This story was originally published by Capital & Main.
The Southwestern Public Service Company has requested that New Mexico grant exceptions to the state’s Energy Transition Act for two proposed gas-fired power plants. One exception would classify one-third of the energy from a plant as a “zero-carbon resource,” akin to solar panels or wind turbines.
Another exception seeks to exempt both plants from the zero-carbon requirement, citing the need to preserve system reliability and prevent unreasonable bill hikes for consumers.
The two plants are planned for Texas, with the larger, Gaines County Power Plant, near Hobbs, New Mexico. Despite their location, New Mexico’s Energy Transition Act mandates that all energy sold by investor-owned utilities must be from zero-carbon sources by 2045. This act marked a significant environmental milestone for Gov. Michelle Lujan Grisham.
The request forms part of an extensive application by Southwestern Public Service Company, a subsidiary of Xcel Energy, to the Public Regulation Commission of New Mexico. It includes proposals for new transmission lines, extended closure dates for coal plants, and eight new power facilities. The $10 billion plan covers the company’s service area in southeastern New Mexico and parts of West Texas.
While most proposed plants focus on renewable energy, the two gas plants would contribute 51% of the application’s total energy.
“To pretend that natural gas is a zero-carbon resource is just a bald-faced lie,” said Camilla Feibelman, director of the Sierra Club Rio Grande Chapter. “It’s profound greenwashing.”
Although the majority of the coverage area and energy sales of Southwestern Public Service Company are in Texas, Xcel reports that much of the projected energy increase would serve New Mexico, especially in the Permian Basin, the largest U.S. oil field. Over 50% of the company’s energy sales in New Mexico power oil and gas operations.
The application states that replacing the gas plants with renewable sources would cost New Mexico customers an additional $5.5 billion and hike residential electricity rates by more than 40%.
“We have already signed contracts for the turbines,” said Kaley Green, Xcel Energy’s senior media relations representative, noting a 40-year service life for each plant.
The company requests that New Mexico ratepayers bear all costs of two solar projects, as they meet Energy Transition Act requirements. It also seeks swift approval to secure enhanced renewable energy tax credits under President Biden, with curtailed timelines from past policies.
This comprehensive and controversial application was filed with the New Mexico Public Regulatory Commission on Sept. 25. The commission plans to decide on the Gaines Plant zero-carbon request by Dec. 10 and the full application by May 7. Green stated that work on the proposal began in 2022.
AnnaLinden Weller, senior policy adviser with Western Resource Advocates, said, “It is the biggest filing I’ve seen, but not by much.”
The company cites several reasons for the application’s size and complexity: planned closure of two aging coal plants in Texas, rising demand from the Permian Basin oil and gas sector, and new requirements from the Southwest Power Pool, operating from southeast New Mexico to the Canadian border.
In August 2024, the pool increased reserve requirements for member utilities like Xcel, partly in response to winter storms in 2021 and 2022 that stressed energy systems.
The request to operate gas plants beyond 2045, when New Mexico targets zero carbon emissions, looks to exploit a legal loophole. Weller noted that the Renewable Energy Act does not explicitly prohibit fossil fuels if utilities can demonstrate compliance with zero-carbon targets by 2045.
Xcel’s Green commented, “We will continue to work towards compliance with the 2045 goals, adjusting grid planning based on technology and other factors.”
The act allows a utility to claim a fossil fuel plant as a “zero carbon resource” if it reduces methane emissions with a 10-to-1 ratio or better. Southwestern Public Service Company suggests that electrifying Permian Basin operations could offset enough emissions to qualify part of the Gaines County plant’s output as “zero carbon.”
Weller said, “Are there climate impacts? Yes. The question is, are they worthwhile given what you’re building?”
Both carbon dioxide and methane are greenhouse gases contributing to global warming, though methane is more potent. The next 20 years are critical in mitigating future warming risks, an increasingly challenging goal due to rising oil and gas use.
On Nov. 12, the International Energy Agency predicted in its 2025 World Energy Outlook that oil and gas demand will not peak before 2050, complicating efforts to avoid frequent climate-related disasters.
“Electrifying the oil field offers some benefits,” Feibelman acknowledged, “but it also builds more infrastructure around oil and gas extraction, promoting a fantasy of sustainable extraction.”
In 2023, Chevron promoted a solar field in New Mexico to power a gas facility. However, it also announced plans for a large Texas gas power plant for data centers, producing far more electricity than the solar field.
Gov. Lujan Grisham’s office, when asked about the Southwestern Public Service Company application, emphasized that nearly half of the proposal is renewable energy. The law allows exceptions to maintain system reliability, and the office expressed confidence in the Public Regulation Commission’s ability to assess necessity.
If approved, the Gaines County plant would be located near Hobbs, New Mexico, with prevailing winds potentially carrying emissions over the town.
“It’s not like there’s a clear border separating New Mexico and Texas’ pollution,” Feibelman said, noting that the region already struggles with air pollution. The American Lung Association has rated Lea and Eddy counties poorly for ozone levels.
“The Permian Basin is essentially out of compliance with federal ozone standards,” Feibelman added. “Poor air quality affects kids, communities, and the elderly regardless of the state they reside in.”
Original Story at insideclimatenews.org