07/09/2013 06:31 pm ET Updated Sep 08, 2013

New Mexico Is Drenched in Solar-Sunshine, so What's With All the Coal PNM?

The Public Service Company of New Mexico is taking tottering baby-steps when it comes to solar energy. PNM has a mere 1 percent of solar on its renewable energy books -- ironic when New Mexico's state flag boasts a blazing yellow sun. Environmentalists worry the company's plan to increase solar to 5 percent by 2020, may be too little too late for New Mexicans.

There are currently four fires raging, and more than 100,000 acres burnt in New Mexico, and it is only June. Temperatures in the state are going up faster than other global temperature averages, while drought conditions are the worst in the nation, according to the U.S Drought Monitor.

On the global scale, levels of atmospheric carbon dioxide hit 400 parts per million in May -- recorded at the U.S Mauna Loa Observatory in Hawaii. And the news just keeps getting worse: the International Energy Agency says two thirds of those emissions come from the energy sector, and last year those emissions reached a record high of 31.6 billion tons.

As the biggest coal burner, PNM may be the biggest producer of greenhouse gas pollution in New Mexico. But like many big utilities, the company just can't seem to break-up with the dirtiest-of-dirty fossil fuels -- King Coal. PNM's Valerie Smith, insists coal still offers the best price for customers and profit margin for shareholders. As for solar, she says, "there is a lot of solar potential, it's just more than we need at this time."

Which is legally true. Having that 1 percent of solar means PNM meets the 2013 state rule for 10 percent renewable energy -- when added to PNM's purchased wind capacity and the solar already provided by residents and businesses. In fact, privately installed solar panels surpass PNM's own solar capabilities.

But while utility companies can cozy up and include privately owned solar as part of their renewable energy portfolios, it's not an easy marriage. Independently installed solar is public enemy number one, according to a report released earlier this year by the Edison Electric Institute - the trade group of investor-owned utilities such as PNM. The report warns of trouble on two fronts, firstly it cites "irreparable damages to revenues and growth prospects" as more customers generate solar energy, buy less from the utilities and are credited for excess energy produced. Secondly, decreased demand increases rates to other customers, which hurts a utility's credit rating, decreasing attractiveness to investors. Though it may take a while, the report notes it's a given that investors will eventually, "realize that the viability of the business is in question."

While Smith concedes, "privately owned solar is a trend we have to adapt to." She maintains the hard part is how to do so, while optimizing PNM's current systems. Understandably adaptation is hard for monopolies, especially regulated utility monopolies operating with a guaranteed rate of return. This rate is agreed to by the New Mexico Public Regulation Commission, based on PNM's own estimates of energy demand and what it will need to charge. Which means the amount of power PNM gets paid for, is not based on actual usage.

"Who wouldn't want this kind of insulation against accountability," laments Mariel Nanasi, Executive Director of New Energy Economy. "It means there are no incentives to promote efficiency, avoid waste, or get off coal. PNM's fossil fuel base-load is the enemy of renewables."

PNM's 2012 base-load relied heavily on coal (56 percent) and nuclear (30 percent) both of which run 24/7. Smith says last year PNM used 9 percent natural gas for peak demand periods and then 5 percent renewables. Though the company has capacity of 38 percent natural gas and 8 percent renewables.

It's a simple math problem according to David Van Winkle, clean energy advocate and NEE board member:

The more coal you have, the less room there is for renewables. It's an expensive proposition to turn a coal or nuclear unit off, so instead they run constantly.

According to Smith, coal takes a day to fire up from a cold start, while nuclear would never be shut down because of the expense and the 2-3 days it would take to restart. But Van Winkle maintains this is exactly why natural gas is the obvious best choice for a 50-50 split with renewables. It comes online so rapidly, New Mexico has one of the two largest deposits in the world, and it produces half the CO2 emissions of coal. When you add it to the state's 300-plus days of sunshine a year, a good supply of wind that blows at night - it's a renewable energy supplier's dream.

But as Santa Fe Mayor, David Coss, ruefully notes, "the joke right now is that New Mexico gets all its sun from Arizona and its wind from Texas" -- in the form of cross state energy trades. His city is not waiting around for utility monopolies to take the next right step. Santa Fe's municipal buildings, water and waste treatment plants are already powered by 20 percent solar. "We had to be very creative to work with PNM's solar credits and accounting system. We built and paid for it -- now PNM is trying to take credit for it," says Mayor Coss.

Santa Fe, Taos and other New Mexico communities are going solar in an attempt to meet the Kyoto Protocol -- the international agreement based on the United Nations recommendations for mitigating climate change. The U.S infamously never signed onto Kyoto, but it hasn't stopped local movements to reduce carbon emissions back to Kyoto's recommended 1990 levels. PNM can be quite an obstacle, says Mayor Coss, "because they have a monopoly authority over power-lines, they simply disallow community solar systems to use them."

He says New Mexico has had a stop-start relationship with clean energy. Under previous Governor Bill Richardson (D) 2003-2011, an ambitious renewable energy proponent, it was all systems go. Richardson envisioned his state would be running on 10 percent renewables by 2010, with the skies just getting cleaner from there on out. Mayor Coss says having Governor Susana Martinez (R) on the heels of Richardson is reminiscent of watching Ronald Reagan take office and remove prior President Jimmy Carter's solar panels off the White House.

Governor Martinez, recently vetoed installing solar panels on state capitol parking garages after both houses of the legislature had approved them. The Governor cited financing issues as her veto excuse.
He feels Governor Martinez has put New Mexico back to the status quo of oil and gas addiction. Martinez also went to bat for PNM when they were fighting the EPA over tough new emission standards for their San Juan Generating Plant. PNM claimed it could not afford the expensive catalytic technology.

The eventual compromise will see two of PNM's coal units at San Juan close in 2017, and lesser pollution controls added to the remaining two units. But Nanasi protests the compromise doesn't move New Mexico any closer to getting off coal:

By reinvesting in old plants they effectively turn the clock back on the plant's shelf life, recommitting us to coal till 2053 whether we like it or not.

A recent Colorado College poll would seem to indicate New Mexicans on the whole do not like coal - it only got the nod from 8 percent. While 56 percent of those polled checked solar as the state's best option.

But Smith maintains that PNM simply, "can't justify the cost of solar to our customers. It's expensive, a lot of our customers can hardly feed their families." She explains that solar is a challenge because New Mexico is so poor, with a big percentage of customers living below the poverty level -- the U.S Census Bureau rates New Mexico the nations second poorest state after Mississippi. Smith says the way PNM's rate recovery is structured, people who can afford solar are actually being subsidized by poorer customers.

But with disconnect notices going out to a third of PNM customers last year, and 17,082 customers actually being disconnected, Nanasi doesn't buy that PNM is concerned about the state's poor. She maintains it's poor New Mexican communities who live near the coal plants and suffer more ill heath effects. San Juan county where the San Juan Generating Station is located did not get a passing grade in the recent American Lung Association's assessment of national air quality. Nanasi insists these are the people who would most benefit from a shift to solar, leaving coal in the dust.

As the push pull continues, there is a new kid on the block. Recently elected New Mexico Senator, Martin Heinrich (D) came out swinging for clean energy both in his state and for the country as a whole. Refreshingly, Heinrich insists on making reality our friend: while everyone is entitled to their own opinions, we are not allowed to operate within our own fact set -- especially when it comes to a melting planet. The new senator insists New Mexico will be a leader in energy innovation.

And there is nothing to stop this sun filled state from living up to Senator Heinrich's bold claim. It says it right there in the fine print of PNM's brochure about its Integrated Resource Plan: New Mexico ranks second in the nation for solar energy production potential.