On Friday, July 19, PNM officials held a public meeting to start an Integrative Resource Planning process.

Bruce Ashburn, communications managerfor the Silver City PNM office, welcomed participants.

"Electricity is a part of our normal lives," Ashburn said. "This planning process includes presentations that will be pertinent for all of you."

Bob Darnell, PNM senior vice president of public policy, said he was pleased with the turnout and thanked Western New Mexico University President Joe Shepard for the use of the ABC room at the Besse-Forward Global Resource Center.

"I can't think of another industry that touches our lives as much," Darnell said. "Electricity is a huge part of our lives, including the lights, your coffeemaker in the morning, clothes dryer, refrigerator, microwave and everything else that uses electricity.

"This is the Integrative Resource Planning Process or IRP," Darnell said. "There are challenges in the way electricity is used nowadays. On June 27, 2013, we had a new peak demand record by 36 megawatts over our prior record for an all-time peak day demand."

He said residential use is almost 50 percent of the daily electricity usage. "When I joined PNM years ago, the average use was 620 megawatts a day. Now it is 604, due to a lot of energy efficiency and conservation."

He said that creates a challenge, because PNM has invested $675 million in power plants and power lines from 2010-2012.

"We are responsible for meeting demand," Darnell said. "We are given the right to provide electricity in a service territory, as a monopoly. The challenge is to balance reliability, the environment and affordability. Beginning in the '90s we began to see an emphasis on the environment. We feel we hit a home run with the San Juan Power Plant to retire two units, but it is challenging to replace the capacity. We were 'fipped' by the federal implementation plan, and the state was late with its implementation plan."

He explained the Environment Department had through the Environmental Protection Act a requirement to treat regional haze.

"The driving issue was to get the haze back to prior to the Industrial Age," Darnell said. "The federal government wanted to reduce the nitrogen oxide, We were challenged by the government to create a better environment and develop a way to mitigate the haze.

"To mitigate the impacts, PNM gave $1 million to the Navajo Nation for training," he continued. "San Juan Community College developed courses to diversify the economy. We have a guarantee that there will be no layoffs due to the closure, but will use attrition and retirement to cut the work force. Our plan is much superior to the EPA's requirement in the reduction of pollutants. We will reduce NOx (nitrogen oxide), particulate matter, carbon monoxide, carbon dioxide, VOCs (volatile organic compounds) and mercury."

He said some people want more pollutants reduced, and others believe the company gave up too early in the lawsuit.

"The change to a renewable generation portfolio is by necessity a gradual process," Darnell said. "In the 15 years between 2003 and 2018 you will see many changes. Before 2003, PNM did a contract to buy all wind-generated energy. Now the company has built or has is building solar projects. Another wind facility is in the works, and the first geothermal facility is outside Lordsburg. As of today, we have 22 megawatts of solar photo-voltaic installed by 3,300 residents."

Darnell introduced Pat O'Connell, PNM planning and resources director, with four employees under him. "They are the smartest people in the company," Darnell said. "After he speaks, we want your thoughts."

O'Connell said the PNM 2014-2-33 IRP presents opportunities "to provide your input."

The planning process has a public advisory component. "We are constantly planning. We just filed a renewable procurement plan with the state. Every three years, we create an IRP report, with a four-year action plan. Yes, we do a four-year plan every three years. Our planning is improved by public input. If we have done a good job of planning, we will have identified our most cost-effective portfolio."

He said the plan does not preclude other choices, but the IRP process is more formal. "We collect assumptions for the 20-year plan, which we are also working on every three years. We collect data: we have a plan to understand risks; and we analyze, evaluate and report."

The collection of assumptions is ongoing. Data determine the uncertainties, demand, prices and regulations. "The big unknown is how people will be using electricity at a future date. We want to identify the resources not yet in use."

O'Connell gave examples of uncertainties: a lot of people buy electric cars, usage goes up; the price of natural gas goes up or down.

Another key uncertainty is, although PNM knows the EPA will issue regulations on fossil fuel emissions, PNM doesn't know when or what they will be.

"We try to plan to understand risks by defining scenarios and identifying sensitivities," O'Connell said. "Each path will give a different answer, so we identify scenarios in this world or that world. We can play with the model on different sensitivities. For instance, the price of solar energy has dropped."

In the analyze-and-evaluate phase, the company runs computer models to identify the best solutions using a range of criteria. "Just because the computer says so does not mean it is the right choice. We test the best solutions under a range of uncertainties."

He said his team includes an engineer and an economist.

"We will present analysis examples early in the process," O'Connell said. "They will provide the foundation for public input. The examples will be IRP analyses of portfolios that can meet regional haze requirements and can show tradeoffs. When we shut door 2 at the San Juan Power Station, we have to know how to replace the capacity."

The next step in the process presents two scenarios, for instance, whether to install selective catalytic reduction technology, which reduces only the NOx, on all four units at San Juan or retire two units and install selective non-catalytic reduction technology on the other two units.

"Today we kick off the process, begin assembling data, prepare the analysis plan and model the scenarios," O'Connell said. "We will have a series of public meetings, with three in a short period of time—Sept. 17, 20 and 26—at our headquarters in Albuquerque, but they will also be available as a webcast. We hope to save it, so people can look at it later. We will look at transmission system improvements and get feedback on the balance in the plan. When we upload it to the website, we will send you a notice as well.

"Our email is irp@pnm.com for this process," he said.

Darnell said he worried about this meeting, because "this is the smartest group we have. I wasn't sure what to say."

The next article will cover the question-and-answer session part of the meeting.