January 24, 2022

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New Mexico Supreme Court decision-upholds Energy Transition Act

FARMINGTON — The New Mexico Supreme Court on Monday rejected arguments made by the groups Citizens for Fair Rates and the Environment and New Energy Economy Inc. against parts of a controversial state law passed in 2019. 

The Energy Transition Act (ETA) is an environmental law that includes a timeline for utilities to replace the energy provided by coal-fired plants with greener sources of power.

The New Mexico Supreme Court decision allows for the issuance of $361 million in bonds by the Public Service Company of New Mexico (PNM) that will cover the costs of abandoning the coal-fired San Juan Generating Station and may send long-anticipated job training and other funds to communities in the Four Corners.

PNM’s customers would have to repay the bonds through a surcharge on their utility bills.

PNM said Monday the court concluded that the Legislature acted within its authority and the court “affirmed that PNM’s plan to abandon and securitize its transition out of the San Juan coal plant is consistent with the Energy Transition Act.”

More:San Juan County seeking $4.1 million in capital outlay funds for three projects

These pulverizers once crushed coal for unit 3 at the San Juan Generating Station. They have since been shut down along with the unit.

“We are pleased this decision once again confirms the legality of the Energy Transition Act (ETA), allowing PNM to continue its progress in a just transition towards a clean energy future,” the utility’s statement said on Monday. “We are also encouraged with today’s decision by the New Mexico Supreme Court rejecting claims from New Energy Economy intended to thwart PNM’s plans to implement the ETA.”

As for the issuance of bonds, PNM spokesman Raymond Sandoval said Monday the utility is still studying the issue.

“PNM is studying the court’s decision to evaluate next steps that PNM may take in potentially pre-funding portions of state agency funds authorized by the ETA for economic development and communities in the San Juan area,” he said via email. “PNM will also consider possible funding (of) the severance and job trainings for Westmoreland employees at the San Juan mine, many of whom have been laid off this past year.”

The utility, Sandoval said, was also studying whether PNM could face any further legal challenges.

An employee watches screens inside the control room to ensure operations run smoothly at the San Juan Generating Station in this Sept. 25, 2019 file photo.

Court spells out its decision

“The state Supreme Court today rejected constitutional challenges to the Energy Transition Act (ETA), which requires electric utilities to move to carbon-free power generation,” said a news release from the state’s Administrative Office of the Courts.

The court’s unanimous opinion upheld a financing order issued in April 2020 by the Public Regulation Commission regarding PNM’s abandonment of the San Juan Generating Station. It did not address two of the issues raised in the case, which the court found were based on actions the PRC might take in the future and “are not properly before the Court and are not essential to our disposition of this appeal.”

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