as of 2025. The Application also sought approval to sell and transfer PNM's interest in Four Corners to the Navajo Transitional Energy Company, LLC ("NTEC"), a corporation owned and chartered by the Navajo Nation. PNM sought approval to securitize its authorized Four Corners abandonment costs and to recover those costs through the issuance of energy transition bonds pursuant to the ETA.

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PNM amended its Application pursuant to the Order on Sufficiency of PNM's Application and Scope of Issues in Proceeding issued on February 26, 2021 ("February Order"). Over PNM's objections that a prudence review in this case contravened the ETA, the February Order required PNM to address and confirm that its decision to continue participating in Four Corners beyond 2016 was prudent. The February Order incorporated the Commission's earlier determination that prudence- related issues for Four Corners would be decided in PNM's Four Corners abandonment proceeding. Case No. 16-00276-UT,Order on Sierra Club's Motion to Re-OpenDocket to Implement the Revised Final Order, ¶ 24 (Feb. 10, 2021).

In accordance with these determinations, PNM filed an amended application for abandonment and sale of its Four Corners interest and issuance of a financing order ("Amended Application") on March 15, 2021. The Amended Application included supplemental testimonies that addressed the issues raised in the February Order, including the prudence of PNM's decision in 2013 to maintain its ownership interest in Four Corners.

2. Background on Four Corners Plant.

Four Corners, located near Fruitland, New Mexico on the Navajo Nation, has served PNM customers since PNM acquired a 200 MW share in Units 4 and 5 in 1969 and 1970, respectively. PNM currently holds a 13% minority share of plant ownership. Four Corners obtains coal exclusively from the adjacent Navajo Mine

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operated by NTEC. The remaining operating life of Four Corners is through 2031, concurrent with the expiration of the 2016 Coal Supply Agreement with NTEC.

Under the contractual arrangements among the owners of the plant, early closure of Four Corners prior to 2031 requires unanimous agreement of the owners, excluding NTEC. No other owner has stated it has plans to exit the plant prior to 2031. Arizona Public Service Company ("APS") is the majority owner (63%) and operator of Four Corners. The three other owners are: the Salt River Project Agricultural Improvement and Power District (10%), Tucson Electric Power Company (7%), and NTEC (7%) which is the only owner with an interest in the coal mine.

3. Terms of the Proposed Abandonment and Sale of Four Corners.

The Commission's consideration of a potential early exit from Four Corners was first raised during PNM's 2016 rate case, NMPRC Case No. 16-00276-UT ("2016 Rate Case"). There, the Commission approved a stipulation that, among other things, required PNM to perform a cost-benefit analysis as part of its 2020 Integrated Resource Plan ("IRP") on the impact of an early exit from Four Corners in 2024 and 2028. 2016 Rate Case, Revised Order Partially Adopting Certification of Stipulation, at 34, Ordering ¶ A (Jan. 10, 2018); Case No. 16-00276-UT, Modified Revised Stipulation, at 9, ¶ 10 (filed Jan. 23, 2018) ("Modified Revised Stipulation").

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