Public Service of New Mexico outlines San Juan shutdown timeline

On Aug. 15, Public Service Co. of New Mexico (PNM) filed with the New Mexico Public Regulation Commission (PRC) two slide presentations, one from Aug. 14 and the other from July 3, that lay out the process for getting approvals to shut two San Juan coal plant units.

The need to shut the units is due to an agreement related to compliance with the U.S. Environmental Protection Agency’s regional haze rule. The state of New Mexico originally had issued a state implementation plan (SIP) requiring $90m worth of selective non-catalytic reduction (SNCR) installations on all four units. EPA overrode that with a federal implementation plan (FIP) calling for up to $910m of selective catalytic reduction (SCR) installations on all four units.

PNM then agreed to a deal to shut San Juan Units 2 and 3 by the end of 2017, and to install SNCR on Units 1 and 4 within 15 months after EPA approval of a revised SIP, but no sooner than January 2016. PNM expects the EPA’s SIP approval in the fourth quarter of 2014.

The utility’s presentations, including an Aug. 14 one for a PRC open meeting, said an SNCR vendor has been selected and that a request for proposals on an engineering, procurement and construction contractor is expected to be issued in October. The company said it is preparing a filing for the New Mexico commission asking for abandonment of Unit 2 and 3, and a possible 78-MW uprate of Unit 4.

The utility plans to file its latest integrated resource plan (IRP) with the commission in December, which will include options to replace San Juan Units 2 and 3. Options currently include the San Juan Unit 4 uprate, the nuclear Palo Verde Unit 3, plus natural gas-fired options and renewables.

One presentation noted that a PNM lease on Palo Verde 1 expires in 2015, with a lease to expire in 2016 for Palo Verde 2. PNM can extend each of these leases for eight more years, and has a right to purchase this capacity at the end of the leases.

This was the first filing in a docket opened by the PRC on July 10 to specifically look at the issues of the San Juan unit retirements and the Palo Verde sale-leaseback situation. This new docket had rolled into it a prior docket on just San Juan that PNM had been fighting, saying it was premature.

“PNM should be required to address and describe how it will meet its obligation to serve customers in a prudent manner and that is consistent with its obligation to provide reliable service at fair, just, and reasonable rates due to its announced undertaking regarding its generation facilities, its resource mix and related impacts,” said the July 10 order. “PNM should also address and describe how these changes will impact system reliability, security, voltage regulation and overall transmission needs, and should address and describe related environmental impacts and economic impacts to the commerce of the state, local and Native American communities.”

San Juan, a minemouth coal facility, is one of PNM’s baseload generating facilities. It consists of four coal-fired units with 1,701 MW (net) of capacity. The net generation capacity and in-service date for each of the four units are:

  • Unit 1 – 340 MW, on line in 1976.
  • Unit 2 – 340 MW, in service in 1973.
  • Unit 3 – 498 MW, in service in 1979.
  • Unit 4 – 523 MW, in service in 1982.

PNM is the operator of San Juan and has the single largest ownership interest. PNM owns 50% of Units 1, 2 and 3 and 38.5% of Unit 4. PNM’s total ownership share is about 46.4% of the plant’s capacity or 790 MW, with various other companies holding small stakes in the plant, including Tucson Electric Power and Tri-State Generation and Transmission.

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.