The coal-fired power plant located in Waterflow is under scrutiny by the U.S. Environmental Protection Agency. The EPA wants operator Public Service Co. of New Mexico to install costly pollution control technology.
PNM estimates it would cost $750 million or more to install selective catalytic reduction technology. The EPA disagrees, saying installing the controls would cost less than $400 million.
PNM has issued a request for proposals due in April. Maureen Gannon, PNM's executive director of environmental services, said the Albuquerque-based utility expects to see engineering firms return with estimates similar to its own, higher figure.
Farmington residents could face higher electricity bills if the utility is forced to use the more expensive technology, PNM warns.
"To add an unneeded cost on that asset does a disservice to our region and our customers," spokesman Don Brown said during a visit to The Daily Times on Thursday.
The city of Farmington owns a portion of San Juan Generating Station through the Farmington Electric Utility System, directly tying local ratepayers to the EPA debate.
PNM has not threatened to close the plant if the utility does not get its way. But, Brown said, "adding that $750 million into the mix doesn't help."
"You have to consider as each regulation comes out how much it costs to generate that power," he added.
PNM is pushing a state-backed plan to install less expensive selective noncatalytic reduction technology. The EPA has dismissed the cheaper technology as less effective at controlling haze-related emissions.
Many local groups, from San Juan County commissioners to the Navajo Nation, have urged the EPA to back off. PNM also has the support of New Mexico regulators and Gov. Susana Martinez.
PNM has asked the EPA and a federal court for stays to avoid installing the controls within a tight five-year deadline. The utility is pushing ahead with plans to install selective catalytic reduction in case its view does not prevail.
The EPA regulations target nitrogen oxides, a form of pollution linked to haze. San Juan Generating Station is near several federally designated "Class I" areas, including Mesa Verde National Park and the Weminuche Wilderness Area in Southwest Colorado.
A local environmental group said PNM has repeatedly raised rates regardless of EPA actions.
"Their rates have gone up dramatically anyway," said Mike Eisenfeld, New Mexico energy coordinator for San Juan Citizen Alliance, a Durango, Colo.-based environmental group. The Alliance is involved in litigation targeting the power plant.
Coal's costs are increasingly apparent in the Four Corners, Eisenfeld said.
"Pollutants are having a dramatic impact on the entire region," he said. "The brown cloud that we see almost every day it's just not right."