Dive Brief:

• Regulators on Wednesday rejected Public Service Company of New Mexico's (PNM) plan to transfer its 13% share of the Four Corners coal plant to Navajo Transitional Energy Co. (NTEC), citing the utility's failure to identify or propose replacement resources for the 200 MW of power it owns.
• The decision by the New Mexico Public Regulation Commission (PRC) is "disconcerting," PNM said in a statement, as selling its share of the plant would have saved customers up to $300 million and helped the utility abandon coal generation almost seven years ahead of current plans.
• Environmental advocates cheered the decision, however. PNM's proposal could have left Four Corners operating "indefinitely," according to Sierra Club. And New Energy Economy (NEE) said the denial means PNM's investments in the plant will now face a prudence review. 

Dive Insight:

Denial of PNM's application to abandon its share of Four Corners followed a lengthy process and a closed-door meeting with stakeholders, and was done against the recommendation of the proceeding's hearing commissioner, the utility noted in a statement.

Ultimately, however, regulators balked at the lack of replacement resources. The utility warned that sets an uncertain precedent.

The decision "departed from previous cases in which abandonment was approved before considering replacement resources," PNM said in a statement. "Receiving an opposite conclusion after months of proceedings creates uncertainty about the regulatory environment in New Mexico."

“We are deeply disappointed," PNM Resources Chairman, President and CEO Pat Vincent-Collawn said.

"The commission’s actions aim to penalize the utility for complying with federal environmental standards while ignoring shareholders’ commitment to pay $75 million to relieve customers from coal obligations," Vincent-Collawn said.

Unable to find a buyer for its Four Corners share, PNM had agreed to pay NTEC $75 million to take PNM's share of the plant. Exiting coal generation in 2024, rather than 2031, would have eliminated 6.5 years of Four Corners coal plant costs, said PNM.

But transferring its share of the plant would have allowed PNM to escape a prudence review of its investments in Four Corners, said NEE Executive Director and President Mariel Nanasi.

"Abandonment was not going to close the plant and PNM’s sale to NTEC would have prolonged the burning of coal," Nanasi said in a statement. "Additionally, the commission required PNM to live up to its past obligations agreeing to a prudence review for its investments and life extension of Four Corners."

PNM "should have to demonstrate the prudence of its ownership and investments in the Four Corners plant, provide a real picture of what the plant replacement would be, and accurate modeling of the utility’s future in the plant," Camilla Feibelman, Sierra Club Rio Grande Chapter director, said in a statement.

PNM's most recent integrated resource plan charts a course to zero carbon emissions by 2040. In 2020, the PRC approved the utility's request to abandon the San Juan coal plant, financing the exit through securitization.