State of New Mexico officials, Albuquerque-based utility PNM and the U.S. Environmental Protection Agency (EPA) last Friday reached a tentative agreement on an emission reductions plan that would shutter two coal-fired generation units and create new natural gas-fired generation.
The nonbinding agreement requires several additional actions, including revisions to the state implementation plan, which is overseen by EPA officials.
The agreement concerns a mutually accepted revised plan for PNM’s coal-fired San Juan Generation Station to comply with federal visibility (haze) rules. New Mexico Gov. Susana Martinez helped broker the deal, and she said she was guided by the prospect of moving away from coal and toward the state’s vast gas supplies, including developing the Mancos Shale, as well as economic development.
“We worked hard to craft a reasonable solution that would improve air quality, conserve New Mexico’s precious water resources, avoid an extremely burdensome rate hike on consumers, protect jobs in northwestern New Mexico, transition away from coal and toward New Mexico natural gas, and position the state to take full advantage of exciting new economic development opportunities in the Mancos Shale,” Martinez said.
PNM said the three-part agreement would be “less costly” and provide “broader environmental benefits than the current federal plan.” With a five-year horizon, plans calls for retiring by the end of 2017 units 2 and three of of San Juan’s four 450-MW units, which is about one-half of the plant’s 1,800 MW of capacity. The New Mexico Environmental Board is expected to act on the agreement by late October, and the EPA should issue its decision in late 2014.
New Mexico’s Public Regulation Commission (PRC) eventually would have to approve closing the generation units and approve the replacement power. PNM has indicated that it plans to develop 150-200 MW of gas-fired power generation at the San Juan site. The remaining two units would be outfitted with nitrogen oxide-reducing technology — selective noncatalytic reduction — by early 2016.
In 2009, PNM completed a four-year, $320 million emissions reduction program at San Juan that reduced the coal plant emission levels for nitrogen oxide, sulfur dioxide, particulate matter and mercury. Since then EPA has raised the bar on plant emissions.
The New Mexico utility, a subsidiary of PNM Resources Inc., is the majority owner of San Juan with 46% of the plant. Public sector power providers in California and the Southwest also are shareholders.
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