PNM wins okay for 40-MW La Luz gas project in New Mexico

Public Service Co. of New Mexico (PNM) said in a July 1 integrated resource plan that it has one recently-approved gas-fired project that is about to go into construction and a gas plant purchase that is still pending.

The integrated resource plan was filed with the New Mexico Public Regulation Commission, which on June 18 granted the utility a Certificate of Public Convenience and Necessity (CCN) to construct, own and operate the La Luz Energy Center, which will be located in Valencia County directly west of PNM’s Belen Substation. Comprised of one General Electric LM6000 turbine, La Luz will have the ability to deliver 40 MW of capacity into the northern New Mexico load center.

La Luz will be equipped with selective catalytic reduction and carbon oxidation reduction system to control emissions. Natural gas supply for La Luz will be delivered through Transwestern Pipeline Co. LLC’s interstate pipeline. The plant is also close to an El Paso Natural Gas interstate pipeline. The plant will be constructed on a schedule to be in-service by the summer of 2016.

Also, a long-standing purchase deal for the Delta-Person Generating Station is still pending, the IRP noted. This is a natural gas-fired plant with a capacity of approximately 132 MW located on the south side of Albuquerque off Interstate 25. This station consists of a GE 7F combustion turbine that went into service in 2000.

In June 2013, the New Mexico commission approved a CCN for PNM to acquire the plant from its previous owner, from whom PNM purchases the entire output of the plant under a power purchase agreement (PPA).

“The closing of the purchase transaction was still pending at the time of filing of this IRP Report,” the report said. “Upon closure of the transaction, the plant will be renamed the Rio Bravo Generating Station.”

PNM has made provisions for a second unit at La Luz

Patrick O’Connell, Director of Planning and Resources for PNM, said in March 21 supporting testimony for the La Luz project that the plant will be built for PNM by Wellhead Construction Inc. under a turnkey contract. It will have quick-start capability allowing the plant to ramp up from zero to full generation within 10 minutes. The plant will have remote operation capability, low maintenance costs and minimal staffing requirements. The LM6000 technology is familiar to PNM because PNM’s Lordsburg Generating Station has two LM6000 generators.

The cost of the La Luz Plant that PNM will be able to include in future ratemaking proceedings cannot exceed the lesser of the actual installed cost or $56m on a total company basis, including Allowance for Funds Used During Construction (AFUDC). PNM estimates a cost of $48.1m to purchase the LM6000 generator from GE and for Wellhead to construct the facility; $3m for gas and electric interconnection costs; $1.6m in land/site/community costs; $2m for PNM project management costs, including labor, legal and permitting costs; and $1.3m in taxes.

PNM received zoning approval from Valencia County to build two 40-MW aeroderivative turbines on the site. PNM’s CCN application was for only one gas turbine at this time. The New Mexico Environment Department issued a Prevention of Significant Deterioration (PSD) air permit in September 2013. The air permit also allows for the construction of a second 40-MW aeroderivative turbine. PNM must begin construction of the first unit within 18 months of issuance of the air permit, by Feb. 9, 2015, or it will have to reapply for the permit.

On the issue of reliable gas supply, O’Connell wrote: “PNM currently has three natural gas-fueled resources in the Albuquerque area: Reeves, Delta and Valencia. Reeves’ and Delta’s natural gas supplies are delivered via New Mexico Gas Company’s (‘NMGC’s’) system and NMGC’s system can experience supply curtailments during the winter, as occurred in February 2011. If that were to happen again, PNM’s northern New Mexico customers (who are typically also NMGC customers) could be faced with either a natural gas supply shortage or an electricity shortage or both. Adding a resource in northern New Mexico that is not connected to NMGC will reduce the competition on NMGC’s system for winter gas supplies between electric generation and natural gas fuel uses because the La Luz Plant will increase the amount of gas generation that does not depend on fuel deliveries through NMGC’s system.”

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.