State officials voice concerns over Energy Transition Act

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By Tris DeRoma

New Mexico’s Energy Transition Act has been hailed by New Mexico’s governor as bold, pioneering legislation designed to wean the state off its dependence on fossil fuels. Others aren’t so sure.

Paul Gessing, president of the Rio Grande Foundation, said the Energy Transition Act will be carried out “on the backs of ratepayers” as big, shareholder-owned utility companies like Power Service Company of New Mexico switch from cheap fossil fuel energy supplies to alternative energy sources in order to meet the goals of the Energy Transition Act.

The Energy Transition Act requires that New Mexico investor-owned utilities like PNM provide carbon-free energy by 2045. The act also requires utility companies within the state to have half of its energy portfolio in renewable energy by 2030 and 80 percent by 2040.

Gessing said the rate increases as a result of the Energy Transition Act have not been widely reported in the media because the cliché of “business equals free market” tends to lull reporters and the public into thinking the market will self-regulate itself.

“As someone who really understands the free market, I can assure you that businesses understand what drives their bottom line, and they try to maximize their bottom line, free market be damned,” Gessing said. “PNM was very much in that suit.”

When the coal-powered San Juan generating station closes in 2022 due to natural obsolescence, Lujan Grisham said residents who relied on the plant for power and for jobs will be taken care of.

“Crucially, this legislation does not leave our neighbors in San Juan County behind, as we will provide millions for training and economic development,” Lujan Grisham said.

The plant is owned by PNM, a utility company that has pledged to the state its commitment to the Energy Transition Act.  

Gessing said at the meeting he was not surprised.

“Remember, they are a regulated utility. They don’t have a real stake in rural electricity prices. They have a stake in maximizing their rate of return, and if that means abandoning coal and driving the rates by putting them on the backs of ratepayers, this is fine for them,” Gessing said of PNM. “… They get all the plaudits, the atta boys, atta girls of being a utility that’s advocating for so-called clean energy, but I don’t think people understand the costs that are going to be born by ratepayers.”

The Los Alamos Department of Public Utilities, a publicly owned utility, purchases 36 megawatts from the San Juan station annually, the biggest source of power in its portfolio. The county has a plan to gradually switch over to other sources after its agreement with the San Juan plant expires in 2022.

New Mexico Republican Rep. Greg Nibert, who represents Chaves and Lincoln counties, said the Energy Transition Act will successfully kill innovative projects designed to capture carbon-based energy for use in the grid.

He said the payout of investment in such projects would run out before the governor’s 2050 deadline.

“Not only will it include fossil fuels, but it would include plants converting manure into methane or even landfills that capture the gas that’s created through the decomposition of the waste within the landfill,” Nibert said.

Nibert also wondered what type of jobs the state would provide those displaced workers in New Mexico’s fossil fuel industry.

“The jobs won’t be here. We’ll be transporting our natural gas into Texas, so that it can then generate electricity that we will pay for in New Mexico,” Nibert said.

Southeastern New Mexicans won’t be to affected by the Energy Transition Act, since their power company straddles the Texas border, where the energy comes from coal generation plants.

But those in the rural interior of the state, where PNM supplies the power, Nibert said he thinks there will be a huge price to pay.

“I think there are a lot of hypocrites in Sante Fe, that’s what I think,” Nibert said. “They’re wanting to meet their political goals because they sound good, but in practical terms, New Mexico may be hard pressed to figure out how to deal with supplying reliable energy 24 hours a day,” Nibert said.

Lujan Grisham signed the bill March 22.

“The Energy Transition Act is a promise to future generations of New Mexicans,” Lujan Grisham said in a written statement on the act’s passage, otherwise known as SB 489. “When we were presented the chance to move toward cleaner sources of energy, we took it, boldly charting a course to a carbon-free future, permanently centering our commitment to lower emissions and setting an example for other states.”

Lawmakers and state officials at the ceremony insist that when the San Juan generation plant retires in 2022, the state will be there to fill the economic and energy vacuum left in its wake.

“The ETA cements New Mexico’s place as a national leader in the transition to a new, renewable energy economy,” Sen. Jacob Candelaria (D-Bernalillo), as sponsor of the bill said. “Unlike other states, the bill doesn’t leave our neighbors that have relied on the coal industry behind. The bill will drive hundreds of millions of dollars investments in workers and communities to ensure a just transition to our state’s renewable energy future.”

Energy, Minerals and Natural Resources Department Secretary Cottrell Propst said the Energy Transition Act is “unparalleled” when it comes to taking care of New Mexicans that will be most impacted by the transition.

“New Mexico’s Energy Transition Act is the strongest package of its kind in the country,” said Cottrell Propst. “The renewable and zero-carbon standards, apprenticeship opportunities, securitization tool for retiring uneconomic coal plants, and state programmatic and financial assistance for the affected community are unparalleled.”