July 18, 2011
PNM Expects to Meet Growing Electric Demand With New Natural Gas Plants, Increased Energy Efficiency and More Renewable Energy
Albuquerque: After a year-long public input process, PNM today said it expects to meet growing electric demand in the next 20 years with a combination of new natural gas-fired plants, increased energy efficiency and more renewable energy -- and without the addition of any large, new baseload power plants.
New Mexico law requires PNM to file an integrated resource plan every three years that identifies the most cost-effective resource portfolio to meet regulatory requirements and energy needs for the next 20 years.
In the plan filed today with the N.M. Public Regulation Commission, available online, the company said adding more natural gas-fired plants to its existing power resources and increasing its energy efficiency and load management efforts are the most cost effective ways to meet customers’ growing electricity needs. The company also expects to add new renewable resources, up to a state cost limit, to help it meet state requirements, even though renewable energy under most scenarios modeled by the company is not a low-cost resource.
The company expects that of the 1,153 megawatts of new resources it will need to serve customers by 2030, 611 megawatts, or 53 percent, will come from new natural gas-fired power plants; 152 megawatts, or 13 percent, will come from energy efficiency and load management programs; and 390 megawatts, or 34 percent, will come from new renewable energy resources.
The report is based on discussion with and feedback from a diverse group of stakeholders that met regularly since last summer as well as modeling by PNM that produced a variety of different possible energy portfolios based on 300 sets of variables, including a range of fuel prices, the potential costs of carbon and other environmental regulation and different scenarios for rising electric demand. The meetings of the public working group were facilitated by the well-respected New Mexico First public policy organization.
“While this is a long-term road map from our current vantage, these resource additions are subject to change based on legal and regulatory developments, the emergence of new technologies, and long-term trends in energy consumption, among other factors,” Bothwell said.
The plan’s most cost-effective portfolio of energy resources would include most of PNM’s existing generation fleet, even given uncertainty over the cost of environmental compliance, as well as the following likely additions:
“While electric use by PNM customers is expected to continue to grow, we are in the fortunate position of not needing large, new baseload resources any time in the foreseeable future,” said Cindy Bothwell, PNM director of Resource Planning. Baseload resources run continuously and are designed to meet the majority of customers’ electricity needs.
“Many of the planned resources are relatively small,” the report states. “Adding capacity in smaller increments allows PNM to meeting growing demand … while avoiding lengthy periods of excess generation ahead of demand growth.”
The plan will be reviewed by the PRC and is considered approved if no action is taken within 45 days.
Year-Long Public Input Process Helped Develop Plan
The public working group whose meetings and discussions formed the basis of the report included individuals representing themselves, government entities, industry, advocacy organizations and resource developers.
“We owe the members of the public working group a debt of gratitude for the many hours they spent on this process,” Bothwell said. “Overall, I think the process helped increase understanding of the resource options available and the trade-offs associated with any particular kind of resource.”
Public working group participants were offered the opportunity to include in this release a comment about the year-long process as well as the final report. All comments submitted are below, are the participant’s own views, and have not been edited.
David E. Thompson, PhD
The IRP process, from my standpoint as an engineer and a citizen, was well-run and open. The PNM experts and staff were candid and worked to hear and respond to the citizen members of the IRP. Unfortunately, I think the basic premise of the IRP was flawed because of the external political constraints imposed on PNM. Let me explain.
I feel that the imposition of the Renewable Portfolio Standards (RPS) established by the Public Regulatory Commission (PRC) have forced PNM to select much more expensive renewable energy resources. The additional expense of renewable energy systems is inappropriate because (1) these technologies are not yet mature, and (2) cannot compete without subsidies paid for by your tax dollars and without special mandates like the RPS forcing their adoption. Having to choose more expensive energy alternatives onto the citizens of New Mexico is particularly offensive in this period of severe economic distress, and it adds to the cost of doing business here.
The disparity in the views of the IRP group quickly became apparent as the various scenarios for adding new energy resources to meet demand were developed. To evaluate different scenarios for adding new power capacity to meet demand, assumed environmental penalties of around one billion dollars were applied to the lower cost energy options (coal, nuclear, natural gas). Thus, the cheapest scenarios with the most mature technologies were essentially unable to compete because of these environmental penalties. In fact, they were rejected out of hand because they didn’t meet the RPS mandates imposed by the PRC.
After months of studying the various options as an IRP participant, I would recommend the repeal of the Renewable Portfolio Standards. PNM could then restructure its portfolio to deliver the best and cheapest energy to New Mexico possible. As renewable energy systems mature, they will become natural additions to the energy systems at rational costs, efficiencies, and with improvements to our environment. Call your State legislators and let them know how you feel.
Participating in PNM's IRP for 2011, the company's second and my first time with this working group, provided an opportunity to learn and interact with the process that provides and plans for the electrical power service to my house. In my view PNM established a well-organized, consistent approach with fine staff support and effective facilitation by New Mexico First. The working group got a crash course into the complex system and business that generates and delivers electricity. All that and engaging regularly with so many experts and concerned community members (like myself) was truly stimulating. Our inputs seemed well-received, but in the end we ran tight on time near the report deadline. Perhaps PNM can consider pacing the IRP working group differently, or consider calling a few interim meetings with interested members once or twice a year to help plan the next round in two years. I'd like to be part of IRP 2014.
PNM deserves accolades for the Integrated Resource Planning process. The material they put together for the working group was extremely valuable. The team handled the varied opinions and agendas very well. PNM did what they had to do to meet the rules put forth by the Public Regulatory Commission which mandated a public input process. If there is criticism, it goes to the PRC and the legislature for the regulations and requirements that created this report to say in 200+ pages what could have been said in three words: more expensive electricity. Ratepayers need to rise up in revolt and force legislators to repeal the Renewable Portfolio Standard before PNM spends billions of dollars—ultimately paid by the consumer—on intermittent and unreliable renewables and the duplicate gas-fueled power plants needed for back up. Once the money is spent, the rates cannot go down. This report makes the reality of higher utility bills undisputable. It’s all there in black and white.
With headquarters in Albuquerque, PNM is the largest electricity provider in New Mexico, serving 500,000 customers in dozens of communities across the state. PNM is a subsidiary of PNM Resources, an energy holding company also headquartered in Albuquerque. For more information, visit PNM.com.