Today, PNM Resources, owner of Public Service New Mexico announced that it plans to transfer its 13% stake in the Four Corners Coal-Fired power plant to Navaho Transitional Energy Company (NTEC) in 2024. In addition, the company will give the Navaho Nation $16 million in economic aid through a regulatory statute outlined in the 2019 Energy Transition Act.
PNM said that the transfer of the power plant will lead to $100M in customer savings.
Shareholders, not customers, will pay $75M in coal contract obligations resulting from PNM exiting the plant seven years ahead of schedule. Shareholders will also forgo collecting any profit from the deal. PNM currently has a 13% ownership stake in the 1,540-MW power plant (specifically it owns part of units 4 and 5). These 200 MW comprise less than 10 percent of PNM’s total energy portfolio and reflect the last of PNM’s remaining coal- fired generation capacity.
Originally, the company was set to exit the plant upon its retirement in 2031 but this deal announced today means that it will no longer hold any coal assets by the end of 2024. PNM will retain transmission rights for the power plant and will still be obligated for the plant decommissioning in 2031, an estimated $23M liability.
Once the transfer to NTEC is complete, PNM will have no further obligations to maintain Four Corners Power Plant, even in the case of a carbon tax or other unforeseen regulations that could increase the cost the operate the plant. NTEC will own 20% of the plant alongside other owners Arizona Public Service, Salt River Project, Southern California Edison, Tuscon Electric Power and the Electric Company of El Paso, Texas.
PNM plans to replace the energy from the plant with a mix of low-cost renewables, energy efficiency, demand response and energy storage.
“Our accelerated exit means significant savings on PNM customer bills, and timely financial support for the Navajo Nation while it continues to navigate its transition to a renewable energy economy. As we manage the challenges of today and focus on solutions for the clean energy future, we continue to do what’s right for our customers, communities and our tribal neighbors.” said Pat Vincent-Collawn, PNM Resources chairman, president and CEO in a statement.
“As a representative from chapter communities that are directly impacted by the operations of Four Corners Power Plant, we understand its significance. The plant operations have provided many benefits to the local community including being a neighboring contributor and partner, providing revenue annually to the Navajo Nation, and most importantly, providing skilled jobs and long-standing careers to Navajo people. It is understood there is a move for transition in the industry, but we must do it in a thorough and timely way where there is consideration of realistic opportunities that minimize any negative impact to the skilled Navajo workforce and local Navajo communities,” said Rickie Nez, Navajo Nation Council Delegate representing T’iistoh Sikaad, Nenahnezad, Upper Fruitland, Tse’ Daa’ Kaan, Newcomb and San Juan Chapter communities.
Karl Cates, Executive Director of the Institute for Energy Economics and Financial Analysis was interviewed for an article in the Albuquerque Journal and said that the Navaho Nation is prioritizing a short-term windfall over the longer-term implications of owning an uneconomical coal-fired power plant when other coal plants are shutting down. He said that in the long run, the plant could end up costing the Navaho Nation quite a bit more.