PNM loses more support on San Juan

The San Juan Generating Station near Farmington burns coal to produce electricity. (Richard Pipes/Albuquerque Journal)

The San Juan Generating Station near Farmington burns coal to produce electricity. (Richard Pipes/Albuquerque Journal)

The environmental organization Western Resource Advocates announced Thursday it is withdrawing its support for Public Service Co. of New Mexico’s plan to shut down half of the coal-fired San Juan Generating Station near Farmington.

The group is concerned that PNM Resources, parent company of PNM, is considering acquiring 65 megawatts more of generating capacity at San Juan after two of the power plant’s four generating units are shut down.

Western Resources is the third organization this week to back out of the “stipulation” agreement that PNM and six groups signed in October in support of the utility’s plan, which aims to bring the coal plant into compliance with federal haze regulations. PNM proposes to shut half the plant and install pollution controls on the remaining two units to reduce nitrogen oxide emissions, which cause haze. It would replace the lost generation with a mix of nuclear, natural gas and solar energy.

But with the partial shutdown, four of the plant’s nine co-owners will withdraw from San Juan, leaving nearly 200 MW of capacity without an owner in one of the two units that is supposed to keep functioning. To resolve that, PNM proposes to absorb an extra 132 MW of capacity in that unit, and the Farmington Electric Utility System – another plant co-owner – agreed in a tentative deal last June to take another 65 MW.

But Farmington announced last week it was withdrawing from the deal, and Western Resources now believes PNM Resources intends to absorb the extra generation in Farmington’s stead.

“If PNM Resources acquires that generation, it would mean PNM and its affiliate would actually be absorbing nearly 200 MW more of capacity in that generating unit, and that’s just too much for us,” said Steve Michel, chief counsel for Western Resources. “We’ve now withdrawn from the stipulation and we will contest any further acquisition by PNM of more San Juan capacity, including the original 132 MW that PNM said it was going to acquire.”

PNM has said it will not take on the 65 MW, but the utility so far won’t give that same guarantee for its parent firm, PNM Resources.

“That’s a matter for the owners who are still in restructuring discussions about the plant,” said PNM spokeswoman Susan Sponar.

The New Mexico Public Regulation Commission has been reviewing PNM’s plan for San Juan in public hearings that began in Santa Fe on Jan. 5.

Earlier this week, the Renewable Energy Industries Association and New Mexico Independent Power Producers also withdrew their support for PNM’s plan because of the 65 MW issue and growing concerns about the plant’s future economic viability. That leaves only the PRC’s utility division staff, the Attorney General’s Office and New Mexico Industrial Energy Consumers still backing the October stipulation agreement.

Opponents in the PRC hearings want PNM to shut down more coal production at San Juan and add more renewables to the grid as replacement power, but PNM says its plan is still the most cost-effective way to achieve compliance with federal haze regulations.
“We believe that our plan before the commission provides the best path forward for our customers in terms of cost, a reliable and less risky power supply, and significant environmental benefits,” Sponar said.
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