PNM does deal to shut two San Juan coal units, build new gas plant

PNM Resources (NYSE: PNM) utility subsidiary PNM (also known as Public Service Co. of New Mexico) said Feb. 15 that state and federal regulators have agreed to pursue a revised plan that could provide a new path forward for San Juan Generating Station (SJGS) to comply with federal visibility rules.

The terms agreed to Feb. 15 by the U.S. Environmental Protection Agency and the New Mexico Environmental Department (NMED) would result in the retirement of the coal-fired SJGS Units 2 and 3 by the end of 2017, and the installation of selective non-catalytic reduction technology on the remaining two units in early 2016.

“We were prepared to install federally mandated technology, but believe the new agreement offers a more promising alternative to selective catalytic reduction on all four units. The plan positions us for an improved environmental future by reducing not only haze forming emissions, but also carbon emissions, water usage and coal combustion byproducts,” said Pat Vincent-Collawn, PNM Resources chairman, president and CEO. “The revised plan also provides us with the opportunity to further diversify our generation portfolio, limiting our exposure to coal in the future, and it reduces the cost impact for our customers.”

The terms of the plan primarily focus on how SJGS would meet the regional haze rule, but also include a natural gas-fired plant to be built in the Four Corners region to partially replace the capacity from the retired coal units. Detailed replacement power strategies would be finalized separately from the haze agreement, said PNM. The company believes adequate replacement power alternatives will be available to meet PNM’s remaining generation needs and ensure reliability.

The terms of the non-binding agreement would require several additional actions before becoming final. NMED would need to file a revised State Implementation Plan, with that SIP needing formal adoption from the NMED, then a sign-off from the New Mexico Environmental Improvement Board (EIB), and, ultimately, final approval from the EPA. The New Mexico Public Regulation Commission also would have to approve retirement of the two units and plans to acquire replacement power. EIB approval is projected for late October 2013, with EPA action in late 2014.

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

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.