PNM halts plans for San Juan County gas plant, pipeline

PNM halts plans for San Juan County gas plant, pipeline

The state’s largest electric utility has halted plans to develop a natural gas plant and pipeline in San Juan County, saying Friday that energy demand is lower than expected and the project isn’t necessary.

The state’s largest electric utility has halted plans to develop a natural gas plant and pipeline in San Juan County, saying Friday that energy demand is lower than expected and the project isn’t necessary.

When the Public Service Company of New Mexico’s power plan was approved in December 2015, the utility agreed to close down two of four coal-burning units at the San Juan Generating Station near Farmington and supplement the lost power with nuclear energy, a small amount of solar and wind power, and a proposed natural gas facility.

An application for the $100 million gas plant to generate 80 megawatts of power was under consideration by the state Public Regulation Commission this year. PNM originally said the facility was a cost-effective way to replace some of the energy lost from the closed units at the coal plant and could be a job creator for the region.

But in a filing Friday, the company withdrew its application for the plant, saying the facility is “unnecessary at this time.” Instead, the company plans to meet energy needs through market purchases of power.

The company also asked the PRC to suspend the ongoing discovery in the case — a long list of legal questions, emails and internal documents requested to justify the development.

The other parties listed in the case — including the Coalition for Clean Affordable Energy, Western Resource Advocates, the state attorney general, the city of Albuquerque and New Mexico Industrial Energy Consumers Inc. — said they had no objection to PNM’s request to withdraw the application. However, some groups objected to the company’s request to suspend discovery, including the Southwest Generation Operating Co. LLC and New Energy Economy.

In a statement, New Energy Economy said the natural gas pipeline proposal had been “entirely unnecessary and unfounded,” largely because the company had overestimated the demand of its customers. Preliminary discovery showed just three jobs would be created as a result of the facility, the group said.

On Sept. 30, David Van Winkle testified on behalf of New Energy Economy before the PRC, saying the utility’s request should be denied because “PNM has shown by their own assessment that this gas … plant is not needed to meet system’s peak demands.”

“An expenditure to meet fictitious peak demand growth will only saddle ratepayers with unnecessary rate increases,” he said.

Van Winkle said the company had estimated 2 percent annual growth in energy demand between 2015 and 2033, despite demand remaining “essentially unchanged,” with 0.4 percent growth per year since 2007.

Mariel Nanasi, director of New Energy Economy, said the group was “thrilled” that PNM had withdrawn the application, saying its “request for more resources is wasteful, pure greed.”

PNM, however, maintains that while the plant and pipeline are not necessary at this time, the projects will be reassessed as the company reviews its 20-year energy portfolio.

Pahl Shipley, a spokesman for the utility, said the company still anticipates needing additional power by 2020.

“We will continue to evaluate resource needs going forward and will file a new application with the commission if a new plant or other resources are required to serve our customers,” he said.

In September, the commission approved a rate increase of about 10 percent for PNM customers that allows the company to get back some of the losses it says it accrued through energy investments related to its new power plan.

Posted: Friday, October 28, 2016 7:00pm
By Rebecca Moss
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