PNM cites progress on San Juan, other generation issues

PNM Resources (NYSE:PNM) is making solid progress on a New Mexico settlement plan to retire Units 2 and 3 at the coal-fired San Juan power station near Farmington, PNM CEO Pat Vincent-Collawn said in an earnings conference call May 6.

In addition, the company hopes to close on the purchase of a power plant this year and also plans to participate in a Gallup, N.M., request for proposals (RFP) for a new long-term power agreement.

PNM has provided power to Gallup for decades and a long-term contract expires at the end of June. While PNM has a verbal agreement for a one-year placeholder contract after that, Gallup plans to seek competitive bids for a long-term replacement contract.

PNM will definitely be a player in Gallup’s RFP, Vincent-Collawn said.

On the power generation front, PNM expects to secure all approvals for purchase of the 132 MW Delta Person power plant by year end. PNM is buying the facility from Delta Person LP. PNM already has a long-term power contract with the facility.

The revised state plan at the San Juan coal plant calls for installation of selective non-catalytic control reduction (SNCR) for NOx emissions would occur by early 2016 and the shutdown of Units 2 and 3 would occur by the end of 2017, officials said.

A BART (best available retrofit technology) analysis was filed with the state recently by PNM subsidiary Public Service of New Mexico.

Approval of a revised state implementation plan (SIP) for the San Juan plant by New Mexico environmental regulators could occur in 4Q. It will then be submitted to the U.S. EPA for review.

“We expect EPA’s review will take about a year,” said Vincent-Collawn.  Construction of the SNCRs could start in early 2015 and take about a year, company officials said.

The PNM CEO also said that mediation is ongoing in U.S. EPA litigation concerning the San Juan coal plant in a case before the 10th U.S. Circuit Court of Appeals.

With potential retirement of two San Juan units possible, PNM is looking at generation options, PNM officials said. The options include various combinations of natural gas peaking units or 134 MW of nuclear capacity at the Palo Verde nuclear — along with additional natural gas generation.

The company has previously announced plans for a 150-200 MW gas fired peaker to be built on the San Juan site, and a 40 MW gas fired peaker to be added at a location yet to be determined. PNM could file for state certificates of the new generation in late 2013 or early 2014.

PNM is currently looking at spending an estimated $1.8bn in capital spending between 2013 and 2017.

Forced outage figures are better in 1Q13 compared to 1Q12, PNM said. While there are signs of improvement for the New Mexico economy, load is still sluggish.

On another note, the company did recently had a credit ratings upgrade to “investment grade” by Standard & Poor’s.

Through its regulated utilities, PNM and TNMP (Texas New Mexico Power), PNM Resources has approximately 2,538 megawatts of generation capacity and serves electricity to more than 738,000 homes and businesses in New Mexico and Texas.

PNM reported unaudited 2013 first quarter consolidated GAAP earnings of $10.6m, or 13 cents per diluted share, compared with $17.1m, or 21 cents per diluted share, in 2012.

Quarterly unaudited consolidated ongoing earnings were $14.7m, or 18 cents per diluted share, compared with $13.5m, or 17 cents per diluted share, in 2012.

About Wayne Barber 4201 Articles
Wayne Barber, Chief Analyst for the GenerationHub, has been covering power generation, energy and natural resources issues at national publications for more than 20 years. Prior to joining PennWell he was editor of Generation Markets Week at SNL Financial for nine years. He has also worked as a business journalist at both McGraw-Hill and Financial Times Energy. Wayne also worked as a newspaper reporter for several years. During his career has visited nuclear reactors and coal mines as well as coal and natural gas power plants. Wayne can be reached at wayneb@pennwell.com.