Edward Klump, E&E News reporter 

Racist and lewd comments halted a virtual meeting of the New Mexico Public Regulation Commission yesterday, but the panel reconvened in the afternoon and approved the abandonment of two remaining units at a coal-fired power plant.

The 5-0 decision paves the way for the Public Service Co. of New Mexico (PNM) to exit the San Juan Generating Station in mid-2022 and possibly close the coal plant, even as some parties hope it could have new life using carbon-capture technology.

Members of the PRC also voted 5-0 in support of a financing order that is central to PNM’s plans to abandon Units 1 and 4 at San Juan. The decision could enable PNM to issue about $361 million of low-interest bonds paid for by customers through a mechanism known as securitization. Funds would cover various items, including certain PNM investments and aid for workers.

But people listening to the proceedings won’t soon forget the online hijacking of the meeting, which was held via Zoom because of the novel coronavirus pandemic and a need for social distancing to slow its spread.

Theresa Becenti-Aguilar (D), the PRC’s chairwoman, had just spoken about a need “to move forward” protecting the rights of PNM customers when someone jumped in saying, “Minorities don’t have rights.” Becenti-Aguilar sought to find out who was talking. The meeting then devolved into chaos, including a clashing of sounds while racist slurs and explicit messages began appearing in an associated chat window.

“I wanted to just say thank you to staff for pulling this together and getting us through the sabotage we experienced earlier,” Commissioner Stephen Fischmann (D) told attendees in the afternoon.

In a statement to E&E News, PRC’s chief of staff, Jason Montoya, said “it appears the meeting was sabotaged by what is being referred to as Zoom Bombing.” That’s a phenomenon gaining attention as people inject offensive words or otherwise disrupt online gatherings.

Was it related to the San Juan coal plant discussion?

“We can’t say for certain but the timing of the interruption occurred during the Commission’s discussion related to this case which seems suspicious,” Montoya said. He said it was “unfortunate” that some parties may not have been able to listen because of the disruption.

There were stricter controls on who could speak once the panel reconvened. And Montoya said the PRC is able to use steps such as restricting audio access and disabling the chat feature.

Online issues are part of a new reality that regulators and businesses are trying to navigate given the rise of virtual meetings in the age of COVID-19. Last month, the Public Utility Commission of Texas had problems conducting a public comment period over the phone because of excess noise.

The PRC’s decisions drew praise from Albuquerque, N.M.-based PNM Resources Inc. It’s the parent of the PNM utility, which owns the biggest stake in the remaining San Juan coal-fired generation and is the state’s largest electric utility. PNM has proposed replacing power from San Juan with a mix that includes renewables, natural gas and battery storage.

“Our customers, communities and environment will benefit as we move to exit all of our coal-fired generation and replace it with lower-cost, cleaner energy resources,” CEO Patricia Vincent-Collawn of PNM Resources said in a statement.

PNM Resources has said PNM aims to have 100% emissions-free power by the end of 2040. Customers are expected to see monthly charges on their bills related to the bonds. But PNM has said its replacement power plan could save an average residential customer about $6.87 a month for the first year compared with keeping San Juan open.

‘No choice’

Yesterday’s PRC actions were foreshadowed by the Energy Transition Act. That legislation, passed by New Mexico lawmakers in 2019, included securitization provisions as well as clean energy standards.

Gov. Michelle Lujan Grisham (D) previously called the ETA a “transformational law.”

But after earlier legal battles, the debate over San Juan and securitization isn’t quite over.

The commission “had no choice” under the ETA “but to approve PNM’s request for financing in its entirety because the PRC’s authority was stripped from them by the Legislature and the Governor, at the request of PNM,” Mariel Nanasi, executive director of New Energy Economy, said in a statement.

Raymond Sandoval, a PNM Resources spokesman, said that comment puzzled him because going through the full legislative process is a more robust public procedure.

But Nanasi said it’s “a travesty of justice” to “shower PNM with money,” especially in challenging economic times.

“We have no other choice but to protect ratepayers and appeal the constitutionality of the ETA because it allows PNM, a monopoly, to bill the ratepayers without regulatory oversight and without any due process for ratepayers,” Nanasi said.

Still, several environmental groups were happy with the PRC’s moves yesterday as possible steps toward closing one of the state’s largest emitters of CO2.

“We applaud the Public Regulation Commission for approving the abandonment plan for the San Juan Coal Plant, which includes funding to support workforce training and economic relief for workers,” Ben Shelton, political and legislative director at Conservation Voters New Mexico, said in a statement.

According to a filing in the case, $361 million of energy transition bonds could include some $283 million for PNM’s undepreciated investments. Other money may be associated with items such as job training and severance for plant and coal mine workers, decommissioning and reclamation, and transactional costs.

Maria Nájera, government affairs director at Western Resource Advocates, said in a statement that the commission’s decision will support healthier communities and ensure New Mexico does its part to address the climate crisis.

“With the expected closure of the San Juan Generating Station in 2022, the approval of PNM’s plan to abandon the plant using the financial tools of the Energy Transition Act will lead to lower utility bills, more affordable clean energy generation, and critical economic investments in the Four Corners,” she said, referring to the region where the plant is located.

Steve Michel, deputy director of Western Resource Advocates’ Clean Energy Program, told E&E News his organization intends to be involved in defending the commission’s decision as well as the statute.

A proposal for replacement resources for San Juan remains pending at the PRC. The PNM utility has a nearly 500-MW stake in the remaining coal-fired generation at the plant.

Carbon capture?

The San Juan station used to have four working coal-fired units. Two of them were taken offline at the end of 2017. The plant’s remaining coal units have a combined 847-MW capacity. PNM, which operates the plant, has proposed ceasing generation at the facility in mid-2022 when a coal contract expires.

But Enchant Energy continues to push ahead on a plan to give San Juan a new chapter. It and the city of Farmington, N.M., previously announced a memorandum of understanding tied to the project with firms such as Mitsubishi Heavy Industries America Inc. and Sargent & Lundy LLC (Energywire, Aug. 19, 2019).

“Both from Farmington and Enchant’s perspective, we applaud the PRC’s decision and we are pleased that this means that PNM and the other participant owners can now move forward with transferring the assets to Farmington,” Peter Mandelstam, Enchant’s chief operating officer, told E&E News. That means Enchant, which plans to take a majority stake in the San Juan generation assets, can continue to push ahead on its carbon-capture plan.

In the past, Enchant has said there could be two coal-fired units at San Juan running and a system that removes 90% of the CO2 from the power plant flue gas. The possible carbon-capture price tag: $1.3 billion. The project could be helped by the federal 45Q tax credit program.

Mandelstam said yesterday that an engineering, procurement and construction contract could be done by the end of the year.

He said Enchant plans to keep San Juan running as a merchant plant as of July 1, 2022. The plant could be closed during parts of the following year, Mandelstam said, because of an Energy Transition Act requirement and as carbon capture is installed. But he suggested some of the carbon capture could be operating in summer 2023. Farmington also could be part of the carbon-capture project.

There still are questions about where the power might go once PNM exits San Juan, as well as how potential liability and transmission issues might be resolved. And there is uncertainty about how carbon capture might fare in a world with low oil prices. Mandelstam said the project is looking at sequestration as well as enhanced oil recovery (EOR).

“When you’ve got people who’ve been in the energy business for decades spending their own money during the corona crisis you got to believe that we’re strongly convinced that this project is going to be built and successful,” he said.

Sandoval of PNM Resources said the company is willing to work with Farmington and Enchant even as it sees significant challenges to keeping the plant open.

“We will in good faith continue to negotiate as long as we’re brought offers that meet the legal liability requirements of the ownership agreement,” he said.

Michel with Western Resource Advocates suggested carbon capture may be a “heavy lift” at the San Juan site. He said demonstrating carbon capture and sequestration could be important for the world in the future, though the economics can be daunting.

That’s different than using CO2 to help produce another fossil fuel.

“Simply using it for EOR just basically plows it into the very thing we’re trying to alleviate,” Michel said.

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