PNM pursues two NOx options, while preferring the cheapest

Public Service Co. of New Mexico on April 6 requested changes to the New Mexico air permit for the coal-fired San Juan power plant to allow for the installation over the next several years of less expensive emissions controls to combat regional haze.

“We are prepared to move forward on installing new environmental controls that will meet federal visibility requirements and further reduce the plant’s emissions,” said Pat Vincent-Collawn, Chairman, President and CEO of PNM parent company PNM Resources (NYSE: PNM). “Our strong preference is to do this in the most cost-effective way so that the cost to PNM customers and our state’s economy is kept as low as possible.”

PNM is appealing a mandate by the U.S. Environmental Protection Agency that the San Juan plant install one particular technology, selective catalytic reduction (SCR), to meet a visibility requirement. The state of New Mexico has approved a different technology, selective non-catalytic reduction (SNCR), which can meet that same federal requirement for about one-tenth the cost of the EPA plan. Initial engineering estimates put the cost of EPA’s plan at $750m or more, while the state plan, backed by PNM, would cost about $77m.

“Both technologies would improve visibility in regional parks and wilderness areas and would contribute to the state’s current goal to restore visibility in those areas to a natural state by 2064, as required by the Clean Air Act,” Vincent-Collawn said.

The April 5 filing, with the New Mexico Environment Department (NMED), requests air permit changes to allow for the installation of either technology. Prior to a major environmental upgrade completed in 2009, the plant was emitting NOx at a rate of 0.46 lbs/mmBtu. The plant’s current permit level is 0.3 lbs/mmBtu and would be lowered to either 0.23 lbs/mmBtu with the installation of SNCR and 0.05 lbs/mmBtu with the installation of SCR.

Due to the “aggressive nature” of EPA’s requirement that SCR be installed on all four of the plant’s units by September 2016, PNM said it is in the early stages of preparing to install SCR. In January, the company issued a request for proposals for that kind of project.

PNM, New Mexico Gov. Susana Martinez and NMED have asked EPA to grant a stay of its decision during their appeal so that customers served by the San Juan plant – about 2 million electric users in New Mexico, Colorado, Utah, Arizona and California – do not have to invest in a technology that the court could find is unnecessary.

According to PNM estimates, about $246m of the total expected project cost will be spent through 2013 – a timeframe in which the matter could still be pending in court. As owner of 46% of the plant, PNM’s portion of these initial SCR costs total about $21.3m through the end of this year and about $112.8m through the end of 2013.

EPA has recently accepted SNCR as best available retrofit technology on coal plants in three other states – Colorado, Montana and North Dakota – but has not yet considered New Mexico’s plan to install that same technology, PNM pointed out. Federal visibility rules give broad discretion to states to make decisions regarding how best to meet those rules within their own states. EPA is required by law to fully consider New Mexico’s plan.

San Juan consists of four units operated by PNM, the parent company noted in its Feb. 29 annual Form 10-K filing. Units 1, 2, 3, and 4 have net rated capacities of 340 MW, 340 MW, 498 MW and 523 MW. Units 1 and 2 are owned on a 50% shared basis with Tucson Electric. Unit 3 is owned 50% by PNM, 41.8% by the Southern California Public Power Authority and 8.2% by Tri‑State Generation and Transmission Assn. Unit 4 is owned 38.457% by PNM, 28.8% by MSR Public Power Agency, 10.04% by the city of Anaheim, Calif., 8.475% by the city of Farmington, N.M., 7.2% by the county of Los Alamos, N.M., and 7.028% by the Utah Associated Municipal Power System.

With headquarters in Albuquerque, PNM is the largest electricity provider in New Mexico, serving 500,000 customers in dozens of communities across the state. The San Juan plant gets its coal from minemouth surface and underground mining operations controlled by BHP Billiton.

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.