Public Service Company of New Mexico is negotiating to sell its 13 percent ownership share of the Four Corners Power Plant to the Navajo Transitional Energy Co.
Negotiations are expected to conclude in the next two weeks, PNM spokesman Ray Sandoval said.
The deal would advance PNM’s scheduled departure from Four Corners near Farmington from 2031 to Jan. 1, 2025.
“There will be a substantial payment to exit the contract early,” Sandoval said. “That payment will come from shareholders, not customers.”
Sandoval would not disclose the payment amount. But CEO Clark Moseley of Navajo Transitional Energy Co., in an email to Navajo Nation leaders acquired by The New Mexican, indicated a $75 million payment to resolve “all existing obligations between PNM and NTEC.”
Navajo Transitional Energy Co., owned by the Navajo tribal government, supplies all the coal to the Four Corner Power Plant, and PNM is under contract to make coal purchases until 2031.
Sandoval said exiting early from Four Corners is part of PNM’s plan to meet state Energy Transition Act requirements to use 100 percent renewable energy by 2045. The utility said it intends to achieve coal-free energy by 2040.
“There will be a $100 million benefit to customers to get out early,” Sandoval said. “Renewable energy is cheaper than maintain a coal power plant.”
Just last week, Connecticut-based Avangrid, a sustainable energy company with a presence in several states, announced its intention to acquire PNM Resources, PNM’s parent firm, for a stock buyout estimated at $4.3 billion. The purchase still needs a variety of regulatory approvals. If the deal goes through, the transaction is expected to close by the end of 2021.
Arizona Public Service Co., the largest electricity company in Arizona, owns 63 percent of the Four Corners Power Plant complex. PNM owns 13 percent, and the Salt River Project in Arizona owns 10 percent. Tucson Electric Power owns 7 percent and Navajo Transitional Energy Company acquired a 7 percent ownership share in July 2018, according to NS Energy, a utility publication.
PNM and Navajo Transitional Energy Co. intended to find a third party to take on PNM’s ownership share but two efforts fell short. Navajo Transitional Energy Co. intends to be a temporary owner and possibly find a third-party owner before the expected January 2025 transfer date arrives, Moseley indicated in his email.
“We determined that we have the flexibility to first acquire the asset ourselves and then seek the appropriate third party on our own time frame and schedule and not be forced to accept adverse terms and conditions due to a short deadline,” Moseley wrote. “So this will now be a two step process in which we acquire the interest from PNM and then sell the interest to a third party prior to 2025.”