Alibi V.25 No.16 • April 21-27, 2016 

Environment

Coal Habits Die Hard

Ratepayers should be nuclear over PNM proposal

PNM
Illo by Brie Macquarrie

“When you're in the dark and you want to see/You need, e-electricity, e-electricity/Flip that switch and what do you get?/You get, e-electricity, e-electricity/Every room can now be lit/With just, e-electricity, e-electricity./Where do you think it all comes from/This powerful e-electricity, e-electricity?/Through high wires to here it comes/They're bringing, e-electricity, e-electricity.” Remember when you were first learning about electricity with the musical gang in “Schoolhouse Rock?” It was fun! But now that you're an adult and are being schooled in the subject of utility bills, it's not so fun. The only thing worse that paying your utility bill is seeing the amount you owe go up permanently due to a rate hike.

Public Service Company of New Mexico (PNM) is proposing a 15.8 percent rate hike, the first requested hike since 2010, and many ratepayers and environmental groups are up in arms over the proposed change for two reasons. First, the changes to PNM's energy portfolio will include more nuclear energy and continue New Mexico's reliance on coal. Second, the rate hike is looking to be a continuation of a nationwide trend of utility companies increasing their profits by spending more money. Though it is shutting down two of the four units at San Juan Generating Station to meet new federal haze standards and adding pollution controls to the remaining units, PNM plans to make up for the loss by taking an extra 132 megawatts of energy from the remaining units and purchasing the majority of the rest of its power from Palo Verde Nuclear Generating Station in Arizona. In addition, to the obvious climate, environmental and health concerns, PNM’s choice of more coal and nuclear energy doesn’t give enough opportunity for real growth in the renewables sector.

Earlier this year, PNM committed ratepayers to a $580M coal contract with Westmoreland Coal Co. for the next 15 years. The coal contract is a “take-or-pay” contract, meaning if PNM takes the coal it has to pay for it, but if PNM doesn’t take the coal (because ratepayers in conjunction with environmental organizations manage to force it to stop burning this environmentally unfriendly and expensive fuel), it still has to pay. And according to PNM, the coal price in the contract may rise up to 40 percent within the first year.

As for the nuclear energy, PNM has been buying it from Palo Verde since the massive plant was commissioned 30 years ago, but has plans to increase the nuclear portion of its energy portfolio from 22 percent in 2014 to 33 percent by 2018. According to the Energy Options FAQ page of PNM's website, this increase will result from the purchase of an extra 134 MW from the nuclear plant. This bump in nuclear power will be coupled with an extra 177MW from natural gas and 40MW more from renewable energy sources to make up for the 16 percent decrease in coal-based electricity. It’s a terrible deal for New Mexico ratepayers, our environment and our economy. We will continue to pay fuel costs when it would be possible to make a more significant increase in solar and wind.

PNM’s claim that Palo Verde is a “cost-effective, emission-free energy resource” that is in the “best interest of customers” is not necessarily true. PNM is gambling with the risk of unanticipated technical complications, as well as costs that may be incurred from future regulations. The more serious manipulation, however, lies in the claims that nuclear energy is emission-free or carbon-neutral. True, nuclear power plants themselves do not emit carbon or other greenhouse gases, but their carbon footprint is not insignificant when assessed on the basis of their complete nuclear fuel life cycle. Substantial amounts of fossil fuels are used indirectly in mining, milling, uranium fuel enrichment, plant and waste storage construction, decommissioning and, ultimately, transportation and millennia-long storage of waste. According to a publication on life cycle emissions analysis from the Nuclear Energy Institute, “Numerous studies demonstrate that nuclear energy’s life-cycle emissions are comparable to renewable forms of electricity generation, such as wind and hydropower, and are far less than those of coal- or natural gas-fired power plants,” but these statements still overlook the obvious problems of fuel toxicity, operational hazards and long term storage.

The Palo Verde energy acquisition comes with a hefty price tag and toxic waste, and the investment will not create a single job in N.M. So why did PNM really sign ratepayers up for a nuclear mortgage? Perhaps it’s because PNM already owns 10.2 percent of Palo Verde. Or perhaps it’s for shareholder profit. People must not forget that PNM is a business, and the point of a business is to make money. According to the Wall Street Journal, there is a national trend of utility companies turning “corporate accounting on its head” by taking advantage of the 10 percent profit cap that regulation commissions impose. Basically, since PNM's profit is based on a percentage of their income, if they spend more on things like new technology and renovation and thereby make customers pay more to cover those expenses, that broadens the total income from which they take their profit. So while the percentage stays the same, the dollar amount increases, like taking 10 percent of $50 rather than 10 percent of $20. The more money PNM spends, the more money it makes. One would hope that PNM would feel some sort of duty to its customers to not enforce exorbitant rate hikes on such a basic necessity as electricity, particularly for residential ratepayers in a state as poor as New Mexico. Despite the Public Regulation Commission regulating the monopoly to make sure it isn't being careless or making “bottom-line” decisions, the lack of competition makes things like this rate hike proposal particularly questionable.

While PNM is investing in solar and wind, which are more sustainable and less toxic than coal and nuclear, it has a long way to go in growing that sector of its energy portfolio. According to the Albuquerque Convention and Visitor’s Bureau, New Mexico has 310 days of sunshine; so even though work needs to be done on improving the technology for storing and modulating the flow of electricity produced by wind and solar to get rid of surges and dry spells, it is clearly a worthwhile project in such a sunny clime. In addition, it would go a long way toward improving our environment, creating sustainable energy resources, and creating jobs right here in New Mexico.

Rather than following popular accounting schemes and sticking with current technology, PNM should become a leader for the industry as a whole, blazing new trails in solar and wind power. While it may be too late to stop PNM from signing its new coal contract, it is not too late to let the PRC and PNM hear your sentiments on the matter. Show up to protest the annual shareholders meeting on May 17; call the PRC to ask them to deny the rate hike; tell PNM to decrease its coal use and invest in the future of renewable energy. This is your energy, your money, your environment, your future.

The Annual Shareholders Meeting is now being held in Texas but the protest is still happening on May 17 at 8:30am at PNM Headquarters (414 Silver SW).