How will the ETA affect Ag?

You can’t drive between Clovis and Tucumcari without noticing the abundance of wind turbines.  Some see a move towards renewable energy while others see a cluttered landscape.  No matter which camp you’re in, expect more wind turbines on the horizon as New Mexico begins enacting the Energy Transition Act signed by Governor Lujan Grisham in 2019.

Senate Bill 489 aims to move the state towards renewable energy and away from traditional sources of energy such as coal and natural gas.  The bill mandates that by 2030, 50 percent of energy generated by investor-owned utilities and rural electric cooperatives will come from renewable sources such as wind or solar, increasing to 80 percent by 2040. By 2045 the law requires zero-carbon energy generation.

Passed in the House by a vote of 43-22, and in the Senate by 32-9, Governor Lujan Grisham was eager to sign the bill saying in a press statement that it “sets bold statewide renewable energy standards and establishes a pathway for a low-carbon energy transition away from coal while providing workforce training and transition assistance to affected communities.”

Dubbed “New Mexico’s Green New Deal,” the law puts the state on par with Hawaii, California and Washington DC in adopting climate change abatement goals.  Currently, our state generates 20 percent of its energy from renewable sources, including importing power from the Arizona’s Palo Verde nuclear plant.

Unfortunately, as we’ve seen with the rolling blackouts in California, solar and wind produce intermittent power not well-suited to provide the constant energy farm, ranch and dairy families need to produce our favorite foods such as chile, beef and milk. Dairy producers need reliable electricity to run the fans that cool their cows in the summer and operate the milking machines twice a day, 365 days a year.  Ranchers rely on affordable energy to power the pumps that keep their cattle watered in remote areas.  And farmers need electricity to operate cold rooms that store chile and packing sheds for sorting onions. Obviously these food producers cannot afford the spotty coverage caused by renewables that are not fully backed up with adequate storage capacity.  Unfortunately, current batteries are not up to the task, a problem many hope will be solved by 2030.

But reliability is not the only issue, we can expect electric rates to rise by 17 percent, according to a paper from the University of Chicago ( Californians are experiencing that reality as their electricity rates have doubled in the past 15 years.  According to the United States Energy Information Agency, California citizens pay almost double for their energy as New Mexicans do at 20.49 cents and 12.47 cents per kilowwatthour respectively. This necessary rise in rates was confirmed by Public Service Company of New Mexico (PNM) as they testified before the New Mexico Public Regulation Commission (PRC) during a hearing to shutter the San Juan Generating Station in accordance with ETA standards. They estimated that rates would rise by as much as 14 percent. 

Notably, while New Mexico is headed towards a greater reliance on renewables, commissioners of a public utility department in the state of Washington say they do not support further wind power development in the Northwest. In a report issued by the Benton PUD on July 14, 2020, commissioners state that large-scale wind farms drive up customer rates and do not make a significant contribution to reducing greenhouse gases. Additionally they write, “We are continuing to sound the alarm regarding the unacceptably high risk of power grid blackouts in the Pacific Northwest being precipitated by overly aggressive clean energy policies and deepening dependence on wind power to replace retiring coal plants…rolling blackouts jeopardize the health, safety and well-being of all citizens.”

It remains to be seen if the benefits of the ETA will outweigh the costs, but we are sure that if electricity rates increase by even 10 percent, it will have devastating effects on food producers and consequently, food prices.