New Mexico board approves partial shutdown of San Juan coal plant

PNM Resources (NYSE: PNM) subsidiary Public Service Co. of New Mexico on Sept. 5 praised a decision by the New Mexico Environmental Improvement Board approving a state plan that provides a new path forward for the coal-fired San Juan Generating Station to comply with federal environmental rules.

Following a public hearing, the state board unanimously approved a proposal from the state Environment Department that would lead to the retirement of two of San Juan’s four coal-fired units (Units 2 and 3) by the end of 2017, and the installation of selective non-catalytic reduction (SNCR) NOx control technology on the remaining two units (Units 1 and 4) in early 2016 at a cost of about $34.5m.

Unit 1 has a capacity of 360 MW, Unit 2 is 350 MW, Unit 3 is 544 MW and Unit 4 is 544 MW.

The plan still requires approval from the U.S. Environmental Protection Agency before it becomes final. That process is expected to take about a year, PNM noted.

PNM currently is required to comply with a costly federal plan that would require installation of more expensive ($861.9m) selective catalytic reduction (SCR) technology on all four units. While there is a cost associated with implementing the state plan approved by the board, it will cost customers less than the federal plan. In addition, the state plan is more forward looking and reduces seven different power plant pollutants, compared to the one reduction addressed by the federal plan.

“The state plan is better for New Mexico because it reduces the cost impact on our customers and allows us to replace a significant amount of coal-fired generation with cleaner fuels,” said Pat Vincent-Collawn, PNM chairman, president and CEO. “The plan would reduce not only haze-forming emissions but also carbon emissions, water usage and coal combustion byproducts, which puts the plant ahead of new and tougher environmental regulations we know are coming.”

With the encouragement of Gov. Susana Martinez, details of the plan approved by the board were developed through negotiations earlier this year with the Environment Department, EPA and PNM and comments from other stakeholders. The terms of the plan focus on how San Juan would meet a federal visibility rule.

In connection with the implementation of the plan, PNM plans to build a natural gas-fired power plant in San Juan County that will operate primarily during times of peak demand. Detailed replacement power strategies will be finalized separately from the haze plan and are expected to be filed with the New Mexico Public Regulation Commission in December and could include various sources, including the possible inclusion of existing nuclear.

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.