Officials: Power plant closure would cost the state $163 million each year in lost tax revenue



FARMINGTON — San Juan County faces hundreds of job losses and considerable lost tax revenue if the Public Service Company of New Mexico pulls out of the San Juan Generating Station, according to testimony at a joint meeting of the state legislative Finance Committee and the Revenue Stabilization and Tax Policy Committee today at San Juan College's School of Energy. 

Earlier this year, PNM released an integrated resource plan indicating the company's plans to close the San Juan Generating Station in 2022 and pull out of the Four Corners Power Plant in 2031.

The final integrated resource plan was filed earlier this month for acceptance by the New Mexico Public Regulation Commission.

PNM Planning and Resource Director Pat O'Connell told legislators the company determined that moving away from coal was the most cost-effective solution. It plans on increasing its use of renewable energy and natural gas.

If the power plant closes, it will not be remediated to look like the landscape was prior to the plant being built, O'Connell said. He said the company has plans for decommissioning the facility but not complete remediation.

Sen. Steve Neville, R-Farmington, expressed concerns about the plans for the generating station after it closes. He said there are closed industrial sites all over the county.

"In the big run, they're environmental disasters waiting to happen," he said.


The plan to close the San Juan Generating Station follows previous job losses at the local power plants. The Arizona Public Service Company closed three of the five stacks at the Four Corners Power Plant in 2014. Two of the four stacks at the San Juan Generating Station will be closed this year as part of a settlement agreement.

PNM and the other plant owners spent $300 million over the past few years on retrofits to make it comply with environmental regulations. PNM will lose its investment in the power plant and will have to build a replacement natural gas power plant.

Despite those factors, O'Connell said abandoning coal will save customers money in the long run.

PNM is not the only power plant owner to come to that conclusion. The Tucson Electric Power Company released an integrated resource plan in April that also called for leaving the San Juan Generating Station by 2022.


With the departure of those operators, the generating station will be forced to close. That will have an impact on its other owners, including the city of Farmington, which has its own electric utility. City Manager Rob Mayes said the city will lose $34 million of investment in the power plant and will have to spend $97 million to replace the energy it currently gets from the generating station.

Officials estimate closing the San Juan Generating Station will cost the state $163 million each year in tax revenue and lead to the loss of more than 600 jobs at the power plant and coal mine that supplies it

"We're talking about $163 million in lost tax revenue," said Rep. Rod Montoya, R-Farmington. "That's an issue."

He compared the impact of closing the power plant to what would happen to Albuquerque if Kirtland Air Force Base closed.

At the same time, he said local officials understand that coal is "on its way out the door." He said the county is hoping to "find a softer landing."

Hannah Grover covers government for The Daily Times. She can be reached at 505-564-4652.

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