PNM Resources (NYSE: PNM) said Oct. 2 that subsidiary Public Service Co. of New Mexico acknowledges that a state settlement proposal released that day to address regional haze at the coal-fired San Juan Generating Station appears to be an important step toward an alternative to an expensive federal plan.
The proposed settlement agreement announced by the state would require several additional actions before moving forward, PNM noted. The first of those actions would be an agreement in principle by the U.S. Environmental Protection Agency and the utility to support the proposal. The proposal then would require many additional approvals, including formal adoption from the New Mexico Environmental Improvement Board, the state Public Regulation Commission and, ultimately, final approval from the EPA.
“The state proposal announced today appears to be an important step toward meeting our objectives of addressing the environmental needs of the regional haze program while lessening the cost impact to consumers and minimizing economic impact to the Four Corners region,” said PNM Chairman, President and CEO Pat Collawn. “We are hopeful today’s announcement will be the basis for a settlement agreement that will include a new state plan that will be approved by the EPA.”
The state announcement called for the retirement of Units 1-2 of San Juan by year-end 2017 and replacement of those units with natural gas and other non-coal generation, some of which would be located in the Four Corners region. Selective non-catalytic reduction technology for NOx reduction would be installed on Units 3-4.
“We are appreciative of the cooperation and leadership shown by Gov. Susana Martinez, the N.M. Environment Department and the U.S. Environmental Protection Agency throughout the process of exploring a new alternative,” Collawn said.
The 2011 plan adopted by the state to address regional haze at San Juan is awaiting action by the EPA, leaving in place a more costly federal requirement to install a specific technology on all four units of the plant. PNM and the state have pending court appeals against the federal plan. If an agreement is reached based on the Oct. 2 settlement proposal, it could have the added benefit of resolving pending litigation, PNM noted.
PNM Resources said July 3 that it had been notified that EPA granted a 90-day stay in the effectiveness of the federal plan for the San Juan plant to meet visibility requirements of the Clean Air Act in New Mexico. This delay provides a fresh opportunity to consider alternative approaches to meet the regional haze requirements at San Juan, said Collawn at the time.
Two different plans were developed for New Mexico, one by the state and the other by the EPA. The state found that best available control technology (BART) to reduce NOx emissions is SNCR and requires the utility to install SNCR on each of its four units. In August 2011, EPA published its Federal Implementation Plan (FIP), which requires installation of more costly selective catalytic reduction (SCR) on all four units within five years of the rule’s effective date of Sept. 21, 2011.
PNM has taken its case to federal court to appeal EPA’s mandate. The governor of New Mexico and the NMED are also in federal court appealing EPA’s decision to adopt a federal plan.
San Juan Units 1, 2, 3 and 4 have net rated capacities of 340 MW, 340 MW, 498 MW and 523 MW. Various other power generators also own parts of the plant.