A utility company has asked for zero emission status for a gas-fired power plant. KC Counts talks with Jerry Redfern, a reporter for Capital & Main, about the loophole the company is hoping to take advantage of. Here is a transcript of the full interview:
KC Counts:
I think right now, Jerry, New Mexicans are seeing from many different sources some confusion about energy use and our environmental future when it comes to, insouthern Doña Ana County, it's Project Jupiter. And out in the southeast portion of the state, we're talking about some new energy to fuel Permian Basin activity. Let's start with what people need to know about what is on the table right now.
Jerry Redfern:
Okay, well, The Southwestern Public Service Company, which is a subsidiary of Xcel Energy, has put a huge proposal together and has it before the New Mexico Public Regulation Commission. And it's a proposal to create a whole series of power plants and battery storage facilities to power expected energy needs and requirements in West Texas and southeast New Mexico.
KC Counts:
And one of the interesting things about it is that they're trying to qualify as a zero-carbon resource, and that's where things get really sticky, right?
Jerry Redfern:
Yeah, absolutely. So the key thing to remember here is this is a big old shaggy dog of a proposal. There's tons of different moving parts in it. So they're actually proposing eight new power facilities. There's two of natural gas, two of solar, two of wind, and two battery systems. But they're trying to get the natural gas power plants a third of the energy that would be produced, the biggest of the two of those, they're trying to get that to be called a zero-carbon resource. It's kind of complicated. The logic is there's a bit of a loophole in the state's Energy Transition Act, which kind of allows or appears to allow a power plant, like a gas-fired or perhaps even a coal-fired power plant, to be claimed to be a zero-carbon resource if it's offsetting a huge amount of carbon someplace else. That's kind of a long introduction, but that's kind of what they're angling for, is this little hole, this little loophole in the law and see if they can squeeze a power plant through it.
KC Counts:
Let's talk a little bit about New Mexico's zero-carbon goals. Things seem to be heading off in different directions at this point from, I think, the spirit of being zero-carbon emissions by 2045.
Jerry Redfern:
Right, yeah. So that is - that is the big goal of the Energy Transition Act that was passed back in 2019. And that goal is that by 2045, all the electricity produced by investor-owned utilities, that's all the electricity that's sold in the state of New Mexico produced by investor-owned utilities, is to be from zero-carbon sources. And it doesn't matter if that is produced directly in New Mexico or in a neighboring state. Like in this particular case, they're talking about building these two gas-fired power plants in Texas. And the biggest of the two of them would literally be right on the Texas-New Mexico border, just a couple miles south of Hobbs. So in theory, these two plants and the energy they produce are kind of the thing that the Energy Transition Act was meant to phase out. So it's kind of an interesting test case, I think, for the Transition Act to see if this would be allowed. And at this point, it's up to the Public Regulation Commission here in New Mexico to make that decision.
KC Counts:
So this energy would be specifically for oil and gas production?
Jerry Redfern:
Well, not exactly, although in large part, yes. So the service area for this particular proposal covers parts of West Texas and southeast New Mexico, and it's going on, you know, the basic public electric grid down there. So, you know, homeowners would be buying this electricity, grocery stores would be buying this electricity, but also a large portion of the New Mexico portion of the Permian Basin and the oil and gas production down there, they want to buy this electricity as well. And that's a big part of the reason why this is such a big plan, because it takes a lot of electricity to create and bring natural gas and oil out of the ground.
KC Counts:
Now, would they be using the funds from those sales to pay for the infrastructure?
Jerry Redfern:
This is a question, yeah. These are some of the things that, again, that the Public Regulation Commission has to figure out. Part of the argument that the Southwestern Public Service Company, or Xcel Energy, is making here is that there's this other loophole in the Energy Transition Act that says that everything has to be a zero-carbon source unless there are reliability issues or you are protecting customers from unreasonable bill impacts and that's exactly the wording that Xcel lifted out of the act and plugged into their proposal here to try to get these two gas-fired power plants allowed by the state of New Mexico and their argument is that if they were to have gone with say solar or wind or some other some other form of, you know, truly clean energy, it would have cost New Mexico customers an extra five and a half billion and raised electricity rates by some 40%. And again, it's going to be a really interesting question for the New Mexico folks to figure out, considering that for the last several years, solar installations, utility-sized solar installations, have been the most cost-effective way of adding power to the grid anywhere in the United States and really on the planet. So it'll be an interesting argument to hear.
KC Counts:
I want to touch briefly as well on some of the things that may be affecting everyone, things that we really can't see necessarily. Some days you can see it. I'm talking about air pollution, of course.
Jerry Redfern:
Right.
KC Counts:
What do we know about how people in the southeastern corner of the state are impacted already by oil and gas production?
Jerry Redfern:
Yeah, oil and gas production down there already has led to that corner of New Mexico being one of the most air-polluted places in the United States. It regularly, during mid to late summer months, has very high ozone pollution levels to a level actually that the EPA, if it had chosen to do so, could have labeled the whole area what's called a non-attainment zone, and then forcing companies and businesses and utilities in the area to dramatically scale back the pollution that comes out of their smokestacks. But EPA didn't do that under the Biden administration, didn't do it under the first Trump administration. It's pretty unlikely it's going to do it under this Trump administration. And what we're seeing with these gas-fired power plants are going to be two very large point sources of more of this sort of pollution in the Permian Basin, an area that's already highly air polluted.
KC Counts:
Do you imagine that New Mexico lawmakers will be fine-tuning these issues during the upcoming session?
Jerry Redfern:
Um, that's, that's a really good question. I'm,not sure. You know, we here in New Mexico have such a, a curious legislature. Um, this, this coming session will be one of the only one- month long sessions devoted entirely, supposedly to, to budget issues, um, as opposed to every other year being a two-month session where kind of everything under the sun gets debated. Um, they would have to somehow figure out how these issues in this particular case, deal with budgetary matters, or it would have to get a special pass by the governor. The governor would have to specifically ask the legislator to deal with these issues, and I'm not sure that's necessarily going to be on the table.
KC Counts:
And of course, when we have these conversations, we often come back to the fact that oil and gas is so much of New Mexico's financial resources. Over the last, say, few years, since maybe Governor Michelle Lujan Grisham has been in office, how would you characterize the diversification of New Mexico's economy that's taken place?
Jerry Redfern:
That's an interesting question. You know, I suppose there are different ways to look at diversification of an economy. One way would be to look at the state budget. It's perhaps a very peculiar way to look at it, but it's the way I kind of look at it. And in that time, the percentage of the state budget that comes from oil and gas revenues has only gone up. So it could be argued that on a monetary level, New Mexico has actually sort of gone backward in terms of overall diversification. There have been a lot of new businesses that have come to the state. I'm not saying that hasn't happened. There have been a lot of new technological businesses that have come to the state. I'm not saying that hasn't happened; but if you're looking at where New Mexico gets its money and where if you're looking at where the state of New Mexico gets its money it is increasingly has increasingly then from the oil and gas industry I don't think there's much debate about that.
KC Counts:
All right, Jerry, well thank you so much for your perspective on that and for sharing your reporting with us. We appreciate it.
Jerry Redfern:
Oh, I do too. Thank you so much for having me on.
Jerry's full report can be found right here.
Jerry Redfern is an Albuquerque-based reporter with Capital & Main, covering the intersection of the oil and gas industry, state politics and the climate crisis in New Mexico. He was previously a photojournalist covering environmental and humanitarian issues across Southeast Asia, and was the co-producer and director of the award-winning documentary film Eternal Harvest, which investigated the lingering effects of America’s bombing campaign in Laos during the Vietnam War.
