PNM talks with EPA fail, utility moves reluctantly forward with SCR

PNM Resources (NYSE: PNM) said Nov. 30 that subsidiary Public Service Co. of New Mexico continues work to comply with federal visibility rules for the coal-fired San Juan plant following the Nov. 29 expiration of the U.S. Environmental Protection Agency’s 45-day administrative stay extension.

The 45-day extension was granted by EPA to allow further consideration of alternatives to the federal and state plans to reduce regional haze but did not result in an agreement in principle to move forward with a third alternative. During the 45-day stay extension, PNM, EPA and the New Mexico Environment Department discussed possible alternatives.

“The stay extension was important in terms of signaling EPA’s willingness to continue discussions of alternatives,” said Pat Collawn, chairman, president and CEO of PNM Resources. “However, the compliance date remained in effect, so we have continued to move ahead with preparations to implement the federal plan that remains in place. In October, we awarded a contract to Fluor Corp. for the installation of [selective catalytic reduction] SCRs on all four units to comply with the federal plan. In December, we plan to submit a filing with the N.M. Public Regulation Commission requesting project approval for the SCR installation.”

The September 2016 compliance date for the Federal Implementation Plan (FIP) currently in place for San Juan requires installation of SCR technology on all four units of the plant. That technology is expected to cost between $824m and $910m. PNM said it continues its legal appeal of the federal plan.

Based on a recently completed conceptual design study, PNM said in its Nov. 2 Form 10-Q report that the current estimates are that the installation of alternative selective non-catalytic reduction (SNCR) on all four units of San Juan would cost between $85m and $90m. If SNCRs are installed, additional equipment would be required to meet National Ambient Air Quality Standards (NAAQS) requirements, the cost of which is estimated to total between $105m and $110m for all four units.

San Juan Units 1 and 2 have a unit capacity of 350 and 360 MW, respectively. Units 3 and 4 each have a unit capacity of 544 MW.

EPA held off on acting on San Juan in New Mexico SIP approval

EPA said in a Nov. 27 Federal Register notice that it was approving New Mexico State Implementation Plan (SIP) revisions submitted in July 2011 and December 2003 by the governor of New Mexico addressing the regional haze requirements for the 16 Class I areas covered by the Grand Canyon Visibility Transport Commission Report and a separate submittal for other federal mandatory Class I areas. It is also taking final approval action on all components of the state’s submittals except for the submitted NOX Best Available Retrofit Technology (BART) determination for the San Juan Generating Station (SJGS). This final rule is effective Dec. 27, 2012.

EPA issued a notice of this proposed rulemaking in the Federal Register on June 15, 2012. It didn’t include a NOX BART requirement for SJGS because that is satisfied by the BART determination that has been promulgated under a recent federal implementation plan (FIP). EPA issued a temporary stay of the effectiveness of the New Mexico FIP rule for 90 days on July 16, 2012, and this temporary stay was extended an additional 45 days to Nov. 29, 2012. The temporary stays are to allow additional time to discuss new and potentially different methods for complying with the NOX BART requirements for the SJGS and to receive additional information from the state of New Mexico required for EPA to consider the state’s different method and for further discussion among the stakeholders.

“If this approach leads to an additional regulatory proposal, it will be the subject of a separate, future rule making,” EPA said in the Nov. 27 notice. “Because today’s action does not include any action on the State’s NOX BART determination for the SJGS, this final action is not affected by the ongoing discussions to consider replacing the NM FIP Rule.”

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.