New Mexico Commission Finds PNM Acted Unreasonably in Extending its Ownership of the Four Corners Coal Plant Past 2016

January 3, 2024: The New Mexico Public Regulation Commission issued an Order finding that the State’s largest electric utility, Public Service Company of New Mexico (PNM), acted imprudently when it continued its ownership of the Four Corners coal plant past 2016. The order relied heavily on Sierra Club’s expert testimony. Going forward, this Order sends a strong signal to PNM that future investments in the Four Corners coal plant will be closely scrutinized.

The prior contract to supply coal to Four Corners expired in 2016, and thus PNM and other owners of Four Corners faced a decision about whether to renew the coal contract and other agreements necessary to operate the plant past 2016. While some utilities decided to walk away from the Four Corners plant, PNM and other utilities renewed the coal contract through 2031 and extended the operating agreement through 2041.

When PNM filed its most recent rate case in late 2022, the utility sought to recover nearly $300 million in Four Corners costs from customers. Sierra Club argued that PNM should not be allowed to recover that full amount, because those costs resulted from PNM’s imprudent decision to extend its participation in Four Corners after 2016. Sierra Club’s in-house technical expert, Dr. Jeremy Fisher, testified that prior to deciding to continue owning Four Corners past 2016, PNM failed to conduct a robust analysis of the economics of continuing to own Four Corners versus exiting the plant. Dr. Fisher showed that a proper, contemporaneous analysis would have demonstrated that the cheapest option was for PNM to exit Four Corners.

The Commission relied extensively on Sierra Club’s expert testimony to support both the conclusion that PNM acted imprudently and in selecting the remedy for PNM’s imprudence. While several parties proposed remedies, the Commission adopted the remedy recommended by Sierra Club’s witness Dr. Fisher.

This case is part of Sierra Club’s efforts over several decades to reduce the air, water, and waste pollution from the Four Corners coal plant and to ultimately ensure that the plant is retired and replaced with clean energy. Sierra Club was represented in this case by in-house counsel Matthew Gerhart. Litigation Assistant Emma Szymanski worked on the case and Dr. Jeremy Fisher provided expert testimony.