Greed Trumps Clean Energy at PNM

At last, the truth is coming out.

PNM is fighting the U.S. Environmental Protection Agency’s plan to clean up the company’s coal-fired San Juan Generating Station not because they want to protect ratepayers and not because they have a better plan.

It’s because they don’t have any money.

In a motion asking the federal 10th Circuit Court of Appeals in Denver to put the brakes on the EPA’s clean up plan, the company, which is New Mexico’s largest utility, stated that it “does not have sufficient internally generated cash flow to pay for the SCR project and will have to raise substantial funding for it in the capital markets.”

In other words, their pockets are empty.  And to pay to clean up the San Juan Generating Station’s air pollution would require fundraising in capital markets.

Now normally, that wouldn’t be a problem for a big utility, especially one that’s a regulated monopoly, like PNM.  Remember, under New Mexico law, the company is guaranteed to recover a reasonable rate of return from its customers, which makes it a “can’t lose” investment.

Except, somehow, investments in PNM are losing.

In testimony submitted to the 10th Circuit, PNM treasurer, Terry Horn, explained not only that “Standard and Poor’s currently rates PNM as below investment grade” but also that “PNM Resource, Inc. common stock trades well below its book value.”

Put another way, the company’s credit is in the pits, meaning the market has no faith that investments in PNM will pay off as expected.  As a result, the cost of acquiring new capital to pay for clean air retrofits promises to be enormous.

As if that wasn’t enough, PNM’s ability to recover the costs of financing the clean air retrofits would be questionable, at best.  Under New Mexico law, the company can only recover costs that are “reasonable and prudent.”  By any measure, it’s difficult to believe that exorbitant finance costs stemming from the company’s poor credit would be considered “reasonable and prudent.”

In the end, PNM’s shareholders will have to absorb the finance costs and possibly more.  It’s no wonder the company is freaked out.

Unfortunately, instead of coming clean with its financial predicament, PNM is resorting to greedy desperation.  Like attacking the EPA’s clean air plan.  And worse, they’re working to pass legislation that would impose a “non-bypassable surcharge” on New Mexico ratepayers, a scheme that would essentially force ratepayers to cover the costs of cleaning up the San Juan Generating Station, regardless of whether those costs are reasonable and prudent.

Worst of all, though, now they’re accusing the concerned public of being liars.

Case in point is a letter that PNM’s Executive Director for Environmental Services, Maureen Gannon, sent to WildEarth Guardians the day before Thanksgiving.

In the letter, PNM accuses WildEarth Guardians of being inaccurate.  What are these inaccuracies, you might ask?  Let’s take a look:

  • PNM claims that WildEarth Guardians is inaccurate in asserting that the “only alternative offered by PNM is to continue operating the plant as is with nominal pollution controls.”  Yet according to the numbers, this statement is not inaccurate.  PNM spurred the State of New Mexico to adopt a plan that would reduce nitrogen oxide emissions by only 17%, whereas the EPA’s plan would reduce emissions by 83% (the baseline nitrogen oxide emission rate for the power plant is 0.28 pounds per million Btus—the EPA’s plan would reduce that rate to 0.05 pounds per million Btus whereas PNM’s pla would reduce that rate to only 0.23 pounds per million Btus).

I suppose “nominal” is in the eyes of the beholder, but a 17% compared to an 83% reduction in harmful emissions seems to speak for itself.

  • PNM further claims that WildEarth Guardians is inaccurate in asserting that “PNM has proposed to force ratepayers to cover the full costs of air pollution controls without determining whether such costs are reasonable and prudent,” which is interesting because, as mentioned, the company has proposed a scheme to foist a a non-bypassable surcharge upon ratepayers to cover the costs of the clean up.
  • Most significantly, PNM also takes issue with modeling showing that the San Juan Generating Station contributes to 33 premature deaths at a cost of more than $250 million annually.  The company is referring to a Clean Air Task Force report that modeled the health risks of coal-fired power plants throughout the country using the same methodologies used by the EPA to estimate the health costs of benefits of major clean air regulations.

PNM may disagree with the methods used by health and environmental regulators to estimate costs and benefits, but that doesn’t mean the modeling is flawed.  And it certainly does not mean there are no health risks from the San Juan Generating Station, as the company asserts.

Sadly, rather than face the truth, it’s just more hot air from PNM.

Despite their claims of inaccuracies, their claims that they are looking out for ratepayers, and their claims that their plan is somehow better than the EPA’s, PNM can’t hide the fact that it cares more about making money than about protecting clean air, public health, and our environment from the coal burning San Juan Generating Station.


Ozone Déjà Vu

The Obama Administration’s refusal to listen to its scientists reared its ugly head last month when the President in early September abandoned plans to strengthen nationwide limits on ground-level ozone, the key ingredient of smog.

But that wasn’t the only scientific sell-out we’ve seen of late.  And it wasn’t the worst.

Last August, the Environmental Protection Agency also rejected calls from its scientists to strengthen federal air quality standards for carbon monoxide.  A close cousin of ozone, carbon monoxide isn’t just lethal, it contributes to global warming and even forms smog.  The key source of carbon monoxide is fossil fuel combustion.

Current carbon monoxide standards limit concentrations in the air to no more than 9 parts per million over an eight-hour period and 35 parts per million over a one-hour period.  They were first adopted in 1971, over 35 years ago, and since then numerous studies have found that these standards should be stronger.

In fact, as EPA was reviewing the carbon monoxide standards, the agency’s own Clean Air Scientific Advisory Committee expressed “its preference for a lower standard,” noting its concern that the EPA was “underestimating CO [carbon monoxide] exposure among some vulnerable groups, especially persons with low income status.”  In a 2010 letter to the EPA, the Committee stated, “there is consensus in the Panel that the current standards may not protect public health with an adequate margin of safety, and therefore revisions that result in lowering the standards should be considered.”

The Committee also found that “there is substantial evidence that CO [carbon monoxide] has adverse effects on climate.”

This is a big deal because the Clean Air Act requires the EPA to set air quality standards based solely on what is necessary to protect public health and the environment.  This means that if the science says stronger standards are needed to protect public health, then stronger standards need to be adopted.

So how did the EPA respond to this science?   It ultimately decided to keep the current standard, which was adopted in 1971, on the books.  The agency even had the gall to claim there was no scientific evidence indicating stronger carbon monoxide standards were necessary.

This wasn’t a matter of simply rejecting the science, as President Obama did on the ozone standards.  In this case EPA outright ignored the science.  The EPA’s decision is so egregious that yesterday, WildEarth Guardians joined Communities for a Better Environment in filing suit over the standards.

And while ignorance may be bliss for the EPA, it’s certainly not for the breathing public.

In its review, the Clean Air Scientific Advisory Committee urged the EPA to consider strengthening the 8-hour standard to as low as 3 parts per million and the 1-hour standard to as low as 5.

Data from the EPA shows that if the 8-hour standard was lowered to 3 parts per million, a number of major urban areas would be in violation, including Los Angeles, Las Vegas, Phoenix, Washington, D.C., and Cleveland.  And if the hourly standard was lowered to 5 parts per million, Anchorage, Alaska, Boise, Idaho, Billings, Montana, El Paso, Texas and more would also be in violation.

Science matters, and while the EPA may reject calls to strengthen air quality standards, the sad truth is that the carbon monoxide decision puts millions at risk.

Ultimately though, while EPA may not listen to its scientists, the reality is they will have to listen to a federal judge.  Hopefully we’ll be able to set things straight and continue to put this nation on track for cleaner air.

Carbon Monoxide Pollution over the United States and Canada Carbon monoxide concentrations measured by NASA over the U.S. on June 8, 2011.

Sabotaging Clean Air in New Mexico

Public Service Company of New Mexico, or PNM, and now the State of New Mexico are lashing out against an EPA plan to clean up the coal burning San Juan Generating Station.

It’s a shame, because as we’ve pointed out, not only will the EPA’s plan save lives, it will drastically reduce haze and smog forming pollution from the four smokestacks of the San Juan Generating Station.  Consider that under the EPA’s plan, air pollution will be cut by more than 80%, while under a PNM-sponsored plan, pollution would be cut by only 20%.

For the 600 people that every year suffer asthma attacks triggered by the San Juan Generating Station, the difference between a 20% and 80% cut in pollution could literally be a life and death situation.

Veiled as an effort to “preserve low cost electricity,” PNM and New Mexico’s opposition really comes down to politics.  Remember, New Mexico’s new Governor, Susana Martinez, has vowed to “undo” former Governor Bill Richardson’s efforts to safeguard the environment.  And as far as PNM is concerned, this is the same company that paid millions over clean air violations at the San Juan Generating Station, then turned around and violated clean air laws yet again.

And really, the politics are incredibly obvious.  Both PNM and New Mexico filed petitions with the EPA requesting the agency “reconsider” its clean air plan.  The basis for the requests?  That EPA was wrong to adopt its own clean up plan in light of the fact that the State of New Mexico had “submitted” its own plan.

Well, guess what?  That’s not how the Clean Air Act works.

Under the law, states are, in fact, charged with adopting clean air rules that are consistent with the Clean Air Act.  And they have to submit these rules for EPA approval.

But when states adopt clean air rules that are inconsistent with the Clean Air Act, the EPA is legally mandated to adopt its own clean air rules, called a Federal Implementation Plan.  Simply because a state, like New Mexico “submits” a clean air rule doesn’t let the EPA off the hook, particularly where the clean air is completely inadequate.

Judge Arguello with the U.S. District Court for the District of Colorado recently rejected the same argument, which was put forward by the State of North Dakota.  In a ruling adopting a WildEarth Guardians settlement agreement with the EPA, Judge Arguello stated:

North Dakota’s construction of the [Clean Air] Act would seemingly allow a state to indefinitely postpone the promulgation of a FIP [Federal Implementation Plan] by filing inadequate SIP [State Implementation Plan] after inadequate SIP, and demanding that the EPA approve or disapprove of them before promulgating a FIP.

In other words, a state can’t derail EPA’s effort to adopt a Federal Implementation Plan simply because it submits its own clean air plan, especially where the state clean air plan is inadequate.  Yet that’s exactly what PNM and New Mexico are demanding.

It’s bizarre, because what it really means is that PNM and New Mexico are demanding that the EPA reject the inadequate state clean air plan before it adopts a federal plan.  The result would be that no clean air plan would ever be adopted.

Of course, maybe that’s really what PNM and New Mexico are after.  Perhaps the 20% reduction plan is simply a tactic to avoid doing anything at all to cut smog and haze forming pollution at the San Juan Generating Station.

It’s not a stretch, especially given the rhetoric from PNM and New Mexico so far.  Perhaps all they’re really after is a free pass to pollute.

It’s disturbing, but ultimately will prove to be wishful thinking.  The Clean Air Act is on our side on this one.  Sooner or later, PNM and New Mexico are just going to have to suck it up and start to protect clean air in New Mexico.

The San Juan Generating Station in northwestern New Mexico.

Fracking vs. Clean Air: Hearings Wrap-up

The EPA this week held public hearings on a proposal to ratchet up protection for public health and welfare in the face of oil and gas drilling.  In Pittsburgh, Denver, and today in Dallas, the message was resounding:  The EPA’s rules promise less air pollution, greater savings for industry, and increased scrutiny on the impacts of hydraulic fracturing, otherwise known as fracking.

It’s good news given that every year, 25,000 oil and gas wells are fracked, leading to huge amounts of toxic air pollution.  Even in cities like Denver and Dallas, oil and gas drilling releases more smog forming compounds than cars and trucks.  And in rural communities like Pinedale, Wyoming, oil and gas drilling is fueling smog levels higher than Los Angeles.

Even industry commented that it wasn’t opposed to the EPA’s proposal.  That’s a welcome change from the knee jerk opposition to any regulations normally espoused by organizations like the American Petroleum Institute.

And although industry is calling for an extension of the comment period and a delay in adopting the final rules, it’s wishful thinking.  Under the terms of a consent decree with WildEarth Guardians and the San Juan Citizens Alliance, the EPA has to finalize the rules by the end of next February.

The delay is especially uncalled for given increasing signs that ramped up drilling is taking a tremendous toll on public health.

Earthjustice‘s billboard made the rounds in downtown Denver on Wednesday.

An Update on North Dakota

Speaking of North Dakota, the state’s efforts to sabotage EPA’s clean air plan just got derailed in federal court today.

After EPA failed to meet its deadline to ensure North Dakota had a legally adequate clean air plan in place, WildEarth Guardians filed suit to enforce the Clean Air Act.  Ultimately, we reached a settlement that committed the EPA to taking action to adopt a clean air plan by late January 2012.

Earlier this month, the EPA proposed that clean air plan, promising major pollution cuts from several coal-fired power plants.

Not happy that the EPA was doing its job, North Dakota intervened in the lawsuit and tried to get it dismissed.  In a terse ruling today, Judge Christine Arguello approved the settlement and dismissed North Dakota’s efforts to undermine the EPA.

It’s good news for clean air and clean energy in North Dakota.

Something’s Gassy in North Dakota

It’s bad enough that North Dakota officials have the gall to assert a clean air plan proposed by the Environmental Protection Agency will do nothing for public health, when in fact the plan will reduce tens of thousands of tons of toxic air pollution from several coal-fired power plants in the state.

Now it seems they’re really bending over backward for polluters, this time turning a blind eye to natural gas flaring in western North Dakota, a practice that every day wastes enough gas to heat half a million homes.  As the New York Times reports today, the practice is not only fueling concerns over air quality, but wasting the very natural gas that companies elsewhere in the United States are clamoring to exploit.

Although North Dakota asserts there are no “serious problems” associated with the flaring, this argument just defies all logic.  For one thing, flaring is lost product, meaning North Dakota is losing money off the practice.  For another, they can’t point to any data showing that air pollution from flaring isn’t putting public health or welfare at risk.

Once again, North Dakota simply defers to the polluters.

The upshot is, once again, that the EPA is stepping in, this time proposing to strengthen air quality standards for the oil and gas industry.  Although we’ll see to what extent the agency decides to tackle flaring in North Dakota, the rules promise big air quality benefits for the entire nation.

Flaring in North Dakota (photo New York Times).

80% of the West at Risk from Smog

More fallout from President Obama’s decision last week to scuttle scientifically based and legally acceptable nationwide smog limits.

Based on WildEarth Guardians’ analysis of the Environmental Protection Agency’s own data, the decision leaves more than 50 million westerners–up to 78% of the entire American West–at risk from unhealthy levels of smog.  If the standard would have been set at 0.060 parts per million, more than 90% of all of California and Arizona, 89% of all Utahns and Nevadans, 79% of all Coloradoans, and many more westerners would have been given new hope for breathable air.  Check out the table below, which is from our analysis.

The upside is that we are doing everything we can to at least keep the EPA on track to start cutting smog in areas like western Wyoming.  Stay tuned for more on that front.

And in the meantime, check out some more enlightened critique on Obama’s disastrous decision from our partners at NRDC.  And while you’re at it, check out their alert and make your voice heard at the White House, too.