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Op-Ed: Energy Choice That Could Create the Change We Need
You may have heard that every month of 2016, so far, has broken average global temperature records to date, that they are digging mass graves in India in anticipation of deaths caused by the record-breaking heat waves expected this summer, and that there’s currently a state of disaster declared in 31 counties in Texas due to unprecedented flooding from torrential rains. We are experiencing triple-digit temperatures, and there are fires raging in New Mexico and in the West that are causing people to be evacuated. The costs of damages to property and infrastructure have yet to be assessed, but emergency declarations already have been issued.
You may also have heard that national, regional and local governments across the world are celebrating their recent transition to 100 percent renewable energy (RE). Portugal provided a glimpse of the future when the entire country ran on 100 percent renewables for four consecutive days last month. Oregon is leading the country with a new law to close all coal-fired energy, and Burlington, Vt., is now running on 100 percent renewables. Other municipalities have recently set ambitious targets to achieve 100 percent RE and are taking bold steps to do so, including San José and San Diego, Calif., and Rochester, Minn.
The reality is that the time to act to save our planet and protect our children’s future has arrived, and the clean-energy solutions needed exist and are viable today. In New Mexico, we have abundant, affordable solar and wind energies, and we must lead in the transition to a new energy economy. New Mexico could be an RE leader and exporter.
Why not here, where the vast majority of New Mexicans support RE use, with solar and wind enjoying strong support across the race, age and political spectrums? Currently, the two major impediments are political will and an influential, self-serving, coddled energy corporation.
Public Service Company of New Mexico (PNM), is not a “public” company. It is a private corporation that must serve the fiduciary interests of its shareholders. It does. The New Mexico Public Regulation Commission (PRC) was formed in part to regulate electric utilities on behalf of the public. Given the monopoly status of utilities like PNM, which legally prohibits competition from any other energy provider in its service territory and its ultimate objective to make money for its shareholders, regulation is the only mechanism within the current system to enforce competitive pricing, consumer protections and compliance with New Mexico’s energy goals. The problem is, regulation is not working.
Today’s energy mix with PNM is 80 percent coal and nuclear—60 percent coal, 20 percent nuclear—and PNM’s plan in 2018 is to reduce the coal by 10 percent and increase nuclear by the same amount. These resources, if allowed by the PRC in the pending rate case, are not only dangerous for the obvious climate, economic and health-related reasons, but because these resources will persist for decades and prevent renewables from being adopted in New Mexico in any significant way. We can’t afford RE tokenism; time is running out.
Even with solar and wind now competitively priced, most cities and counties lack access to clean-energy options and still cannot choose to purchase clean energy because the monopoly energy system can effectively keep renewables out. Why does PNM choose coal and nuclear when solar is cheaper?
1) Profit—When PNM spends more money, it makes more money. This strategy is the opposite of the dynamic in the competitive market, where the less a business spends the more it keeps for profit.
2) Return on assets—Investing in 50-year-old coal plants and 28-year-old nuclear plants makes PNM more money than shiny new wind turbines and solar panels that are often guaranteed in terms of maintenance and price. This is true because those older, traditional energy plants require frequent and costly capital expenditures just to keep the behemoths running, and pollution controls are required. When they spend capital dollars to either acquire assets or fix things that break, PNM makes a guaranteed “return on assets”—an additional 11.4 percent on top of the reimbursement for the actual costs—all of which comes out of ratepayers’ pockets.
3) Temporary avoidance of decommissioning and reclamation costs—If PNM continues to supply the public with energy from these coal and nuclear plants, then current PNM executives will have moved on or retired before the bill for cleanup costs comes due. Experts and some states are worried that the cleanup costs will be of such magnitude that the companies will abandon their responsibilities, go bankrupt or pursue bailouts from the government to cover these costs, and the public will be stuck with the toxic mess. The more the utilities can move the ownership of these assets into the rate base, the easier it will be for them to pass the bill onto consumers and skirt their responsibility. Essentially, PNM wants to kick the can down the road and offload cleanup cost risks onto the public.
We might win small victories here and there, within the constraints of the current regulatory system, but, in general, we cannot align our energy preference with our energy system because 80 percent coal and nuclear meets PNM shareholder quarterly targets. In fact, PNM just submitted its Renewable Energy filing on June 1 and told the PRC that it “did not need” any more renewables on the system and that 2 percent solar is just fine for them.
So, what can we do? Community Choice Aggregation (CCA) has been adopted by six states and has had greater impact on RE penetration than any other policy solution out there. CCA allows a community, through its city or county authority, to produce or purchase, or both, electric services for its residents. The municipality then makes its choice, aligned with its values, through a local decision-making process as to what energy mix it wants. Cost savings and RE choices can be achieved through the aggregation of customer energy needs, allowing the municipality to negotiate bulk purchasing rates and energy sources. CCA requires a statewide network of support to pass state legislation that would create the shift we need and open up our energy markets so local communities could choose our energy futures.
Currently, 17 million people live in communities that have or are launching or exploring CCA in California. Of the total eligible population, 60 percent will potentially be served by CCA by 2020. Pacific Gas and Electric Company, the state’s largest utility monopoly, with 5.4 million electricity customers, has 370,000 CCA customers in its territory. That number could increase rapidly because San Francisco recently adopted CCA and is already providing 7,400 commercial customers with an energy demand of 30 megawatts (MW) and expects to add 20 MW—enough to serve up to 48,000 residential customers—in 2016. San Francisco is offering two options to customers: 35 percent RE and gas, as well as a 100 percent renewable choice. These are impressive numbers that actually move the needle on climate, create a hedge against rising electricity rates and create jobs in a clean-energy economy. This policy and market mechanism have contributed significantly to California’s success in reaching targets to achieve 33 percent renewables by 2020 and 50 percent renewables by 2040. Other states that have implemented CCA are enjoying similar success in making the transition. For example, Illinois has 91 communities that are providing 100 percent renewable electricity to their residents—a total of 1.7 million people. These examples show the power of letting communities choose their electricity supply.
In addition to the ability for municipalities to purchase wholesale renewables, the CCA option can drive further solar rooftop adoption and offer attractive financing for larger-scale local installations. These are other measures that municipalities can undertake to ensure consumer protection and significant renewable penetration.
Without access to the energy market, most towns and cities cannot meet their climate-reduction targets and sustainability goals in a timely and cost-efficient manner. Santa Fe has committed to achieve carbon neutrality by 2040, but under the current PNM monopoly regime, there is absolutely no way it can achieve that goal. We must pursue avenues that put the power in our hands as a community to choose. This is a big lift, no question, but CCA is the kind of policy mechanism that can bridge grassroots activism and needed legislative decision making. CCA is a proven strategy that will enhance consumer choice and local control, facilitate RE penetration and local economic development and accelerate progress toward achieving our communities’ environmental goals. Communities across New Mexico will have to work together to make it happen and drive the adoption of CCA legislation in the Legislature. But together we can do it. We can create the energy solutions we need and transform New Mexico from an energy colony to a model of energy democracy. To be part of this budding statewide movement please visit NewEnergyEconomy.org
Mariel Nanasi is the executive director of New Energy Economy.
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