PNM scraps plans for gas plant

Plant cancellation means lost tax revenue for San Juan County

Leigh Black Irvin
The San Juan Generating Station as seen Aug. 1 in Waterflow. PNM has abandoned a plan to create a natural-gas fired power plant in the area after a study showed the anticipated demand would be lower than expected.

FARMINGTON — Public Service Company of New Mexico has cancelled plans to build a $100 million natural gas plant and pipeline to help offset energy lost from the federally-mandated shuttering of two coal-fired power units at the San Juan Generating Station.

“Based on the results of the latest customer demand forecast, PNM has determined that the 80 (megawatt) peaking plant will not be needed to maintain reliable service to our customers in 2018, and the company is asking to withdraw the pending application,” said PNM spokesman Pahl Shipley in a written statement provided to The Daily Times.

Shipley added that by the year 2020, PNM will probably require additional resources to serve its customers, and forecasts that a 40 megawatt peaking plant will then be needed. At that time, a new application for an additional plant would be filed with the New Mexico Public Regulation Commission.

The San Juan Generating Station, which provides about a third of New Mexico’s power, will shut down the two coal-powered units in December 2017, leaving two units operating. The federally-mandated shut-down was a compromise to allow the plan to continue operating while making sure it is also in compliance with federal haze regulations. The plant was also ordered to install nitrogen oxides emission reduction technology on its remaining units, which it has done.

San Juan County Executive Officer Kim Carpenter said he understands the reason for the cancelled plans, but doesn’t like to see any progress in the county halted.

“Any improvements obviously become a benefit (to the county) via property tax — and also with jobs — so it’s disappointing in that respect, but given the studies they’re doing regarding the demand for power, it’s just not justified at the moment to construct this,” said Carpenter, adding that he hopes the demand for energy will increase and construction plans can proceed at some future date.

Mariel Nanasi, executive director for New Energy Economy, a renewable energy advocacy group based in Santa Fe, follows PNM-related developments here closely. In a release provided by the group, Nanasi said that while she is happy about PNM halting plans for the gas plant and pipeline, it happened only after the group asked PNM for more discovery information on their load forecast (a projection of the amount of power that will be needed by the customer base).

“That’s when they gave up,” Nanasi told The Daily Times, adding that her group was the sole party filing opposition testimony in regards to construction of the gas plant. “Shouldn’t the public have a right to know why all of a sudden they made these changes? A lot of questions need to be asked and answered.”

Nanasi also said the new gas plant was being “sold” as economic development for Farmington after the closure of the two coal-powered units.

“But when we asked them how many jobs the plant would create, they said only three,” she said.

Carpenter expressed frustration that coal-fired power continues to come under attack.

“Environmentalists want to see it and almost everything go away,” he said. “They don’t have any interest in finding a balance.”

According to PNM’s "Motion to Withdraw Application and Close Document" submitted to the New Mexico Public Regulation Commission on Oct. 28, the updated 2016 demand forecast incorporated information not available when PNM filed its initial application in April, including the 2016 summer peak demand, which showed a reduction in the projected 2018 peak demand.

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