After decades and decades of commitment to coal, New Mexico is rapidly heading toward a future that’s coal free.
But a commitment to transition away from coal is just one part of the story; equally important is a commitment to where that transition will lead. What’s more, how this transition plays out—like who has access, and what happens to the communities and industries otherwise left behind—can have ramifications that last long into the future.
Now, legislators in the state are wrestling with one policy tool for transitioning to a truly clean and low-carbon future, and are considering several more that could help speed the journey along.
Legislation that asks not whether, but how
New Mexico’s lawmakers are in the midst of racing their way through this year’s 30-day legislative session, doing their best to deploy limited hours against a towering to-do list.
During these short sessions, which alternate years with regular 60-day sessions, lawmakers tend to prioritize budgetary issues above all else. But as a testament to the growing recognition of just how economically pivotal the state’s energy transition is, this year legislators are also devoting serious hours to SB 47/HB 80, or the Energy Redevelopment Bond Act.
Legislators have the opportunity to deploy policies that will help propel the state to a better, cleaner future.
This bill is a historic piece of legislation, and has the potential to catalyze the clean energy transition that New Mexico’s economy so desperately needs, and that New Mexicans so fully deserve. Achieving that potential, though, is key, and it turns on the central issue flagged above—a commitment away from something just isn’t enough; there must also be a commitment to what comes next.
At its core, SB 47/HB 80 is about enabling the state’s largest power provider—PNM—to issue securitized bonds to recover costs from the early retirement of San Juan Generating Station. Because the terms of such bonds result in much lower interest rates, customers can actually save money by paying PNM to, effectively, move on from coal.
But the bulk of the debate surrounding the bill is not about the proven securitization tool itself. Instead, it has to do with everything that could—and should—happen as a result.
Securitization presents an incredible opportunity to intentionally shape the state’s energy future, and squandering that opportunity (or worse, using it to point the state down a bad path) is too serious to let slide. That’s why stakeholders have been so deeply engaged in trying to make the initial proposal much stronger, including:
- Securing meaningful support to ensure Farmington and San Juan County are provided a viable opportunity to diversify, develop, and ultimately transition their economy away from the dwindling coal sector.
- Committing PNM to a future energy mix that would supply customers with 40 percent renewable energy by 2025 and 50 percent renewable energy by 2030—strong and critical waypoints that would keep the utility moving toward an ever-cleaner (and more cost-effective) energy future.
- Requiring more market competition for the renewable energy resources that replace coal.
- Ensuring that the Public Regulation Commission (PRC) has full authority to review PNM’s proposed closure costs.
Stakeholder negotiations to develop a consensus bill have improved the text from its original form, but it’s still not yet where it needs to be to warrant passage. A few central issues that demand prudent resolution include:
- Making sure that a coal plant retired under this legislation cannot reopen again as a coal plant further down the road.
- Limiting the amount of new resources PNM is guaranteed to own, as more market competition can drive down prices for ratepayers and create more development opportunities for the state’s growing clean energy industry.
- Ensuring the PRC is sufficiently empowered to do its job as regulator, including by being able to adequately vet any securitization proposals that cross its desk.
- Making sure the bill works for the communities it’s directly affecting by ensuring all stakeholders have a say.
The negotiating process for this bill has been a winding one, with stakeholders on both sides being brought together to try to come to a workable, consensus agreement. And in a sign that there’s still hope that a sufficiently improved bill will emerge this session, the legislation was tabled—not killed—in a vote by the Senate Conservation Committee last week. If designed well, the tool has incredible potential. We’re looking for legislation that ensures all that potential is met.
But transitions take a lot more than one bill, and a lot more than just bills
The remaking of New Mexico’s power sector cannot hope to be resolved in a single bill. There are many, many policies and regulations that can be brought to bear to best facilitate and accelerate New Mexico’s transition to a vibrant clean energy economy—one that’s open to participation and innovation from people all across the state.
Just this session alone there are multiple additional energy bills under consideration that could help pull the state forward, including:
- A proposal to reinstate the solar tax credit: Especially in light of the Trump Administration’s recent enactment of solar import tariffs, the state can play a critical role in supporting its nascent-but-growing solar industry by making sure solar stays affordable—and available—for all New Mexicans as the costs of solar continue to fall.
- A proposal to re-fund the Renewable Energy Transmission Authority (RETA): Cost-effectively shifting to a high-renewables future means taking advantage of all the state’s incredible renewable resource potential, which will require the buildout of new transmission lines to ensure the best opportunities can be brought to market. Refunding RETA would allow for the development of a strategic and centralized transmission planning approach.
And then, of course, there are all the many and varied ways that progress is being facilitated outside the legislature, from local community commitments to go green, all the way up to the PRC investigating the feasibility of PNM joining a broader energy market and considering the development of a Clean Energy Standard, and so much else in between.
New Mexico’s transition away from coal should lead directly to a clean energy future—the least-cost, healthiest, and most economically favorable future for the state. This transition must be open to all, and supportive of those who could otherwise get left behind.
State legislators have the chance now to make a leap toward this vibrant clean energy future—they should do everything they can to make the best of it.