New Mexico regulators will wait to decide on 350 MW of solar resources planned as a partial replacement for the output of the 847-MW San Juan Generating Station.

Public Service Company of New Mexico will cease operations at the coal-fired plant on June 30, 2022. The utility filed for abandonment, financing and replacement resources for San Juan in July, but legal battles over the state's 2019 Energy Transition Act delayed conclusive action from the New Mexico Public Regulation Commission until April 1, when the commission approved abandonment and financing orders prepared by hearing examiners Anthony Medeiros and Ashley Schannauer (see CEM No. 1584).

The commission must decide on replacement resources for the output of San Juan by Sept. 30, according to terms in the ETA, but Medeiros and Schannauer recommend approval of the Jicarilla and Arroyo solar projects before an April 30 deadline imposed by the projects' developers [19-00195-UT]. The solar project proposals will take advantage of federal tax credits that will be reduced if construction does not begin this year, which would add costs to the projects.

At an April 22 meeting held via web conference, NMPRC member Stephen Fischmann suggested PNM reopen bidding on replacement resources in light of new developments since its original request for proposals. Fischmann at the meeting called the first RFP process "very manipulative" for prioritizing utility-owned options, and said reopening bidding would give other projects an opportunity to bid on an equal playing field.

PNM issued its initial RFP in October 2017 and concluded it in early 2019. The timing was dictated by a modified stipulation approved by the NMPRC in late 2015 that required the utility to issue an RFP for alternatives to San Juan as soon as practicable after filing its 2017 integrated resource plan [13-00390-UT].

PNM evaluated 390 bid options before settling on the Jicarilla and Arroyo solar projects, spokesman Ray Sandoval said in an email, adding that the utility put forth multiple scenarios to give the commission various options to balance the interests of all stakeholders.

San Juan provides the major tax base for funding of the Central Consolidated School District, and commissioners have placed a high priority on siting replacement resources there. PNM recently offered an additional replacement-resource scenario that considers a possible carbon-capture retrofit at San Juan by Enchant Energy (see CEM No. 1585). That alternative would site 497 MW of replacement power within the county, but could lead to an average monthly bill increase of up to $10.37, according to the utility. The original RFP predated the carbon-capture prospect.

"While the Energy Transition Act identifies additional items to consider, in our opinion, it does not remove PNM's obligation to provide low-cost and reliable resources to serve PNM customers," Sandoval said. He confirmed in a phone call that no other proposed resource options, including a 130-MW battery, are subject to the April 30 deadline and that siting of replacement resources other than the two solar projects has not yet been decided.

According to the recommended decision of Medeiros and Schannauer, PNM says if it were required to reopen the bidding process, it would not have time to bring replacement power on line when it ceases involvement in San Juan. The commission will vote on the Jicarilla and Arroyo projects at its April 29 meeting.

Also at the meeting, the commission briefly discussed its impending eviction from the state-owned Public Employees Retirement Association building. The state's General Services Department unexpectedly informed the commission in March that it must vacate the building by June 30. The offices are apparently being requisitioned for the state's new Early Childhood Education and Care Department. Commissioners at the meeting wondered aloud about options for a new location, which might include renting space from local newspaper the Santa Fe New Mexican. Commissioners also expressed frustration that the COVID-19 pandemic has further complicated the schedule of the unexpected move.