PNM subsidiary making case for new 187-MW gas turbine at San Juan coal plant

Public Service Co. of New Mexico is working at the New Mexico Public Regulation Commission in the early stages of an effort to win approval for a 187-MW, gas-fired combustion turbine to be located at its San Juan coal plant, where two of the coal units are to be shut due to clean-air needs.

This PNM Resources (NYSE: PNM) applied June 30 with the commission for approval of a Certificate of Public Convenience and Necessity and related approvals to construct and operate a 187-MW natural-gas fired peaking generator that would go into operation in time for the summer 2018 peak season.

The San Juan Gas Plant will provide generating capacity to partially replace two generating units (Units 2 and 3) at the San Juan Generating Station (SJGS) that PNM has proposed to retire and will also serve other operational needs. The San Juan Gas Plant was selected through an integrated resource planning process and is part of the most cost-effective portfolio of resources to replace the two SJGS coal-fired units when they are retired at the end of 2017, the utility has told the commission. PNM acquired the equipment and construction services for the San Juan Gas Plant through a competitive bid process.

The ability to interconnect the Gas Plant to an existing adjacent PNM switching station at SJGS will reduce electric interconnection costs and facilitate permitting. The plant’s proximity to two natural gas pipelines that provide access to natural gas from the San Juan Basin will enhance fuel reliability and price competition.

The project will use a General Electric 7F.05 turbine and A63 generator. The plant will have a peaking duty cycle, meaning that it will operate at periods of peak system demands and for system regulation and load following purposes. PNM anticipates that the plant will operate at an annual capacity factor of between 5% and 10%. The annual average net heat rate for the generator is anticipated to be about 9,800 Btu per kWh at full load. The gas turbine will also have the capability of providing 160 MW of generation within ten minutes of a cold start.

The plant will include state-of-the-art emission controls and will be air cooled to minimize water use. It will be equipped with a selective catalytic reduction (SCR) unit to reduce NOx emissions and a carbon oxidation catalyst to reduce carbon monoxide.

The new plant will interconnect to PNM’s transmission system at the San Juan 345-kV switchyard, which is adjacent to SJGS. Natural gas supply for the plant will be purchased by PNM from suppliers in the San Juan basin and transported to the plant via a natural gas pipeline that will be owned and operated by a third-party pipeline provider. No natural gas compression facilities will be required by PNM for plant operation.

Southwest Generation looks to be a thorn in PNM’s side in this case

The commission’s review schedule for this case includes:

  • A prehearing conference that was held on Sept. 8. Participating in the conference were representatives of PNM, the New Mexico Attorney General, Coalition for Clean Affordable Energy, Western Resource Advocates, New Mexico Industrial Energy Consumers, Southwest Generation Operating Co. LLC and commission staff. Southwest Generation filed on Oct. 13 a formal notice to intervene in the case.
  • Any person who desires to become a party to this case has to file an intervention motion by Dec. 16.
  • Staff and intervenors will file testimony on or before Jan. 15, 2016.
  • Rebuttal testimony is to be filed on or before Feb. 3, 2016.
  • A prehearing conference will be held on Feb. 9, 2016, at the commission offices in Santa Fe.
  • A public hearing will be held February 22-26, 2016, also at the commission offices in Santa Fe.

Southwest Generation said in its Oct. 13 intervention request that PNM’s plan for this new self-built capacity was not based on and is not supported by the results of a competitive RFP process that solicited and evaluated all feasible supply and demand-side resource options, including but not limited to natural gas-fired or other technology-based resources of different capacities sited elsewhere in New Mexico and/or provided by entities other than PNM.

Southwest Generation is an independent power producer that owns and operates natural gas-fired power plants in New Mexico, Colorado and California. It currently owns five gas-fired facilities with an approximate aggregate capacity of 700 MW operated under short- to long-term contracts with major electric utilities. It owns Valencia Holdings LLC, owner of Valencia Power LLC, which owns 100% of and operates the 145-MW, gas-fired Valencia Energy Facility, located south of Belen, New Mexico, from which PNM purchases wholesale peaking power under a 20-year power purchase agreement executed in 2007 that expires in 2028.

San Juan plant ownership will be shifted around ahead of unit retirements

PNM on Aug. 21 had filed with the Federal Energy Regulatory Commission amendments to the San Juan Project Participation Agreement that relate to plans to shuffle ownership of the existing San Juan power plant and shut later this decade the two units at the plant. The changes are under something called the “San Juan Project Restructuring Agreement.”

The San Juan Generating Station is a four-unit coal-fired facility with a net generation capacity of about 1,685 MW located in San Juan County, near Farmington, New Mexico.

Under the SJPPA, San Juan is owned by: PNM; Tucson Electric Power; The City of Farmington, New Mexico; M-S-R Public Power Agency; The Incorporated County of Los Alamos, New Mexico; Southern California Public Power Authority; City of Anaheim; Utah Associated Municipal Power Systems; and Tri-State Generation and Transmission Association. PNM is the operating agent for the plant.

In 2011, the U.S. Environmental Protection Agency published its Federal Implementation Plan under the Clean Air Act that included a proposed Best Available Retrofit Technology (BART) determination for emissions of NOx from San Juan requiring installation of very expensive SCR technology on all four San Juan units.

The parties have since worked out a “BART Alternative” that requires retirement of San Juan Units 2 and 3 by Dec. 31, 2017, and the installation of less-costly selective non-catalytic reduction (SNCR) technology on San Juan Units 1 and 4 no earlier than Jan. 31, 2016.

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.