California Energy Markets – Abigail Sawyer – May 1, 2020

The New Mexico Public Regulation Commission during a webcast meeting April 29 voted 3-2 to defer approval of Public Service Company of New Mexico’s least-cost solar projects proposed as part of the replacement resources for the utility’s coal-fired San Juan Generating Station.

The Jicarilla and Arroyo solar projects, which are still under consideration as part of the replacement mix for San Juan, would site a combined 350 MW of replacement solar resources and a combined 60 MW of battery storage in McKinley and Rio Arriba counties, including a 50-MW project on land belonging to the Jicarilla Apache tribe. Hearing examiners recommended approving the two projects before the bids expired April 30 [19-00195-UT]. The 847-MW San Juan plant is scheduled to close in June 2022.

The approved order states that the issues presented in the hearing examiners’ March 27 recommended decision are “best resolved as a whole in conjunction with the remaining issues not addressed” in that recommendation (see CEM No. 1584). The hearing examiners had recommended preserving the low-cost options presented by the Jicarilla and Arroyo bids separately before they expired April 30. The replacement resources will be considered in “a further recommended decision addressing the remaining issues in this matter,” the order states.

A date for the later recommendation has not yet been set, but Commissioner Valerie Espinoza at the meeting suggested it could come as soon as June. New Mexico’s 2019 Energy Transition Act establishes a Sept. 30 deadline for the commission to act on approving PNM’s requested replacement resources.

Cynthia Hall, who joined fellow commission member Stephen Fischmann in voting against the order to defer, said at the meeting that not only economic considerations but also potential supply chain issues related to the COVID-19 pandemic present a challenge to furthering the projects (see CEM No. 1587).

The Arroyo project developer, in response to a January request from the hearing examiners, agreed to a July 31 bid extension, but only in exchange for a $500,000 extension fee, the hearing examiners said in their March 27 recommended decision to approve the projects ahead of other resources. The Jicarilla developer agreed to extend its bid, but cautioned that “the further the date extends from the original April date in the contract, the more pressure it puts on the economics . . . due to delay.”

Hall, the only attorney on the commission, said she had been studying the ETA and was struck by the environmental and social justice aspects of the statute. “I think it’s very important that we acknowledge that,” she said before the vote.

Espinoza and NMPRC Chair Theresa Becenti-Aguilar discussed the importance of siting replacement resources in San Juan County, where the plant is located, in order to provide a tax base for funding the Central Consolidated School District, which educates a significant number of Navajo children.

“I think it’s important that we prioritize the school district and also the most environmentally sound choices,” Hall said at the meeting. An additional 500 MW of replacement resources are yet to be considered before the ETA’s Sept. 30 deadline.

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