PNM push to buy San Juan coal mine worries activists

Public Service Company of New Mexico’s negotiations to buy a coal mine near Farmington are drawing the ire of activists concerned that the purchase could continue the power company’s dependence on coal for years to come — and from a mine already facing intense scrutiny over environmental issues.

The San Juan Mine, owned by a subsidiary of the Australian mining giant BHP Billiton, supplies all of the coal burned in the San Juan Generating Station in Northwestern New Mexico. The power plant provides most of the electricity used in Santa Fe and Albuquerque and by other PNM customers.


PNM’s existing contract with the San Juan Mine ends Dec. 31, 2017, and BHP Billiton wants to get rid of the mine after that, according to documents filed with the state Public Regulation Commission. BHP Billiton has already sold the Navajo Mine, another coal mine in the Four Corners region, to the Navajo Nation.

The contract requires PNM and other owners of the San Juan Generating Station to pay for coal from the mine regardless of whether it is used.

“We have made no decision to purchase the mine,” a PNM spokeswoman said. “But in the process of making the evaluation, we are seeking the most cost-effective option for our customers.”

The company did agree in October to sign a “binding and enforceable” letter of intent by Dec. 31 regarding the mine’s future, which won’t include input from state regulators or ratepayers.

Some groups worry that PNM will negotiate a contract to buy the mine, which might not be in the long-term best interests of New Mexico ratepayers.

“Coal is a very risky resource — and a very costly and dirty resource,” said Steven S. Michel, an attorney with Western Resource Advocates.

PNM will need flexibility to handle changes in environmental regulations that are likely to impact coal power plants in the next few years. “Locking yourself into a long-term future coal supply contract compromises that flexibility,” Michel said.

Lori Goodman, who is a Navajo community organizer with Diné CARE, said the bottom line that is PNM needs to stop using coal, for the health of people in the Four Corners region who have lived with emissions from the plant for decades.

“Coal is not good. The people of the Four Corners, we’ve been overburdened with the pollutants of the power plant,” Goodman said. “PNM is in a position to switch over to other resources.”

Coal ash, a byproduct of coal mining, along with carbon dioxide and methane — both potent greenhouse gases linked to climate change — have environmental consequences that present a liability to whomever owns the San Juan Mine, environmentalists say.

Scientists have discovered a methane “hot spot” has persisted near the San Juan Generating Station and the nearby coal-fired Four Corners Power Plant for a decade. Their research results were published in October in Geophysical Research Letters. The methane comes from coal mining, not hydraulic fracturing for oil and gas, scientists said. “We attribute this hot spot to fugitive leaks from coal-bed methane that actually preceded recent concerns about potential emissions from fracking,” said Manvendra Dubey, a Los Alamos National Laboratory researcher on the project.

The findings were published shortly after the nonprofit WildEarth Guardians sued the federal Office of Surface Mining for giving the San Juan Mine a permit to expand operations. WildEarth Guardians claimed the government had skipped an environmental review, left the public out of the decision and failed to look at the cumulative environmental impact of a decade of coal mining. San Juan Coal Co. has intervened in the case.

PNM’s negotiations to buy the mine would need to resolve the issue of who pays any costs from the litigation.

Meanwhile, PNM also wants state regulators to approve a plan to charge customers for increased power capacity at one of the coal-fired units at San Juan. Before state regulators approve PNM’s plan for replacing power at the San Juan Generating Station, Michel said, they should know where the coal is going to come from after 2017 and how much it will cost ratepayers.

PNM has proposed closing two of the four coal-fired units at San Juan Generating Station to reduce haze in the Four Corners region and appease federal regulators. The company wants to replace the power with a combination of nuclear, natural gas, solar and an additional 132-megawatt capacity from one of the two remaining coal-fired units.

PNM owns most of the San Juan Generating Station, with the rights to 783 megawatts of power from the plant. The company also operates the power plant. If state regulators approve retiring two of the units, PNM will reduce its use of coal at San Juan Generating Station by 36 percent.

New Mexico regulators are still months from deciding if they will approve the San Juan power replacement plan. A public hearing is scheduled for January.

Besides potentially buying the San Juan coal mine, PNM is exploring the possibility of opening a new strip mine at Ute Mountain, a half-dozen miles from the power plant, with permission from the tribe.

PNM customers need to start a larger conversation about where their power is coming from and who should pay the environmental price for producing it, said Mike Eisenfeld, who lives 10 miles from the San Juan Generating Station.

“Our hope is that this will become more of a dialogue from people all across New Mexico and they will not just look the other way,” Eisenfeld said. “It is time to start giving a little more thought about this, instead of just that coal is burned in one place, with the environmental problems there, and the cheap benefits are enjoyed elsewhere like Santa Fe and Albuquerque.”

Contact Staci Matlock at 986-3055 or Follow her on Twitter @stacimatlock.

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