Sprawling rural school district hurting as state moves away from coal

Jul. 20—A school district in San Juan County — small in student population, huge in land area — says it is in a precarious financial position as the Public Service Company of New Mexico transitions from coal-fired power to renewable energy.

Lawmakers and officials with the Central Consolidated School District are calling on the state's biggest utility to live up to the promises of a "just transition" promised in the Energy Transition Act of 2018. The legislation promised replacement power generation to be developed within boundaries of the school district as PNM moved away from coal, long a key economic driver in the area.

The school district, consisting of 15 schools, a technical center and several preschools spread over nearly 3,000 square miles in northwest New Mexico, have complained about funding shortfalls following the closure of San Juan Generating Station and worry about a future closure of the nearby Four Corners Power Plant. Both have been critical contributors to the school district's tax base.

The district serves about 5,000 students, more than 90% of whom are Native American.

Steve Carlson, the school district's superintendent, recently painted a bleak picture of his district's financial outlook in a sworn statement submitted to the Public Regulation Commission.

"As we strive to rectify disadvantages and to give our students the opportunities that the students of other districts enjoy, we see ourselves facing an uphill battle because we end up using all of our scant resources, including our minimal and dwindling tax revenues and a few years' worth of long overdue impact aid, just to level the playing field," Carlson wrote.

The school district's tax base is inadequate for its size and needs, he wrote, and administrators are forced to spend state funding to maintain "deteriorating facilities."

About 80% of the district's property tax revenue was generated by a combination of San Juan Generating Station, Four Corners Power Plant and related coal mines, according to his statement, and the district has seen a 700% increase in student homelessness rates since San Juan plant shut down in 2022.

State Rep. Rod Montoya, R-Farmington, said Central Consolidated's revenue has relied on on the coal plants for decades, including for bonding capacity.

"With one of the power plants and one of the coal mines gone, their taxable income is almost nothing," Montoya said. "No other school district in the state has that problem."

Montoya is part of a group of state lawmakers attempting overturn a recent decision by the state's Public Regulation Commission, which they believe allows PNM to skirt a requirement in the 2019 Energy Transition Act to locate replacement power projects within the area served by the school district. The decision, they contend, allows the utility's projects to be built elsewhere.

Earlier this month, 15 legislators asked the state Supreme Court to order the commission to enforce provisions of the legislation.

A spokesman for the state agency declined to comment on the challenge to the commission's decision.

In an email, PNM spokeswoman Kelly-Renae Huber wrote PNM "remains fully supportive and compliant with the Energy Transition Act."

"The third-party projects selected through the [Public Regulation Commission] process for San Juan replacement power contained projects located within the [Central Consolidated School District] as well as elsewhere; one of the projects slated for the area subsequently defaulted and the contract was terminated," Huber wrote. "We filed notice of this event with the PRC in January 2023 and discussed it in our ongoing biweekly stakeholder meetings."

In late May, the commission approved the utility's coming power resources, which included solar and battery projects in Bernalillo and Valencia counties, but none in San Juan County, where the 130-megawatt Rockmont solar and storage project was scheduled to be developed.

The utility agreed to develop 430 megawatts of power capacity within school district boundaries to replace the San Juan Generating Station, during negotiations for the Energy Transition Act. So far PNM has developed 200 megawatts of solar and 100 megawatts of battery storage in San Juan County, both of which are scheduled to come online in August, according to information provided by Huber.

Some legislators who signed on to the Supreme Court challenge — such as Joanne Ferrary, D-Las Cruces — supported the 2019 legislation. But Ferrary said concerns about the company's actions since the Energy Transition Act was passed prompted her to act.

"We had no choice but to file for the writ of mandamus, since the PRC has failed to hold PNM accountable," Ferrary said in a recent interview.

Huber wrote the utility has committed to include "a CCSD-located [Central Consolidated School District] project in our upcoming resource filing later this year, even if it doesn't meet the criteria for a lowest-cost portfolio."

Attorneys for San Juan County government echoed the district's concerns, arguing before the commission the utility holds a significant presence in San Juan County.

"PNM's replacement resources for the [San Juan Generating Station] impact the employment of thousands of San Juan County residents and the County's local economy," the county's officials wrote in a request to commissioners to challenge PNM's plan.