New Mexico commission wants more data on San Juan coal shutdown

The New Mexico Public Regulation Commission in a Jan. 22 order gave Public Service Co. of New Mexico (PNM) a 14-day deadline to file more information about its plans to “abandon” 418 MW of its capacity at the coal-fired San Juan Units 2 and 3.

PNM filed for this and related approvals on Dec. 20, 2013. That application arises out of PNM’s plan to abandon Units 2 and 3 of the San Juan Generating Station (SJGS) in connection with a Revised State Implementation Plan (“Revised SIP”) issued by the New Mexico Environmental Improvement Board (EIB), which is pending approval before the U.S. Environmental Protection Agency. The Revised SIP is intended to replace the EPA’s Federal Implementation Plan (FIP) under the federal agency’s regional haze rule.

The PNM application from Dec. 20 seeks various approvals, including:

  • Authority to abandon (i.e. retire) Units 2 and 3 of SJGS;
  • Issuance of a certificate of public convenience and necessity (CCN) for 78 MW of additional capacity in SJGS Unit 4 to be acquired under a swap in ownership of Unit 3 capacity at a $52.5m book value;
  • Issuance of a CCN to include PNM’s ownership of 134 MW of Palo Verde Nuclear Generating Station (PVNGS) Unit 3 (previously decertified) as a supply resource to serve New Mexico retail customers at a value for ratemaking purposes of $335m ($2,500 per kW) and recovery of the costs associated with funding the PVNGS Unit 3 decommissioning trust on a pro rata basis.

The application states that PNM does not yet have a deal for that 78 MW swap at SJGS and that it intends to supply the details when the agreement is made.

The proposed abandonment of SJGS Units 2 and 3 would reduce PNM’s base load capacity by 418 MW. However, the application seeks approvals for only 212 MW of replacement generation (78 MW at SJGS Unit 4 and 134 MW with PVNGS Unit 3). Other “potential” replacement resources are “identified,” but CCNs for such resources are not being sought in this case. Thus, the commission said it is not able to evaluate the full portfolio of replacement generation as an alternative to compliance with the FIP. “PNM should explain how the Commission could find that the public convenience and necessity does not require the continued operation of SJGS Units 2 and 3 when all replacement resources are not submitted for approval in this case,” it added in the Jan. 22 order for more information.

PNM said it anticipates that the remaining replacement resources will be “identified’’ through the Integrated Resource Planning (IRP) process. PNM’s deadline for filing its IRP plan is in July 2014. The commission said PNM should explain how it intends to coordinate this proceeding with the IRP proceeding, including: when it will complete and file the IRP; whether PNM will update and change the portfolio it proposes here based on the results of the IRP; how the commission should review the portfolio proposed in this case if it is based upon the preliminary analyses in PNM’s IRP process; and how the commission could decide this case within the requested timeframe if replacement resources are not identified until the filing of the IRP plan.

Commission wants more information on gas, solar replacements

Currently, PNM anticipates that the remaining replacement resources will consist of a 177-MW gas-fired plant to be sited at SJGS and a 40-MW utility-scale solar facility.

PNM anticipates that it will file a CCN application for the 177-MW gas facility around December 2014, presumably subject to the IRP process. “PNM should file supplemental testimony providing additional information regarding this potential replacement resource, and the current status and projected timeline of its efforts to procure same, and explain why it does not intend to file a CCN application until December 2014,” the commission wrote.

The PNM application contains virtually no information about the proposed 40 MW of utility-scale solar and simply states that a CCN for this resource will be filed “in the future,” presumably subject to the IRP process. PNM should file supplemental testimony providing additional information regarding this potential replacement resource, the current status and projected timeline of its efforts to procure same, including the timing of filing a CCN application. PNM should also explain how it anticipates the commission should review and approve the application in the absence of a CCN application for this resource, the commission added.

San Juan is a four-unit (1,683 MW net) coal-fired plant located in Waterflow, N.M, fifteen miles west of Farmington. The net generation capacity and in-service dates for each of the four units at San Juan are:

  • Unit 1: 340 MW, on line in 1976
  • Unit 2: 340 MW, on line in 1973
  • Unit 3: 496 MW, on line in 1979
  • Unit 4: 507 MW, on line in 1982

PNM operates the plant on behalf of the other owners. The PNM website lays out these San Juan co-owners.

Units 1 and 2:

  • PNM: 50%
  • Tucson Electric Power: 50%

Unit 3:

  • PNM: 50%
  • Southern California Public Power Authority: 41.8%
  • Tri-State Generation and Transmission Assn.: 8.2%

Unit 4:

  • PNM: 38.5%
  • MSR Public Power Agency: 28.8%
  • City of Anaheim, Calif.: 10%
  • City of Farmington: 8.5%
  • Los Alamos County: 7.2%
  • Utah Associated Municipal Power Systems: 7%
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.