The New Mexico Supreme Court has affirmed a regulatory decision blocking the transfer of shares in the Four Corners Power Plant from Public Service Co. of New Mexico (PNM) to the Navajo Transitional Energy Co. The court also upheld the denial of PNM's request for a financing order to cover the costs of abandoning the plant.

The Navajo Transitional Energy Co. aimed to acquire PNM's shares to mitigate the economic impact of the plant's potential closure on surrounding communities. However, environmental groups opposed the transfer, fearing extended operation of the plant, which serves customers in both Arizona and New Mexico.

The court's decision, issued after hearing arguments earlier this year, deemed the regulators' rejection reasonable and in line with the state's Energy Transition Act. The Public Regulation Commission originally rejected PNM's plan in 2021 due to the utility's failure to outline replacement power sources for the electricity no longer generated at Four Corners. This concern stemmed from ongoing delays in completing solar and battery storage facilities intended to replace the San Juan Generating Station, another coal-fired plant that closed in September 2022.

The court highlighted testimony from PNM's resource planning director, Nicholas Phillips, regarding limitations in the utility's modeling. PNM had relied on previous bids for San Juan replacements instead of identifying new resources for Four Corners. Phillips also admitted to unforeseen delays in replacing the lost capacity from San Juan's closure.

The court concurred that the provided information was insufficient to meet the utility's obligations under the Energy Transition Act, given the delays and the generic nature of PNM's proposal. PNM expressed disappointment with the ruling, with spokesman Raymond Sandoval stating that it delays their exit from the plant until potentially 2031, postponing emissions reductions.

Despite this setback, Sandoval reaffirmed PNM's commitment to carbon-free electricity. Operated by Arizona Public Service Co., which holds the majority stake in its remaining two units, the Four Corners Plant is located on the Navajo Nation. PNM's original proposal aimed to divest from coal as part of a proposed merger with a subsidiary of Iberdrola, a global energy giant. The court also noted PNM's awareness of the commission staff's concerns regarding their resource replacement modeling.

PNM continues efforts to bring replacement resources online for both the San Juan plant and the expiring leases at the Palo Verde nuclear plant in Arizona, though specific commercial operation dates remain undetermined. A 150-megawatt battery installation is currently undergoing testing and can provide electricity during the current heatwave. PNM anticipates no rolling outages due to proactive power purchases in anticipation of peak summer demand.