Dive Brief:

• A hearing examiner has determined Public Service Co. of New Mexico’s (PNM) proposal to replace generation from the coal-fired San Juan facility with a mix of nuclear, gas and more coal, is not in the public's best interest. The examiner was assigned by the state's Public Regulation Commission (PRC) to review the case and recommended rejection of most of it, the Albuquerque Journal reports.
• Support for PNM's proposal has been losing steam, with several groups withdrawing from a previous agrement to scale down the plant's generation after a related power deal was canceled, potentially raising costs. Last week, the Albuquerque City Council voted to withdraw support for the plan, citing fuel costs and concerns about the economic analysis backing the proposal
• PNM told the Journal that is it reviewing recommendations on the plan, and is "extremely disappointed" to hear of the examiner's position. 

Dive Insight:

Support is quickly eroding for PNM's proposal to replace generation from the aging coal-fired San Juan facility. The utility has proposed shuttering two units and adding nuclear and gas, along with boosting generation from another coal unit at San Juan. But critics, worried that cancelation of a related deal could mean even more coal in the mix, have been backing away from the arrangement.

The Albuquerque City Council has withdrawn its support, and in January the Renewable Energy Industries Association and New Mexico Independent Power Producers backed out of the settlement. The City of Santa Fe also opposes the deal.

Now this week, a hearing examiner at the New Mexico Public Regulation Commission has found the deal is not in the interest of ratepayers, The Albuquerque Journal reports. 

The newspaper reported that while the hearing examiner recommended PNM shutter two of the four coal-fired units, he balked at an additional request to pick up 132 MW more of coal generation. The absence of a formal agreement among the San Juan plant's owners made the deal difficult to accept. 

According to New Energy Economy, an advocacy group that opposes the deal, only three of the original six parties to the PNM agreement are still backing it, while the city of Santa Fe, Santa Fe County and Bernalillo County, and now Albuquerque, have all opposed the deal.

The agreement "is proving to be unviable," Mariel Nanasi, executive director of New Energy Economy, said in a statement. “PNM is not above the law, they have an obligation to New Mexico to provide cost-effective energy options that don’t burden ratepayers. There is growing momentum against PNM’s plan and it's very exciting.”

PNM says it is in the process of reviewing the recommendation. Utility spokesperson Pahl Shipley told the Journal in an email that the company is "extremely disappointed in the hearing examiner’s recommendation."

“Our primary concern is to balance reliability and affordability for our customers, and his decision does not appear to support either priority,” he wrote.