September 29, 2020 • EPE Related News
El Paso, Las Cruces, and environmentalists oppose El Paso Electric's power plant project
El Paso, Las Cruces, and environmentalists oppose El Paso Electric's power plant project
El Paso Electric's plan to spend more than $163 million to put a new, natural gas-fired generating unit at its Newman power plant in far Northeast El Paso is being opposed by the El Paso and Las Cruces city governments, the New Mexico attorney general, and environmental groups in El Paso and New Mexico.
The new generator is needed to meet future peak electric demand, and also to allow the utility to retire three, inefficient, 60-year-old generating units, including two at the Newman plant, El Paso Electric officials said in filings with the Public Utility Commission of Texas and the New Mexico Public Regulation Commission.
The company, which in July was sold for $4.3 billion to the JP Morgan Chase-tiedInfrastructure Investments Fund (IIF), late last year filed applications with the states' regulatory commissions to add the 228-megawatt generator to the Newman power plant by May 2023. That's enough power to supply about 101,000 homes over a year.
El Paso Electric needs approval from electric utility regulators in Texas and New Mexico because it provides electricity to more than 436,000 customers the El Paso and Las Cruces areas.
The company also needs Texas Commission on Environmental Quality approval for revisions to the Newman plant's air-quality permits, something EPE officials said should not be a problem.
Newman project too risky in the COVID-19 world, El Paso argues
El Paso Electric’s years-old analysis to justify the need for the new generator, dubbed Newman Unit 6, is no longer relevant because of the unprecedented economic downturn caused by the COVID-19 pandemic, city of El Paso lawyers and its energy consultant argued in filings with the PUC.
“The company’s proposal to move forward with construction of Newman 6 before the impacts of COVID-19 are known, places far too much economic risk on customers,” Scott Norwood, an Austin energy consultant hired by the city, said in testimony filed in the case.
El Paso Electric should use the three old generators for a longer period, and also buy more power from outside sources to meet short-term power requirements until more is know about how the pandemic will affect its power needs, Norwood said.
The New Mexico attorney general in filings in the New Mexico case also proposed the utility use the old generators for a longer period to "allow EPE time to elicit new proposals for generating resources that are superior for EPE's customers, system reliability, and planning horizon."
El Paso Electric lawyers countered that the city of El Paso's “arguments about what COVID-19 supposedly means for this case are untenable and just a prescription for paralysis."
The city’s “proposal to wait for actual peak demand results through some indeterminate future time can only lead to a decrease in (electric system) reliability and an increase in costs to customers.”
In its filings, the company rejected extending the lives of its three, 60-year-old generators, arguing that the new Newman generator will reduce operating costs, is more environmentally friendly and will make the utility's system more reliable.
The Newman power plant, with five power generators, is on 175 acres in a mostly undeveloped area at Stan Roberts Sr., Drive and Martin Luther King Jr., Boulevard. The nearest home is about a mile away, near the Texas-New Mexico border, EPE officials reported.
EPE's plan gets backing from Texas, New Mexico commission staffs, judge
So far, a Texas administrative law judge, who conducted a one-day hearing in the PUC case in June, the PUC staff, and the New Mexico Public Regulation Commission staff have recommended the utility's plan be approved.
The Newman application is scheduled to go to the Texas commission for a vote Oct. 16. The New Mexico commission is expected to vote in mid-November.
The company can add the new generator without New Mexico approval, but it would not be allowed to supply energy from that unit for New Mexico customers, said George De La Torre, a company spokesperson. Company officials have not yet decided if the project will go forward if the New Mexico commission rejects the project.
How much will ratepayers be charged for new generator?
The city of El Paso also asserted in its filings that EPE officials understated the potential costs to El Paso ratepayers for Newman 6.
Utility officials estimate Newman 6 would require an additional $18.6 million in rate revenues in Texas and $4.6 million in New Mexico for first-year operations. That translates to an increase of an average $1.45 per month for El Paso-area residential customers, and an average $1.43 per month in Las Cruces, after fuel savings from retiring the three, old generators is included, EPE officials reported in filings.
However, the actual rate impact to customers won’t be known until the utility files for new rates with each of the state commissions after the new generator goes into operation. So, customers wouldn't pay for the new generator until after it begins operating.
New environmental law cited as another reason to derail Newman 6
The city of El Paso's filings also noted EPE's analysis did not take into account a new environmental law in New Mexico requiring the utility to supply 100% of its power to its New Mexico customers from carbon-free sources by 2045. That’s likely to reduce Newman 6’s economic value, and potentially shift more costs of the unit to El Paso-area customers, Norwood, the El Paso energy consultant, said in filed testimony.
In the city of Las Cruces filings in New Mexico, its lawyers argued El Paso Electric should have evaluated the effects of the new environmental law on the Newman project prior to seeking approval from regulators.
The lack of such an evaluation is "alone grounds for denial of the company's (New Mexico) application," they argued.
The new environmental regulation didn’t play a part in El Paso Electric's 2018 selection of aportfolio of new power projects because the law was passed in 2019. That includes solar projects that will help meet New Mexico's new requirements, James Schichtl, EPE's vice president of regulatory affairs, said in filed testimony.
El Paso Electric lawyers in another filing said "New Mexico law cannot determine how EPE serves Texas," which makes up about 80 percent of its customer base. However, Newman 6 may be allowed to serve New Mexico after 2044 under some exceptions in the new law, EPE lawyers noted.
Environmentalists protest project
Environmental groups Vote Solar and the Coalition for Clean Affordable Energy are opposing Newman 6 in the New Mexico regulatory case.
EPE "failed to justify its selection of Newman Unit 6 over less costly and less risky alternatives that would have been better aligned with New Mexico's clean energy policy," Vote Solar, a California-based environmental group, argued in one of its filings.
Environmental group Sunrise El Paso's request in January to be an intervenor in the Texas PUC case was denied by an administrative law judge.
However, Sunrise El Paso leaders held a rally and march Sept. 21 in Downtown El Paso to protest the Newman 6 project, which the group's leaders say is bad for the environment because natural gas-fired plants pollute the air and keep demand for fracking to get the gas out of the ground, including in West Texas' Permian Basin. About 40 people, wearing face masks and holding protest signs, attended the demonstration, which included a march to the EPE headquarters and to the Chase Bank Downtown branch.
“It’s not enough to just reject the Newman 6, we have to also transition to renewable energy quickly, as quickly as we can, so we can take advantage of the wealth in this region, which is the sun," Miguel Escoto, a Sunrise El Paso leader and part of Earthworks, a national environmental group, said after he spoke at the rally.
The groups want El Paso City Council to take steps to stop the Newman project. But approval of the plant rests with Texas and New Mexico regulators.
West-Central City Rep. Alexsandra Annello, who spoke at the protest, said later that she's disappointed El Paso Electric didn't hold a public meeting to inform El Pasoans about the project.
Officials with IIF, the utility's new owner, promised to be transparent with the community, and also committed to do a future study on the use of renewable energy, she said.
"I don't think this gas plant (addition) is beneficial to the community in 2020," but it will be up to the Texas and New Mexico commissions to decide, she said.
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