• Abstract and Figures
• Public Full-text

BEFORE THE NEW MEXICO PUBLIC REGULATION COMMISSION IN THE MATTER OF THE APPLICATION ) OF PUBLIC SERVICE COMPANY OF NEW ) MEXICO FOR APPROVAL OF THE ) ABANDONMENT OF THE FOUR CORNERS ) POWER PLANT AND ISSUANCE OF A ) SECURITIZED FINANCING ORDER ) Case No. 21-_______-UT ) PUBLIC SERVICE COMPANY OF NEW ) MEXICO, ) ) Applicant ) ) DIRECT TESTIMONY OF THOMAS G. FALLGREN January 8, 2021 NMPRC CASE NO. 21-_______-UT INDEX TO THE DIRECT TESTIMONY OF THOMAS G. FALLGREN WITNESS FOR PUBLIC SERVICE COMPANY OF NEW MEXICO I. INTRODUCTION AND PURPOSE ...................................................................... 1 II. BACKGROUND OF THE FOUR CORNERS COAL PLANT............................. 4 III. PNM’S EXIT FROM THE FOUR CORNERS COAL PLANT .......................... 10 IV. FOUR CORNERS ABANDONMENT COSTS ................................................... 17 A. Necessary Ongoing Plant Capital Expenses ................................................... 18 B. Four Corners Decommissioning Costs ........................................................... 20 V. OVERVIEW OF PNM’S SYSTEM RESOURCES ............................................. 24 VI. TIMING OF ABANDONMENT OF FOUR CORNERS .................................... 26 VII. CONCLUSION ..................................................................................................... 28 PNM Exhibit TGF-1 Educational and Professional Summary PNM Exhibit TGF-2 Four Corners Purchase and Sale Agreement PNM Exhibit TGF-3 Capital Investments July 2020 – December 2024 PNM Exhibit TGF-4 2020 Decommissioning Cost Estimate Update PNM Exhibit TGF-5 PNM’s Generation Resources PNM Exhibit TGF-6 Cash Flow Model – 2020 Four Corners Decommissioning SELF-VERIFICATION i DIRECT TESTIMONY OF THOMAS G. FALLGREN NMPRC CASE NO. 21-_______-UT 1 I. INTRODUCTION AND PURPOSE 2 Q. PLEASE STATE YOUR NAME, POSITION AND BUSINESS ADDRESS. 3 A. My name is Thomas G. Fallgren. I am Vice President of Generation for Public 4 Service Company of New Mexico (“PNM”). My business address is 2401 Aztec 5 Rd, NE, Albuquerque, New Mexico 87107. 6 7 Q. WHY IS PNM FILING THIS CASE FOR ABANDONMENT NOW? 8 A. PNM has a unique opportunity to exit from its participation in the Four Corners 9 coal plant in 2024. This early exit is six and one-half years prior to the conclusion 10 of the current coal supply agreement in 2031. This opportunity arose as a 11 consequence of PNM’s obligation to perform a cost-benefit analysis in its 2020 12 Integrated Resource Plan on the impact of an early exit from Four Corners as of 13 2024 and 2028. The abandonment and securitization of the plant under the Energy 14 Transition Act provides cost savings to PNM customers and supports a just 15 transition for the local community. Following on the approval to shut down the 16 San Juan Generating Station, the exit from Four Corners is PNM’s next and final 17 step in transitioning away from coal-fired generation to more sustainable energy 18 resources. If PNM’s application is approved, PNM will no longer have any coal 19 resources in its generation portfolio after 2024. I provide support for PNM’s 20 proposed abandonment and transfer of its interests in the Four Corners coal plant 21 to one of PNM’s co-tenants in the plant, effective December 31, 2024. 22 1 DIRECT TESTIMONY OF THOMAS G. FALLGREN NMPRC CASE NO. 21-_______-UT 1 Q. PLEASE SUMMARIZE YOUR PROFESSIONAL QUALIFICATIONS AND 2 EDUCATIONAL BACKGROUND. 3 A. I have overseen PNM’s Generation operations since November 2016 in the roles of 4 Managing Director, and as of May 2017, as Vice President of Generation. From 5 July 2013 to November 2016, I was the Plant Manager for the San Juan coal plant. 6 Before I came to PNM, I worked for various subsidiaries of Xcel Energy as Plant 7 Manager for the Tolk/Plant X Complex, a two site complex consisting of two coal- 8 fired units rated at 1100 MW and four-unit natural gas-fired steam plants rated at 9 442 MW, and the Black Dog Generating Facility, a now-retired coal-fired 10 generating station and a one-on-one combined cycle gas plant. Prior to that, I 11 served in several management positions at the Sherburne County Generating 12 Station, a three-unit 2,238 MW coal-fired facility. I also have thirteen years of 13 experience at the Monticello nuclear generating facility, where I was previously 14 qualified as a Senior Reactor Operator. I have been a registered engineer in the 15 State of Minnesota since 1994. I graduated with a Bachelor of Mechanical 16 Engineering degree with High Distinction from the University of Minnesota. A 17 copy of my Educational and Professional Summary is attached as PNM Exhibit 18 TGF-1, which includes a list of cases in which I have testified before the New 19 Mexico Public Regulation Commission (“NMPRC” or “Commission”). 2 DIRECT TESTIMONY OF THOMAS G. FALLGREN NMPRC CASE NO. 21-_______-UT 1 Q. PLEASE DESCRIBE YOUR RESPONSIBILITIES AS VICE PRESIDENT 2 FOR GENERATION FOR PNM. 3 A. I am responsible for the strategic direction and operation of PNM’s generating 4 resources to ensure that they continue to provide safe, reliable and cost-effective 5 electricity to customers within PNM’s service territory. The functions I oversee 6 include generation operations, maintenance, engineering, construction, fuel and 7 power procurement, wholesale power marketing, resource planning, and other 8 services related to PNM’s generation fleet. I also have executive oversight 9 responsibility for the operation of the San Juan coal plant on behalf of its various 10 owners, in conformity with the San Juan Project Participation Agreement. 11 Likewise, I have executive oversight responsibility with respect to PNM’s 12 ownership interests in shared-owner generation resources where PNM is not the 13 operator, specifically, the Four Corners coal plant and the Palo Verde Nuclear 14 Generating Station (“Palo Verde”). 15 16 Q. PLEASE SUMMARIZE THE TOPICS YOU COVER IN YOUR 17 TESTIMONY. 18 A. I provide background for the Four Corners coal plant, including its ownership and 19 governance structure and processes. I address the circumstances surrounding 20 PNM’s effort to exit from the Four Corners plant, and terms of the agreements for 21 the proposed transfer of PNM’s interest in the Four Corners coal plant to Navajo 22 Transitional Energy Company, LLC (“NTEC”). I provide an overview of PNM’s 3 DIRECT TESTIMONY OF THOMAS G. FALLGREN NMPRC CASE NO. 21-_______-UT 1 generation resources and the role of the Four Corners coal plant in PNM’s portfolio. 2 I address PNM’s changing needs due to significant increases of renewable 3 resources on PNM’s system and why it is in the best interests of customers and the 4 public for PNM to exit the Four Corners power plant in 2024 rather than in 2031. 5 Finally, I provide support for PNM’s recovery of certain plant abandonment costs 6 under the Energy Transition Act consisting of reasonable and necessary capital 7 investments and plant decommissioning costs. 8 9 II. BACKGROUND OF THE FOUR CORNERS COAL PLANT 10 Q. PLEASE PROVIDE A BRIEF DESCRIPTION OF THE FOUR CORNERS 11 COAL PLANT. 12 A. The Four Corners coal plant has been a vital part of serving PNM customers’ needs 13 since PNM acquired a thirteen percent share in Units 4 and 5, representing 200 14 MW, in 1969 and 1970, respectively. For over half a century this plant has provided 15 the critical energy needs of New Mexico. As resource technology and economics 16 have changed in recent years, and with NTEC as a buyer, there are now more 17 economical options to meet our customers’ future needs. 18 19 Arizona Public Service Company (“APS”) is the majority owner and operates the 20 Four Corners coal plant which is located near Fruitland, New Mexico within the 21 Navajo Nation. The plant has been and continues to be a major source of revenue 22 as well as employment for the Navajo Nation and its residents. The plant formerly 4 DIRECT TESTIMONY OF THOMAS G. FALLGREN NMPRC CASE NO. 21-_______-UT 1 consisted of five coal-fired generation units. Units 1, 2 and 3, in which PNM had 2 no ownership interest, were previously retired for purposes of compliance with the 3 EPA’s Regional Haze Rule. The other owners in Units 4 and 5 are APS, the Salt 4 River Project Agricultural Improvement and Power District (“SRP”), Tucson 5 Electric Power Company (“TEP”), and NTEC. The Four Corners coal plant obtains 6 coal exclusively from the adjacent Navajo Mine in what is referred to as a “mine 7 mouth” configuration. In other words, the Navajo Mine has no other customers for 8 this coal other than the Four Corners coal plant. 9 10 Q. WHAT ECONOMIC IMPACT DOES THE FOUR CORNERS COAL 11 PLANT HAVE ON THE NAVAJO NATION? 12 A. The Four Corners coal plant and associated Navajo Mine employ approximately 13 700 direct employees. Over 600 of these direct jobs are currently held by Navajo 14 Nation members. In addition, there are other contractors and temporary workers 15 that rely on the Four Corners plant for income. The Navajo Mine itself spends over 16 $ 4 million annually with qualified Navajo vendors and supplier. 17 18 The sale of coal to Four Corners by NTEC from the Navajo Mine generates 19 approximately $35 million per year in royalty payments to the Navajo Nation. 20 NTEC pays an additional $4 million per year of Possessory Interest Tax (PIT) and 21 $4 million per year of Business Activity Tax (BAT) to the Nation from the 22 operation of the Navajo Mine. Each participant owner of the Four Corners Plant 5 DIRECT TESTIMONY OF THOMAS G. FALLGREN NMPRC CASE NO. 21-_______-UT 1 also pays an agreed tax in lieu of PIT and BAT to the Nation as a result of the 2 operations of the Four Corners Plant itself.

Load more

  194

Copy Link