What does New Mexico want from an electric power company?
The debate over PNM’s proposed long-term plan is raising questions that go beyond the plan itself, if New Mexicans are willing to engage in that discussion. Though most of the state is served by electric co-ops, PNM’s economic and environmental influence reaches well beyond its service boundaries.
The Public Regulation Commission must make a decision with far-reaching consequences. Environmental concerns – including the health of New Mexico children – appear to clash with economic objectives, which also affect New Mexico citizens.
But maybe clash of objectives is not real. The argument may be broader.
Three PRC commissioners recently spent more than two hours at a session devoted entirely to public comment about the PNM plan.
Under the plan, two of the coal-fired units at the San Juan Generating Station will be shut down. The controversy is over what replaces the power from those units. Will it be a mix of coal, nuclear, renewable and natural gas – a plan already agreed to by federal and other state regulators — or, as some New Mexicans demand, will it be changed to scrap the coal and nuclear and rely much more on solar and wind?
Supporters regard the plan as the best way to achieve reliable electic power, which is one basic responsibility of an electric utility. As we hear in every argument about solar power, the sun does not shine all the time.
Supporters also claim this plan is the most cost-effective and will keep rates lower than other alternatives. Centrally generated solar requires big capital investments, which would raise rates. Affordable power is better for New Mexico’s small businesses and low-income residents. Not surprisingly, a number of pro-business organizations were there to make that point.
And yet, in a state that boasts 300 days a year of sunshine, how can we justify not taking much more advantage of our solar capacity? Movie companies come to New Mexico in part because they can rely on the sunny weather. So do retirees. Yet we rank in solar production below cold, cloudy countries like the United Kingdom and Germany.
Several commenters asked whether the cost-effectiveness of the proposed plan is genuine or whether the numbers work because inconvenient truths are left out.
For example, who should pay for the effects of burning coal, even coal improved by scrubbing, on the health of residents of northwest New Mexico? This kind of argument is often raised but not often clearly resolved in discussions about environmental impacts.
Another issue is nuclear power from the Palo Verde power plant in Arizona. Commenters said this ageing plant will soon be required to be shut down, and if PNM is buying power from Palo Verde, PNM ratepowers will have to absorb some of that cost.
And some commenters talked about the very core of the investor-owned utility model.
Investor-owned public utilities like PNM are based on a trade-off. The public benefits from the efficiencies of a monopoly source for a commodity that everybody uses. The investors who provide the capital deserve a reasonable return. There is an inherent tension between profit and the public interest, and that’s why the utility is regulated.
Some commenters asked whether the investor-ownership model is outdated. Today, homeowners can generate power on their rooftops, and small wind generators can be shared by a neighborhood, bypassing the utility and reducing both its profit and the demand for power. The commenters argued that PNM is resisting new opportunities like decentralized solar to control the market and keep profits up.
Twenty-first-century realities demand that when issues of this magnitude are under consideration, all relevant factors have to be taken into account, including costs that utilities traditionally were not responsible for. This is a conversation worth having.
Triple Spaced Again, © New Mexico News Services 2015