Should nuclear power generation be part of New Mexico's zero carbon future? The question is part of a continuing controversy around the Public Utility Company of New Mexico's stake in Palo Verde Nuclear Generating Station, a nuclear power plant in Arizona that supplies electricity to New Mexico.

New Energy Economy, a consumer and environmental advocacy group in Santa Fe, says that the utility's investments at Palo Verde throw ratepayers under the bus, and the availability of cleaner, safer, cheaper alternatives means it's time to ditch nuclear. But other environmental advocates and PNM say New Mexico may not be able to get to zero carbon without it.

The debate has been the subject of a legal battle that has ping-ponged from the Public Regulation Commission to the New Mexico Supreme Court and back again.

In 2016, the PRC found that the utility failed to uphold its responsibility to protect ratepayers because the utility could not provide proof that it had analyzed the financial implications of reinvesting in nuclear assets at the Palo Verde Nuclear Generating Station and did not consider alternative sources of energy generation such as solar and wind. To make sure consumers weren't getting unfairly charged, the commission lowered rates and cut the substantial future costs of decommissioning and cleaning up the plant from ratepayers' bills.

PNM appealed the case to the New Mexico Supreme Court. Its May ruling supported the PRC's findings that ratepayers should not be charged full price for the nuclear assets at Palo Verde. But the court also found that the PRC cannot make the utility solely responsible for the decommissioning costs without due process. Justices sent the case back to the PRC to determine decommissioning costs at the next rate review meeting.

New Energy Economy Director Mariel Nanasi, who has argued against PNM in this case since it began, says this is not enough.

On Wednesday, July 17, she'll go before the PRC to argue that PNM should present its financial analysis in a special hearing before a hearing examiner. If the power company can't prove that the original purchase of 64MW and lease extension of another 114MW of nuclear at Palo Verde was the most cost-effective option, Nanasi says maybe it's time to remove these assets completely from the rate base without holding customers accountable for any of the costs involved in the utility's blunder.

In a court filing submitted July 1, NEE alleges that PNM deliberately chose not to conduct the required analysis though they knew it was imprudent and lied to the PRC about the value of its investments. The filing also argues PNM intentionally shifted the burden of increasing costs of nuclear power generation and the costs and liabilities of decommissioning onto the shoulders of ratepayers while the utility's shareholders stand to make a profit. These are among the reasons NEE claims that a special hearing is appropriate.

"If we let them get away with this, we'll be rewarding them for their outrageous behavior. It's time to hold PNM accountable," Nanasi tells SFR.

PNM spokesperson Ray Sandoval counters that the reason the utility did not do the full financial analysis and assessment of alternatives has to do with a refinancing plan stemming back decades and PNM's interpretation of previous agreements between the utility and the PRC which authorized the PNM to buy back leases at Palo Verde at market rate when they expire.

Rates are not the only concern.

A petition circulated by NEE cites the "history of cancer, sickness, and death and environmental catastrophe from uranium milling contamination" in New Mexico as a reason to leave nuclear behind. In her oral testimony before the PRC last week, retired chemistry teacher and anti-nuclear activist Cindy Weehler brought attention to the millennia that it takes nuclear waste to stop being toxic and radioactive.

"Future generations will have to live with the deadly dangers of nuclear waste without having ever gotten the benefit of one bit of the energy produced," Weehler told the commission. "We need to address the most challenging moral obligation of nuclear waste in my opinion, which is not to export into the future risks we are not willing or prepared to bear in the present."

Yet other stakeholders, including other environmental groups and the attorney general, have released statements opposing NEE's position, and PNM says that taking 64 MW of nuclear out of New Mexico's ratebase could be problematic for the transition to renewables.

"NEE is not asking for a hearing on the decommissioning costs. NEE is asking for a hearing on our entire nuclear resources in our generation portfolio. That has an implication on everything," PNM spokesman Ray Sandoval tells SFR by phone.

He says in an ordinary rate case, the nuclear would be considered as part of PNM's entire portfolio of current and potential future resources. In a special hearing, says Sandoval, the nuclear assets would be scrutinized in isolation. He says nixing nuclear without considering PNM's entire portfolio could have an unpredictable impact on the utility's generation capacity and could throw a wrench in the utility's plans to go carbon-free.

"What's allowing PNM to get to 100% carbon-free energy by 2040 is really these nuclear assets which help provide our base-load energy generation and are zero carbon assets. It's one of the reasons why nuclear assets are allowed under the Energy Transition Act," says Sandoval, adding that for these reasons, "We feel that our nuclear assets are very prudent."

The Coalition for Clean Affordable Energy, which includes members such Western Environmental Law Center and 350.org, among others, plans to argue against NEE on Wednesday.

"The arguments being advanced by New Energy Economy have nothing to do with protecting the environment … and could actually have an adverse consequence for the environment," CCAE Attorney Chuck Noble tells SFR by phone. He says that taking the 64 MW of nuclear at Palo Verde out of PNM's rate-base would not shut down the generating station. The Arizona utility that owns the plant would likely simply find other buyers for the energy generated. And PNM would still have to find a way to replace those megawatts for New Mexico.

"There's a good likelihood that that replacement would be natural gas generation," says Noble, "so from an environmental point of view, that's only going to increase emissions."

CCAE will and NEE will present oral arguments for and against a special hearing before the PRC at 1 pm on Wednesday July 17 at the PRC offices (1120 Paseo de Peralta).

Editor's note: An earlier version of this story incorrectly included the Rio Grande Chapter of the Sierra Club among member of the coalition that planned to argue against the NEE. Sierra Club leader Camilla Feibelman says the group is not "legally represented" by the coalition.