Sierra Club says future looking grim for San Juan coal plant

The Sierra Club said April 8 that Public Service Co. of New Mexico‘s (PNM) plan to continue burning coal at the San Juan Generating Station faces a new hurdle after a New Mexico Public Regulation Commission (PRC) hearing examiner that day recommended that the commissioners reject PNM’s request to acquire 132 MW of San Juan Unit 4.

In his recommendation, Ashley Schannauer, the independent hearing examiner overseeing PNM’s request to the commission, found that PNM’s proposal to acquire an increased portion of the San Juan plant “is not fair, just and reasonable and in the public interest.” Schannauer referred to concerns raised during the proceeding regarding the reliability of San Juan, the future ownership of the plant after a contract expires in 2022, and uncertainty about where the plant will get its coal after a supply agreement expires in 2017.

Schannauer also expressed his concern that customers would be harmed by PNM’s plan. “The stipulation as a whole does not produce net benefits to the public,” wrote Schannauer. “The dollar impact of the risks, however, appears to significantly exceed the dollars saved.”

He added: “PNM’s increasing ownership and responsibility for San Juan may pressure PNM to continue to act as the owner of last resort, absorbing exiting owners’ shares to protect its investment even if the plant has become uneconomic – in a version of the ‘too big to fail’ syndrome.”

Nellis Kennedy-Howard, Senior Campaign Representative for the Sierra Club’s Beyond Coal Campaign, said in response: “PNM’s plan to spend more customer money and to continue burning more coal at the San Juan Generating Station is unreliable, risky, and expensive for customers. We applaud the hearing examiner for recognizing the huge risks that PNM’s plans would pose to New Mexico families and customers, and we support his recommendation that the Public Regulation Commission reject this misguided proposal.”

Recently, the city of Farmington, New Mexico, announced it would not acquire an additional 65 MW in San Juan Unit 4 due to reliability concerns and the costs that would be passed on to the community. Other New Mexico stakeholders have also pulled away from a stipulated agreement that would continue PNM’s use of coal at the plant after shutdown of two of its four units, citing the overall uncertainty about San Juan’s operations. The Albuquerque City Council passed a resolution on April 6 formally opposing PNM’s plans and urging the New Mexico Industrial Energy Consumers, of which the City of Albuquerque is a member, to withdraw its support.

The hearing examiner noted that three of the seven parties that filed an initial stipulated agreement in the case pending at the PRC have withdrawn their support for it. Two other parties, PNM and the state Attorney General, now want to add additional elements to the stipulation. The hearing examiner does recommend approval of abandonment of San Juan Units 2 and 3 as of the end of 2017, which is part of what PNM wanted to meet clean-air needs. The fight at this point is over the surviving capacity at the plant, Units 1 and 4, and whether to install selective non-catalytic reduction systems on them to reduce NOx emissions and to keep them viable after the other two units are shut.

San Juan is a four-unit, 1,683-MW (net) station located in Waterflow, New Mexico, 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

Under a regional haze deal with the U.S. Environmental Protection Agency, instead of installing expensive selective catalytic reduction technology on all four units, the plant owners will shut Units 2 and 3 and install cheaper selective non-catalytic reduction for NOx control on Units 1 and 4.

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.