MISSION: Southwest Research and Information Center is a multi-cultural organization working to promote the health of people and communities, protect natural resources, ensure citizen participation, and secure environmental and social justice now and for future generations

What People Fought For and Didn't Get

By Jennifer Taylor

The electric power industry was one of the largest spenders on lobbying in Santa Fe, over $73,000 in just the first five weeks of the 1999 legislative session, according to a March 13, 1999, article in the Santa Fe New Mexican. Not surprising, considering this industry was the proponent of the energy deregulation proposal that has now been signed into law. A coalition of environmental and consumer groups sought legislation that would have prevented ratepayers from having to pay utilities' stranded costs, encouraged the development of renewable sources of energy and the reduction of air emissions from electricity-producing generators, and provided certain consumer protections; but the legislation that was approved fell far short of their hopes.

The deregulation legislative process is still in progress, however. The eventual outcome will determine the health of New Mexico's environment and of its citizens, electric rates, and the energy future of New Mexico for decades to come. And the outcome will depend on how much and what kind of impact people concerned about utility deregulation will have on the Public Regulatory Commission's decisions.

The electric power industry is the largest industrial source of air pollution, emitting 29 percent of smog-forming nitrogen oxide and 66 percent of soot-forming sulfur dioxide. In New Mexico, 89 percent of our electricity comes from coal-fired plants. People with asthma and respiratory disease are especially vulnerable to the effects of air pollution. According to the American Lung Association, more than 93,000 New Mexicans suffer from asthma, more than 34,000 of whom are children. The electric power industry is also the largest source of mercury, a dangerous toxin that has contaminated the fish in many New Mexico lakes and rivers, and carbon dioxide, a primary greenhouse gas that contributes to global warming.

The two coal-fired electricity-generating plants in the Four Comers area (where the state borders of New Mexico, Wyoming, Utah, and Colorado meet) are among the one hundred dirtiest in the nation. Since these grandfathered plants aren't required to meet current Clean Air standards, they are cheaper to run. In a competitive market there will be greater pressure and incentive to push these plants to maximum capacity, furthering reliance on nonrenewable energy and worsening air quality. If all of New Mexico's older power plants were required to meet current, new source emission standards, 55,777 tons of nitrogen oxides and 35,666 tons of sulfur dioxide would be eliminated each year - the equivalent of removing 2.8 million cars from the state's roadways.

The Coalition for Clean Affordable Energy (CCAE) was one of the main groups involved in the deregulation legislation debate this past year in New Mexico. CCAE comprises New Mexico Citizens for Clean Air and Water, New Mexico Conservation Voters Alliance, New Mexico Public Interest Research Group (NMPIRG), New Mexico Solar Energy Association, the Sierra Club, Southwest Research and Information Center, and the Land and Water Fund of the Rockies. The Coalition sought to include the following in the deregulation legislation:

• a requirement that power plants reduce air emissions.
• renewable-energy and energy efficiency programs.
• consumer protections such as customer choice, bill assistance, reasonable payment policies, emergency service programs and affordable rates.
• a provision to prevent any single power supplier from having an unfair advantage over other power suppliers
• a provision to prevent consumers from being burdened with payment for utilities' uneconomic investments, or stranded costs.

New Mexico needs to clean up its dirty power plants, and it is also the perfect place to make the transition from coal-fired power plants to cleaner, renewable sources of energy. Investment in renewable power and energy efficiency, like requirements for seatbelts and airbags in cars, protects public health; it represents a longterm vision of our energy future. The Pacific Northwest National Labs, a division of the U.S. Department of Energy, conservatively estimated New Mexico's wind potential for generating electricity at 48 billion-kilowatt hours per year — three times the total energy consumed in New Mexico each year. New Mexico also has abundant solar energy resources. Development of these two resources could supply thousands of new jobs and produce major revenue for the state's treasury. The legislation does not require energy generators to provide any specified amount of renewable energy, though it does set up a fund that can be spent towards limited renewable energy projects.

Another major concern is the effect of deregulation on consumer's rates. Minimal protections for consumers have been included in the law such as bill assistance and monopoly protections. However, there are no guarantees that residential or small business rates will go down under competition, as the utilities claim. During the transition to competition, consumers will be paying for the utilities' bad investments or "stranded costs." Fifty percent is guaranteed, but the exact amount is yet to be determined by the Public Regulatory Commission. Stranded costs for PNM alone are estimated around $300 million.

Fortunately, not everything is set in stone for deregulation in New Mexico. The process can still be influenced by citizen input to assure the greatest benefits for the environment and consumers. The first option is in a provision called the systems benefit fund. Starting in 2002, up to $4 million can be spent annually to encourage the use of renewable energy. The funds will be collected from New Mexico ratepayers' electric bills (as a Systems Benefit Charge, or SBC) and managed by the New Mexico Environment Department for renewable technology projects authorized by educational institutions, school districts or local governments. The New Mexico law has also left the Public Regulatory Commission to examine other issues. These include whether to adopt a renewable portfolio standard (RPS), which would require energy generators to sell a certain percentage of renewable energy to their New Mexico customers. Other options up for examination and public input are determining the amount utilities will recover of their bad investments and creating an adequate consumer education program.

These provisions are baby steps toward cleaner energy, a better environment, and affordable rates. Consumers will need to watch the process carefully to ensure their money is well spent; more importantly, to be sure that public input continues in order to promote programs that protect small ratepayers and move us closer to cleaner, renewable energy.

Editor's note: A Community Choice option for aggregate purchasing of electricity by communities or municipalities was not included in the 1999 legislation, though no barriers to community choice (as in California) were adopted.

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Jennifer Taylor is a program associate with New Mexico Public Interest Research Group, a nonprofit, nonpartisan environmental and consumer watchdog group with 4,000 members statewide.