Facing an aggressive timeline for complying with a new U.S. Environmental Protection Agency requirement, Public Service Co. of New Mexico (PNM) said Jan. 30 that it has issued a request for proposals for the installation of selective catalytic reduction (SCR) for NOx control at its San Juan coal plant located near Farmington, N.M.
“EPA’s five-year timeline for compliance means we must move forward on initial steps to install this technology even as we continue to make the case that we can meet the federal visibility standard for about one-tenth the cost to customers,” said Pat Vincent-Collawn, Chairman, President and CEO of PNM parent company PNM Resources (NYSE:PNM). “PNM is prepared to implement the state plan right away. We are trying to resolve this issue quickly, reasonably and in the best interests of the people of New Mexico.”
The Clean Air Act set a long-term timetable for improving visibility in national parks and wilderness areas. Two different plans have been developed for New Mexico to meet its obligation: one developed by the state and the other by EPA. Both plans meet CAA requirements and would produce a similar visibility improvement as seen by the human eye, said the utility. But EPA’s required technology could cost almost ten times more than the technology required by the state. Two major engineering firms have estimated the EPA-required technology will cost at least $750m and that the state-required technology, selective non-catalytic reduction (SNCR), would cost about $77m.
PNM has asked EPA to reconsider its decision and also to put its decision on hold while a federal court considers appeals by PNM, New Mexico Gov. Susana Martinez and the New Mexico Environment Department. All three parties support the state plan, which calls for the installation of SNCR at San Juan. PNM also has asked the court for a stay of the EPA mandate while the court considers the merits of the appeals.
“To meet the current EPA deadline, PNM and the eight other owners of San Juan will have to begin to spend a significant amount of money to install technology that the court may find is unnecessary. For the benefit of customers, an administrative or judicial stay is absolutely critical,” Vincent-Collawn said.
PNM estimated that about $246m of the total project cost of $750m or more will be spent through next year – a timeframe in which the matter could still be pending in court. As owner of 46% of the plant, PNM’s portion of these costs total about $21.3m through the end of this year and about $112.8m through the end of 2013.
PNM said it believes EPA significantly underestimated the cost of installing SCR at San Juan while overstating the visibility improvements that would result. EPA has not yet responded to PNM’s requests for reconsideration and for an administrative stay pending legal resolution.
Responses to the PNM RFP are due April 20. Vincent-Collawn said receiving bids from engineering firms with real-world experience installing the EPA-required technology should provide important information regarding the cost of installing that technology at the San Juan plant.
The future of the San Juan plant is a key issue for international miner BHP Billiton, which feeds captive coal to the plant from nearby mining operations that could not economically survive if the plant were to shut down. San Juan is a four-unit plant with 1,800 (gross) MW of capacity. PNM owns 46% and operates the plant on behalf of eight other owners.
With headquarters in Albuquerque, PNM is the largest electricity provider in New Mexico, serving 500,000 customers in dozens of communities across the state.