As a lifelong resident of Farmington, I have seen the enormous positive impact that the energy industry has on our area. We are in a resource-rich part of the country with deep reserves of gas and coal that have provided meaningful jobs for thousands in the community. While energy helps our economy thrive, we have the best of all worlds, with an abundance of blue skies, access to a vital river and some of nature's best habitats.
From that perspective, it may seem out of character that I believe a plan to close two of the four units at the coal-fired San Juan Generating Station is the best path forward for our state. Yet that's the conclusion I've arrived at after more than a year of grappling with it.
Before describing what led me to that conclusion, I should say that I would rather have our state's original plan for San Juan in place. That plan would have required a relatively inexpensive technology on all four units to meet a federal visibility rule that applies to San Juan. The fact is, however, that plan was rejected by the U.S. Environmental Protection Agency.
Instead the feds decided that San Juan would have to install technology that would cost almost $1 billion. Basic economics would tell you that with that kind of investment, generation from San Juan would lose its affordability edge and be less competitive with generation from other non-coal sources. So while it might not happen overnight, the nine owners of San Juan likely would begin looking elsewhere for their electricity needs, and we'd be left without a backup plan. Given coming environmental regulations that picture could become even bleaker over time.
The other potential outcome of that scenario is that electricity rates for much of our state could go up more than the rest of the country. That would make it even harder to recruit new businesses to New Mexico, and make it tougher on a population that's already economically challenged.
Gov. Susana Martinez recognized the quandary we were facing last year and asked the N.M. Environment Department, PNM and the EPA to work together to attempt to find a better solution, and they did. The compromise they reached would lead to the closure of two of four units at San Juan by the end of 2017, and the installation of less expensive haze-reducing technology on the remaining two units.
The plan costs less than the federal plan that had been in place, but more important to me, it includes some protections for the Four Corners economy. For example, PNM has agreed to build a natural gas power plant in the Four Corners area to replace some of the power it will lose from the shutdown. PNM also has agreed to no layoffs as a result of the closures. The company says it can achieve the reductions through attrition. Finally, it still keeps two of the four units operational.
Another benefit of the state plan is that it reduces several emissions that are expected to be regulated in the near future. This will help protect consumers in the state from the costs of those future federal rules. The state plan also reduces fresh water use by about 50 percent, another important step in a state that is struggling with severe drought.
The (state Environmental Improvement Board) meets on Sept. 5 in Farmington to consider this plan. It's not a perfect plan, but I strongly believe it's the best option for our state and our area.