PNM defends plans to replace power from San Juan plant

Posted: Tuesday, April 21, 2015 7:00 pm | Updated: 12:45 am, Wed Apr 22, 2015.

ALBUQUERQUE — New Mexico’s largest electric provider is defending its plan to replace power from part of an aging coal-fired plant with a mix of coal, natural gas, nuclear and solar generation.

Critics, including environmentalists and consumer advocates, counter that the plan isn’t in the best interest of ratepayers.

Public Service Company of New Mexico said Monday in a filing with state regulators that rejecting the plan could jeopardize the continued operation of the San Juan Generating Station and end up costing customers more.

The utility’s objections follow the recommendation last week of a hearing examiner who suggested the plan not be approved by the Public Regulation Commission unless changes are made. The examiner cited uncertainty surrounding the ownership makeup of the plant and the lack of a coal-supply contract beyond 2017.

Commissioners will hear the matter Wednesday. It could be another month before a final vote is taken.

Two units at the San Juan plant are scheduled to close in 2017 under an agreement with federal and state officials to curb haze-causing pollution in the Four Corners region.

PNM, the operator of the plant, proposed replacing the two units with coal from one of the plant’s other units, electricity generated by the Palo Verde nuclear plant in Arizona, a new natural gas-fired plant and more solar generating stations. Even with the addition of 132 megawatts of coal, PNM says its coal generation would drop below 50 percent if the plan is approved and part of San Juan is shuttered.

PNM’s regulatory filings estimate the cost over 20 years at more than $6.8 billion. The plan represents the most cost-effective alternative for dealing with federal environmental mandates that call for reducing emissions at San Juan, the utility says.

“The company has worked diligently to find the best balance among affordability, reliability and environmental protection, and the hearing examiner’s recommendations could have the opposite impact,” Ron Darnell, a PNM vice president, said in a statement.

Renewable energy advocates have questioned the costs of adding more coal and investing in the Palo Verde nuclear plant. They’re pushing for PNM to add more solar to its portfolio and to keep in place roof-top solar incentives.

A coalition of environmental groups on Tuesday delivered a letter to Attorney General Hector Balderas’ office, calling on him to withdraw support for the PNM plan.

Last week in a separate rate case, Balderas urged state regulators to investigate the costs and benefits of roof-top solar and wind-generation systems on the electric grid. He said New Mexico needs a plan that guarantees energy security as well as affordable clean energy.

The Daily Times in Farmington reported that the San Juan County Commission on Tuesday officially stated its support for PNM’s plan to shut down the two coal-burning units and retrofit the other two stacks to reduce pollution.

Officials worry if the plan does not pass, the plant and the coal mine that fuels it will close. The power plant employs 340 people, and 400 work in the coal mine.

“I’m really worried about the future if we don’t put our foot down, put a stop to this,” Commissioner Scott Eckstein said.

At Tuesday’s county meeting, PNM Vice President of Public Policy Ron Darnell briefed commissioners on the company’s situation. He said the power plant pays the county approximately $5.2 million a year in property taxes, funds more than $41 million annually in payroll and another $15.5 million in benefits and retains each employee for an average of 14 years, which excludes the coal mine.

But those numbers are at risk, Darnell said. If the PRC does not issue a certificate of operation for the plant’s four units, the Environmental Protection Agency will only permit one unit to function, he said.

County Executive Officer Kim Carpenter asked whether the plant would remain open with only one unit burning coal. Darnell said he couldn’t answer the question, but “the probability is not very good.”

Read the article here.

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