Sprawling rural school districts suffer as state phases out coal

July 20 – A San Juan County school district — small in student numbers, large 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 from the Central Consolidated School District are calling on the state’s largest utility to deliver on “just transition” promises made in the Energy Transition Act of 2018. The legislation promised to develop replacement electricity generation within the school district’s boundaries as PNM transitioned away from coal, long a major economic driver in the area.

The school district, which includes 15 schools, a technical center and several preschools spread across nearly 3,000 square miles in northwestern New Mexico, has complained about funding shortfalls following the closure of the San Juan Generating Station and worries about a future closure of the nearby Four Corners Power Plant, both of which have contributed significantly to the district’s tax base.

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

School district superintendent Steve Carlson recently painted a bleak picture of his district’s financial outlook in an affidavit he filed with the Public Regulation Commission.

“As we strive to close gaps and provide our students with the same opportunities as students in other districts, we face an uphill battle as we ultimately must use all of our scarce resources, including our minimal and dwindling tax revenues and a few years of long-overdue impact aid, 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 money to maintain “deteriorating facilities.”

According to his statement, approximately 80% of the district’s property tax revenue was generated by a combination of the San Juan Generating Station, Four Corners Power Plant and related coal mines. Additionally, the number of homeless students in the district has increased by 700% since the San Juan Generating Station closed in 2022.

State Representative Rod MontoyaR-Farmington said Central Consolidated has relied on revenue from coal plants for decades, including for bonding capacity.

“Now that one of the power plants and one of the coal mines is gone, their taxable income is almost zero,” Montoya said. “No other school district in the state has that problem.”

Montoya is part of a group of lawmakers seeking to overturn a recent decision by the state’s Public Regulation Commission that they say allows PNM to bypass a requirement in the Energy Transition Act of 2019 to locate replacement energy projects within the area served by the school district. The decision, they argue, allows the utility’s projects to be built elsewhere.

Earlier this month, 15 lawmakers asked the state Supreme Court to order the commission to enforce the legislation’s provisions.

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 that PNM “continues to fully support and comply with the Energy Transition Act.”

“The third-party projects selected through the (Public Regulation Commission) process for replacement power in San Juan included projects within the (Central Consolidated School District) and elsewhere; one of the projects planned for the area subsequently went bankrupt and the contract was terminated,” Huber wrote. “We filed a notice of this event with the PRC in January 2023 and have discussed it in our ongoing biweekly stakeholder meetings.”

In late May, the commission approved the utility’s future energy sources, which include solar and battery projects in Bernalillo and Valencia counties, but no projects in San Juan County, where the 130-megawatt Rockmont solar and storage project was planned.

The utility agreed to develop 430 megawatts of power capacity within the school district’s 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 lawmakers who signed 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 passed prompted her to take action.

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

Huber wrote that the utility has committed to including “a CCSD (Central Consolidated School District) project in our upcoming resource request later this year, even if it does not meet the criteria for a lowest cost portfolio.”

Attorneys for the San Juan County government shared the county’s concerns, arguing to the commission that the utility has a significant presence in San Juan County.

“PNM’s replacement sources for the (San Juan Generating Station) impact the employment of thousands of San Juan County residents and the county’s local economy,” county officials wrote in a request to commissioners challenging PNM’s plan.

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