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FARMINGTON — The New Mexico Indian Affairs Committee received an update today on the status of the San Juan Generating Station, which provides about one-third of the state’s power.

Carlos Lucero, government affairs manager for the Public Service Company of New Mexico and generating station plant manager Tom Fallgren, briefed the officials during a meeting held at San Juan College.

Lucero provided a general overview of PNM’s client base and service area, and talked about investments and contributions PNM has made throughout the state. “We have provided $428,000 (in assistance) to over 3,500 low-income families,” said Lucero. He also spoke about PNM’s programs aimed at Native Americans, including an internship and a scholarship program, and PNM’s commitment to ensure jobs and training opportunities for tribal members.

Lucero voiced PNM’s disappointment at the recent decision by the New Mexico Public Regulation Commission regarding a rate increase PNM was seeking in order to cover costs.

PNM filed the request with the commission in August 2015 for an increase in electric rates amounting to $121 million, but the Commission’s decision was to increase rates that would yield only $42 million. The new rates went into effect Oct. 1.

“This makes it harder to make future investments, and could jeopardize affordability,” said Lucero, adding that even a more modest rate increase that was approved will aid the company’s efficiency. “Our customers will see the rate increase on their bills, but the increase will allow us to provide more reliable and affordable service.”

Fallgren discussed the employment situation at the plant. It had around 400 employees as of 2013, but they've managed to lower that amount by 100 through attrition.

“Fortunately, many employees were approaching retirement, so it was an easy transition, and the impact was minimized,” he said.

The numbers do not include employees at the San Juan Mine. The sale of the mine, which is the generating station's sole supplier of coal, by BHP Billiton to Westmoreland Corporation also resulted in significant savings, he said.

On Dec. 31, 2017, Fallgren said, the generating station will move forward with plans to shut down units 2 and 3, keeping units 1 and 4 up and running.

“This (partial shut-down) was federally-mandated, so there’s no backing down from that,” he said.

The plant was also mandated to install nitrogen-oxide emission reduction technology on its remaining units, which it has already done, he said, and it has reduced coal use by 50 percent.

“The controls are operating well and we’re in compliance,” said Fallgren. “Sometimes what you read in reports is not clear, but we want to clearly state that there is less coal at the San Juan Generating Station. There are 286 less coal megawatts on the PNM system, so don’t let anyone tell you we’re adding megawatts.”

The plant is moving forward with plans to replace its coal-powered energy with solar power, low-emission natural gas and existing zero-emission nuclear power.

Fallgren said the plant is in full compliance with the Coal Combustion Residuals Rule.

“San Juan Generating Station puts ash back into the mine, so we’re already in full compliance with this,” he said, adding that it also is in full compliance with the Clean Power Plan.

“We should be able to continue to comply with this without any further requirements,” he said. “We’re on a clear path to full compliance, it’s just a matter of finding the right energy balance for our system.”

Following the briefing, Senator Benny Shendo asked for clarification on why those particular units were chosen to be shut down.

“I think it was part of the settlement agreement — different parties wanted to make sure it was a 50-percent shutdown, so they chose one of the small units and one of the big units,” said Fallgren.

Shendo also asked why solar energy is one of the options PNM is focusing on to eventually replace its coal-powered plants.

“We feel solar is cheaper," said Lucero. "and that’s our commitment to our customers, to keep costs low.”

Leigh Black Irvin is the business editor for The Daily Times. She can be reached at 505-564-4621. 

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