El Paso Electric nears New Mexico approval for new gas plant

A hearing examiner at the New Mexico Public Regulation Commission has recommended that the commission approve an application from El Paso Electric (NYSE: EE) to build two 88-MW, gas-fired units at the greenfield Montana site near El Paso, Texas.

Elizabeth Hurst, the hearing examiner in this case, noted in the Nov. 1 recommendation that this application was filed on May 2 and is for a Certificate of Public Convenience and Necessity (CPCN). In its application, El Paso Electric (EPE) seeks approval to construct, own and operate two 88-MW natural gas-fired units at a new site in El Paso County. The proposed units are called Montana Units 1 and 2.

EPE is in the process of adding new generation (Rio Grande Unit 9) at its Rio Grande Station, which was approved by the New Mexico commission in a prior case. Rio Grande Unit 9 is anticipated to be brought online by May 2013. The last major generating addition prior to Rio Grande Unit 9 was the gas-fired Newman Unit 5, which was also approved by the commission.

In addition to its generating stations, EPE also purchases power under various wholesale agreements to meet a portion of its customers’ energy needs, including about 50 MW of solar energy purchases. An EPE witness testified that EPE typically allocates 23%-24% of its system to New Mexico, 76% to Texas, and less than 1% to FERC.

The need for peaking capacity and the addition of a gas-fired unit were evaluated and included in EPE’s Integrated Resource Plan (IRP) filed with the commission in July 2009, as well as its most recent IRP filed on July 16. The Montana Units 1 and 2 are needed to meet forecasted increases in load growth, to meet peak demand during EPE’s summer peak hours, and to satisfy reserve margin needs.

New units needed to replace gas-fired retirements

In addition, EPE currently anticipates retiring: the gas-fired Rio Grande Unit 6 (45 MW) at the end of December 2014: and the largely gas-fired Newman Unit 2 (76 MW), one of EPE’s local units that has duel fuel capability (the other fuel is fuel oil), at the end of December 2015. The Montana Units 1 and 2 will fully cover the loss of about 121 MW from these older, less efficient units. As a result of forecasted customer load growth and plant retirements, EPE projects it will have a 66 MW resource deficiency in 2014 and a 173 MW resource deficiency in 2015. Based on this forecasted deficiency, EPE requested approval to add the two new gas-fired peaking units.

EPE said in the application that the Montana plant will consist of two, simple cycle combustion turbine generating units using General Electric’s aeroderivative LMS100 technology. EPE is requesting approval of a CCN to construct, own and operate two, new natural gas-fired generation units rated at approximately 88 MW each. These two units are part of an overall project which will consist of four General Electric LMS100 units. The units will be built in phases over the next few years. One LMS100 unit is to be added in 2014, another LMS100 unit in 2015 and two additional LMS100 units in 2016. The LMS100 units added in 2014 and 2015 are the Montana Units 1 and 2.

EPE’s certificated estimated cost for the two Montana units and related facilities is $203m, including allowances for funds used during construction, Hurst noted.

El Paso Electric said in its Nov. 2 Form 10-Q statement about a parallel case ongoing at the Public Utility Commission of Texas: “On May 2, 2012, the Company filed a petition with the PUCT requesting a CCN to construct a new generation facility to be located at a new plant site, the Montana Power Station, in far east El Paso. The new facility will initially consist of two 88 MW simple-cycle aeroderivative combustion turbines, which will be powered by natural gas. The first unit is scheduled to become operational in 2014. This case was assigned PUCT Docket No. 40301. On October 25, 2012, the Company filed an unopposed stipulation and settlement that resolves all matters in this proceeding. The State Office of Administrative Hearings returned the case to the PUCT for its consideration of the stipulation. It is anticipated that the PUCT will consider the case by the end of 2012.”

Said the Form 10-Q about the New Mexico case: “On May 2, 2012, the Company filed a petition with the NMPRC requesting a CCN to construct a new generation facility to be located at a new plant site, the Montana Power Station, in far east El Paso. … No party has intervened in the proceeding. The NMPRC Staff filed testimony recommending approval of the application. A hearing was held on August 30, 2012 and a final order is expected in November 2012.”

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.