Source: Institute for Energy Economics and Financial Analysis
New Mexico’s largest electric utility on Monday submitted to state regulators its plan for shutting down the coal-fired San Juan Generating Station, replacing the lost power and pricing the cost to customers.
The filing with the Public Regulation Commission comes as a new state law dictates more aggressive renewable energy requirements while allowing Public Service Co. of New Mexico to recoup from customers some of the expenses.
The application for abandonment of the plant and the building of replacement power includes the utility’s preferred option, which it describes as the most cost-effective plan, as well as three alternatives. The costs range from nearly $4.7 billion to more than $5.4 billion, but utility executives say residential customers would end up saving about $7 a month in the first year after the plant closes under its preferred proposal. They couldn’t say what, if any, savings customers would see after that given fluctuations in the costs related to producing electricity.
The preferred option includes a mix of natural gas-fired power plants, solar and wind farms and new battery storage facilities.
Under the state’s new landmark energy law, investor-owned utilities and rural electric cooperatives are required to get at least half of their electricity from renewable sources by 2030. That would jump to 80% by 2040. A 100% carbon-free mandate would kick in five years later for utilities. Electric co-ops would have until 2050 to meet that goal.
As part of the energy transition law, Public Service Co. of New Mexico and other owners of San Juan can recover investments in the coal-fired plant by selling bonds that are later paid off by utility customers. The law also calls for setting aside millions of dollars in job training funds to ease the economic effects of shuttering the plant and the adjacent coal mine.