CITY of ALBUQUERQUE

TWENTY-FIRST COUNCIL
COUNCIL BILL NO.
SPONSORED BY:

R-15-177
Brad Winter

RESOLUTION

DIRECTING THE CITY ADMINISTRATION TO WITHDRAW SUPPORT FOR THE

STIPULATION RELATING TO PUBLIC SERVICE COMPANY OF NEW MEXICOS

PLAN TO REPLACE 836 MEGAWATTS AT THE SAN JUAN GENERATING

STATION BASED ON COSTS TO RATEPAYERS AND INCREASING RISK

CONSIDERATIONS.

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ENACTMENT NO. _____________________

WHEREAS, on February 15, 2013, Governor Susana Martinez, the Public

Service Company of New Mexico (PNM), and the Environmental Protection

Agency (EPA) announced an agreement to close San Juan Generating Station

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(SJGS) Units 2 and 3 (836 megawatts), install pollution controls on Units 1 and

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4, and reduce state permit levels for nitrogen oxides and sulfur dioxides; and

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WHEREAS, the City of Albuquerque supports the agreement between

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Governor Martinez, PNM and the EPA to close SJGS Units 2 and 3, install

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pollution controls, and reduce state permit levels for nitrogen oxides and

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sulfur dioxides as referenced in the Revised State Implementation Plan (RSIP);

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and

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WHEREAS, a Stipulation Agreement submitted to the Public Regulation

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Commission (PRC) on October 1, 2014, in docket No. 13-00390-UT, includes

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requests for approval of key elements of the RSIP, but also requests the PRC

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to approve the purchase of 132 megawatts from SJGS Unit 4 (despite the

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closure of Units 2 and 3); and

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WHEREAS, the City participated in the Stipulation Agreement based on

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representations that the Stipulation Agreement represented the least cost

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plan to rate payers; and

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economics of certain elements of the Agreement have changed to the

detriment of the Citys ratepayers; and

WHEREAS, in particular, after the development of the Stipulation

Agreement, numerous mistakes in the cost-modeling and economics of fuel

costs were admitted. Correction of these mistakes increased the average and

present value of the assets presented in the Stipulation Agreement to the

detriment of rate payers; and

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WHEREAS, since the filing of the Stipulation Agreement, the costs and

WHEREAS, on January 7, 2015, the City of Farmington reversed its

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decision to acquire an additional 65 MWs in SJGS Unit 4 given capacity

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acquisition economics, uncertainty and likely unfavorable economics

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regarding future fuel supply, uncertainty pertaining to operations and

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ownership structure post-2022 and other evaluated liabilities unacceptable to

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the City and continued unresolved issues including the already protracted

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negotiations and on-going status of negotiations to the detriment of the City's

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ability to develop alternate generation resource options; and

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WHEREAS, PNM recently announced its attention to acquire the San Juan

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Unit 4 plant rejected by the City of Farmington, thereby increasing its interest

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in San Juan Unit 4 from 132 MWs to 197 MWs. PNM informed its shareholders

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that the acquisition would result in operating losses; and

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WHEREAS, the cost-modeling errors, the City of Farmingtons decision and

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PNMs announcement that it is increasing its ownership in San Juan Unit 4,

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along with other changes since the filing of the Stipulation Agreement

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increase costs and risk to the Citys ratepayers; and

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WHEREAS, the same considerations caused the Albuquerque Bernalillo

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County Water Utility Authority to indicate its opposition to the Stipulation

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Agreement on January 27, 2015; and

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WHEREAS, since January 20, 2015, at least three (3) other parties have also

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withdrawn their support for the Stipulation Agreement including the:

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a. Renewable Energy Industries Association of New Mexico;

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b. New Mexico Independent Power Producers, and

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c. Western Resource Advocates; and

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WHEREAS, the Stipulation Agreement does not meet the requirements of

FS R-14-59, Enactment No. R-2014-046 and increases costs and risks that will

be borne by City ratepayers.

BE IT RESOLVED BY THE COUNCIL, THE GOVERNING BODY OF THE CITY OF

ALBUQUERQUE:

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Section 1. Given the changed circumstances, the City Council does not
support the Stipulation Agreement.
Section 2. Given the changed circumstances, the City Council directs the
City Administration to withdraw support for the Stipulation Agreement relating

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to the RSIP based on costs to ratepayers and increasing risk considerations.

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Section 3. That Council staff is directed to forward this Resolution to the New

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Mexico Public Regulation Commission.

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