Regional planners look for the next step as environmental activists laud SJGS demise

Freight rail plans, hydro power generation and participation in a multi-state hydrogen hub are among many options on the horizon

John R. Moses
Farmington Daily Times

FARMINGTON – The City of Farmington’s effort to take over the San Juan Generating Station moved into the history books Dec. 20. Now regional planners face a tough question: What will replace the stable jobs the region permanently lost due to the shutdown?

The permanent closure left a void in the region’s still-developing economic plans, weighted currently on building up recreational businesses, lining up both funding and a right of way for a freight rail line, and generally planning for a future not based solely on the volatile nature of boom-and-bust extraction industries.

Some Four Corners region community groups and environmental activists are hailing the coal-fired plant's demise as a victory for public health. Those keeping an eye on the region's economy are planning for what’s next to spur growth and create local jobs.

Farmington's Director of Economic Development & Outdoor Recreation Industry Initiative Warren Unsicker said the city's efforts have been ongoing, but it felt like the clock really started ticking when Public Service Company of New Mexico (PNM) announced its planned 2022 closure of the generating station.

Unsicker said that on top of rolling out an initiative to increase the number of visitor-serving businesses built around recreation, the city has worked hard to attract manufacturing, as well as they type of agricultural jobs that provide year-round employment.

"We're still continuing to go full steam ahead to build this community," Unsicker told the Daily Times on Dec. 22. "That hasn't changed."

Warren Unsicker.

As part of the drive to grow the local economy, Unsicker said the city regularly responds to state project response opportunities. These are chances for Farmington to pitch projects the state may choose to locate in Farmington.

Looking back at some of the public and private projects that have come up during the pandemic, Unsicker said supply chain and other issues have complicated the process of business development.

"It has been an uphill battle over the last few years," he said.

Energy Transition Act funds meant to assist workers whose jobs were lost due to the closure of the San Juan Generating Station did not materialize before the closure, adding another challenge, Unsicker said.

"They are still in process," he said.

A state fund established by the energy law includes $12 million for affected workers, The Associated Press reported in September.

Public Service Co. of New Mexico, which used to run the facility, provided $11 million in severance packages to help about 200 displaced workers, and about 240 mine workers are getting severance payments worth $9 million. Another $3 million went to job training, according to The Associated Press.

One bright spot has been a number of new businesses opened during the pandemic, some of them reflecting the interests of those who open them. Unsicker said such businesses give Farmington "a unique, homegrown feel" and are generally businesses that work to support the community.

Unsicker said that another bright spot is found in recent population trends indicating Farmington has picked up more than 600 residents and an influx over the past 18 months of homebuyers from other states moving to the city.

Many projects on the horizon

At Four Corners Economic Development, the question of which new industries will fit into San Juan County’s future was already center stage long before the city’s power plant takeover failed.

The organization has compiled a toolbox of sorts in the form of an inventory of many aspects of San Juan County's economy and assets via a report called Competitive Asset Assessment and Diversification Strategy dated November 2022. It is available for download in 4CED's website, www.4cornersed.com at the bottom of the “Strategic Plan” subpage titled “Diane Lupke & Assoc. Final Report on Competitive Asset Assessment and Diversification Strategy.”

In the report's opening pages, 4CED Chairman of the Board Jeremiah Hayes urged county citizens to get involved in planning for the future using what he called a "powerful document."

"Friends, we have the challenge and the opportunity of a lifetime before us. While we face some steep challenges in adapting our economy for future stability, I remain confident that the wisdom and hard work which have always been the bedrock of our community will ultimately bring us into a season of unprecedented flourishing," Hayes wrote. "And as a citizen of this great community, you have the opportunity and responsibility to help shape the evolution of that economy."

4CED Director Arvin Trujillo told the Daily Times that the loss of the generating station as a component of regional economic planning is not a positive thing, but at least the loss of that potential component creates a clearer starting point for future planning.

"4CED's work focuses on building a more resilient, sustainable regional economy," Trujillo wrote in the beginning of the organization's assessment report. "Doing this work requires understanding what assets we have and what assets we lack. Beyond this understanding, taking advantage of our assets requires the collective investment, insight, and fortitude of the community."

“We’re in the beginning steps of a number of different initiatives,” Trujillo told the Daily Times Dec. 21. While the horizon has changed a bit, he said, “We’ve got that vision in sight now.”

Arvin Trujillo

Trujillo said there are many initiatives at work in the county, such as business retention and moves to attract new businesses to the region, and improved career pathway programs to train workers to engage in specialized fields where workers are needed.

Other projects in the works are more hands on.

One is a collaboration to generate power by using water from a reservoir situated at a high elevation to release water into a large spillway and run it through turbines, then into a reservoir at a lower elevation. That water would be returned to the upper basin using excess power generated during the process.

Another project years in the making is the drive to get a cargo railroad built linking the Gallup area with the Four Corners region, and Trujillo said that effort is moving ahead.

Farmington is also involved in trying to get the rail project accomplished. Unsicker said the rail project is crucial to the region as "a lot of imports and exports are here in San Juan County."

Everything from cars and lumber to retail goods could move by rail instead of highways, and local produce and manufactured goods could reach broader markets more easily, as well, he said.

The project would need a huge grant from the federal government, which Unsicker said possibly could be attracted not only the benefit of by getting vehicles off of roadways but with the addition of alternative fuel engines to move the cargo.

Unsicker noted that the region has manufacturers like PESCO and Raytheon, and there is coal from surface mines that could also utilize the rails. Also, bringing in rail access could attract more manufacturing.

"It could be transformative," Unsicker said.

Trujillo said 4CED is also working with companies, and public and private entities trying to develop projects within the multistate collaboration known as the Western Inter-State Hydrogen Hub.

Trujillo said the state’s team is supportive of local efforts, which include an agricultural demonstration project.

State has joined a regional hydrogen hub

New Mexico Gov. Michelle Lujan Grisham in February joined the governors of Colorado, Utah and Wyoming to announce the states would compete together for their share of $8 billion the federal government set aside in the Infrastructure Investment and Jobs Act to develop regional clean hydrogen hubs.

The Governor’s Office stated that the states in the Western Inter-State Hydrogen Hub are “uniquely situated to become a clean hydrogen hub given the presence of high-quality wind, solar, biomass, natural gas, and other energy resources.”

A month before the mountain west regional hub was announced, the New Mexico EDD released a report in January 2022 noting the things New Mexico would bring to the table for the group and recapping the economic impacts Northwest New Mexico has suffered due to the drop in oil and gas industry revenues in recent years.

“Farmington, NM was cited as 'America’s Fastest Shrinking City' in 2016 based on US Census data. It experienced a negative population growth of -8.76% from 2010 to 2016,” the report noted. “Further, Farmington’s non-adjusted gross receipts tax collection, a key indicator of a community’s financial well-being, dropped by 13.5% from 2009-2018.”

The Navajo Nation, the report also noted, “has an astounding 35.8% of households under the federal poverty level (FPL) in 2020, an unemployment rate of 16.8% from 2015-2019, and 35% of households without access to running water.” 

It also stated that the Jicarilla Apache Nation had 17.6% of families living below the federal poverty level “and an unemployment rate of 23.5% from 2015-2019.”

Due to these figures, the report said the Four Corners is one of five priority areas in the nation identified in the Revitalizing Energy Communities Report for “focusing initial federal investments … and delivery of investment to Energy Communities.”

Enchant says it has new projects in the works

While it may not be a participant in local projects, the city's former partner in the SJGS takeover project remains active in the energy industry.

A panel of arbitrators handed Farmington a key strategic loss on what the city and Enchant Energy considered a make-or-break part of the deal — retention of key components like transformers that move power from the station.

Enchant Energy’s formal comments on the city’s decision to end its SJGS takeover attempts came via a news release on Dec. 21.

“Even if the arbitration eventually was successfully completed by the City of Farmington, the timing of the sell off and dismantling of the plant assets make it impossible to successfully complete the carbon capture project,” CEO Cindy Crane said in a prepared release.

“We are very saddened by the need to terminate the project that would have brought so many benefits to the City of Farmington, energy workers in the region and customers who would have benefited from the reliable low carbon electricity,” Crane said.

Crane noted that Enchant Energy will keep its headquarters in Farmington and said the company is "currently reviewing and developing proposals for other carbon capture and sequestration projects around the country.”

Enchant noted it was unable to discuss any current projects due to confidentiality agreements.

4CED’s Trujillo had been monitoring the SJGS situation and the arbitration process.

“The ruling by the arbitration panel was really disappointing,” he said.

One of the many wells monitoring ground water quality is pictured, Thursday, Nov. 14, 2019, at the San Juan Mine.

Plant opponents say its closure is a victory for clean air and a better future

By contrast, longtime SJGS opponents in an email coordinated by the Sierra Club released statements Dec. 21 in favor of keeping the generating station shuttered and heading for demolition.

“With this decision by the City of Farmington acknowledging that the coal-fired San Juan Generating Station will in fact stay closed and be decommissioned, the Four Corners community can finally get on with a just transition to the sustainable economic future they deserve,” said 350 New Mexico co-coordinators Tom Solomon and Jim Mackenzie.

That group’s website says it is “building an inclusive movement in New Mexico to prevent the worst effects of climate change and climate injustice.”

Others cited opposition to continuing to run the coal plant, even with the carbon capture technology.

“The carbon capture conversion was unrealistic in reviving a polluting plant that, for decades, put our community's health and environment at risk,” said Ahtza Chavez, executive director of Naeva, a group formerly known as the Native American Voters Alliance (NAVA) Education Project. “Let's move forward to proven renewable energy so that future generations can see energy transformation with cleaner air and water for our tribal communities and climate.”

Also weighing in was longtime former SJGS plant chemist and Farmington resident Norman Norvelle.

“I spent over 20 years as an industrial chemist at San Juan Generating Station and El Paso Natural Gas,” Norvelle wrote. “What Enchant proposed would never work well and would have been in constant upset/breakdown mode and constantly polluting our air.”

Norvelle, a Sierra Club Northern New Mexico Group board member, said coal-fired power plants are bad for the environment and people, and the proposed carbon capture project required more water that the Four Corners region should provide.

Sierra Club Senior Advisor Jeremy Fisher said the situation provides Farmington with a chance to move in a different direction.

“With the passage of the Inflation Reduction Act, the City of Farmington now has the opportunity to aggressively pursue clean-energy incentives in the form of direct-pay tax credits for solar, storage, and wind, support low income customers through added tax credits and federal rebates, and even use EPA’s new grants program to drive down the cost of decarbonizing the Four Corners region,” Fisher wrote.

Activists cite PNM’s future role, need for SJGS site cleanup

When it was proposed that the San Juan Generating Station stay open three months longer than planned, the Sierra Club Rio Grande Chapter had no opposition, as long as the plant closed down after that.

At the time, the chapter cited a need for PNM to get the solar projects facing a construction slowdown due to pandemic-related supply chain issues up as soon as possible. The chapter reiterated its position Dec. 21.

“The solar and storage replacement power approved in 2020 will provide $1 billion in investment in the communities most impacted by San Juan,” chapter communications director Mona Blaber said in the group’s news release. “With pandemic supply-chain and other delays, it is incumbent upon PNM to work with developers of the solar and storage replacement power to overcome these obstacles and get those projects online as soon as possible.”

One issue raised during arbitration hearings by the City of Farmington was a county ordinance that demanded a demolition plan be prepared for the SJGS site when it is considered decommissioned.

County officials earlier this year took pains to define for the arbitrators what that meant, noting the ordinance kicks in when the facility has stopped producing electricity and its owner declares it retired. That left plenty of room in the timeline in case Farmington and Enchant got their project moving forward.

“Based on the County’s Ordinance 121, barring the potential for reuse, a demolition and remediation plan is required to be submitted no later than 90 days after a Qualifying Generating Facility is retired,” county spokesman Devin Neeley explained via email Dec. 21. “In the ordinance, ‘retired’ means the complete and permanent closure and retirement occurs on the date that the facility ceases combustion of fuel and permanently ceases to generate electricity. If the owner of any such facility believes that the facility is retired, by ordinance, a plan should be submitted 90 days later.”

“In this instance, if the owners of SJGS believe it was retired on September 30, we would expect a plan submitted for review by December 30th,” Neeley added.

“PNM remains on track to file the San Juan County ordinance required plan before Dec 31st,” Public Service Company of New Mexico (PNM) spokesman Ray Sandoval said via email Dec. 21. “We anticipate making this submittal mid next week.”

“There are no other parties considering carbon capture at San Juan,” Sandoval added.

Former employee Norvelle’s statement emphasized his belief that the property needs complete and careful reclamation and remediation.

“Over 50 years of damage was done to the environment. From releasing plant wastewater effluent into the Shumway Arroyo to air pollutants and mercury into the San Juan River watershed to plant solid and liquid waste disposal into unlined surface mine pits,” he wrote. “There will be need for extensive cleanup and monitoring to verify cleanup of the contaminants. Sampling and monitoring should be done by 3 or 4 different organizations to assure completeness and honesty.”