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As renewable energy and natural gas costs decline, it's harder to justify coal energy. Many utilities also are closing coal-generation plants in Indiana and elsewhere. Dwight Adams, dwight.adams@indystar.com

The New Mexico Public Regulation Commission is poised to hear PNM's abandonment case and provide ruling on replacement power sources

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FARMINGTON — More than two years after announcing plans to close the San Juan Generating Station, New Mexico's largest utility has filed its plan to replace the electricity it currently receives from the coal-fired power plant.

Public Service Company of New Mexico filed documents on July 1 with the New Mexico Public Regulation Commission that will begin the utility's transition away from coal.

PNM will have a public meeting on July 29 in Farmington to discuss the transition.

PNM spokesperson Raymond Sandoval said the utility's proposal would limit the economic impact to San Juan County, provide assistance to power plant and mine workers, save customers money and reduce carbon emissions by 62 percent when compared to the 2005 emissions.

If San Juan Generating Station was to remain open, PNM states it would only achieve a 27 percent reduction in carbon dioxide emissions compared to the 2005 levels. Two units at San Juan Generating Station have closed since 2005.

Ultimately, the PRC will have the final say in how PNM replaces the power. 

PNM officials stress importance of San Juan community

PNM officials emphasized a commitment to San Juan County as well as to the employees of the power plant and the mine while addressing the media during a virtual press conference.

"A step away from coal is not a step out of the communities we have been a part of for so long," said Ron Darnell, the senior vice president of public policy for PNM.

The proposed plan calls for 370 megawatts of solar that would be located within a 100-mile radius of the San Juan Generating Station, including 20 megawatts within Central Consolidated School District.

It also proposes 280 megawatts of natural gas generation within CCSD boundaries.

The new generating facilities will not replace all of the property taxes entities like CCSD and San Juan County will receive if the power plant closes.

According to PNM documents, it currently pays $3.2 million in property tax for the San Juan Generating Station. The proposed plan would provide more than $1.6 million of property tax.

While the solar arrays will be located within 100 miles of the power plant, they will not necessarily be in San Juan County. The largest array — 300 megawatts — will be located in McKinley County near Crownpoint and will include 40 megawatts of battery storage. A 50 megawatt array will be located in Rio Arriba County east of Nageezi and will include 20 megawatts of battery storage.

PNM Vice President of Generation Tom Fallgren said the natural gas generation is important for grid reliability. The natural gas would be phased out in 2040. 

"We all share one goal — an emission-free New Mexico," Fallgren said. "And there are many ways to get there."

He said the gas generation will provide reliability while battery storage technology is developed.

"This transition is not numbers and graphs," Fallgren said.

He said there are real people and communities that are impacted by the transition. Fallgren said the power plant and mine workers as well as their predecessors have provided reliable, low-cost power to much of New Mexico for half a century. Fallgren said they cannot be left behind when the coal-fired power plant closes.

He outlined plans for job training and severance. 

Sandoval said the human resource department will help employees with mock interviews and writing resumes.

"This is the PNM way, the New Mexico way and the only way to move this state forward," Fallgren said.

Enchant Energy hopes to keep power plant open

PNM's announcement comes days after Enchant Energy CEO Jason Selch presented plans to the U.S. Energy Association to take ownership of the San Juan Generating Station and keep it open by installing carbon capture technology. This would allow Enchant Energy to sell carbon dioxide to the oil fields to increase productivity of oil and gas wells.

More: Enchant Energy CEO says San Juan Generating Station carbon capture may cost $1.23 billion

Sandoval said PNM will not be using the current San Juan Generating Station location for the natural gas generation, which allows Farmington and Enchant Energy to pursue installing carbon capture at the power plant.

PNM outlines training, severance packages for employees

The Energy Transition Act, which was signed into law earlier this year, outlines requirements for assisting San Juan Generating Station and San Juan Mine employees.

Sandoval said PNM will provide nine months of severance pay for 160 San Juan Generating Station employees as well as about $10,000 per employee for training or education. It will also provide funds for six months of severance pay for San Juan Mine employees as well as $8,000 per employee for training or education. San Juan Mine is owned by Westmoreland Coal Co.

The Energy Transition Act also mandates $1.8 million of funds for the Indian Affairs Department, $6 million for economic development and $12.1 million for a displaced worker fund.

PNM evaluated multiple scenarios

Darnell said he is not aware of any other time when PNM has filed multiple scenarios for replacement resources with the PRC. 

"We are giving New Mexicans information they can use as we navigate down a path together," he said. 

Sandoval said the four scenarios evaluated are based on the various interests at stake. All four scenarios include 140 megawatts of wind power.

The second scenario listed is replacing the majority of power from the San Juan Generating Station with natural gas generation in San Juan County. Sandoval said the company evaluated that scenario because of the desire to provide the least impact to San Juan County and CCSD.

The third and fourth scenarios were created based on the interests of environmental activists. Scenario three calls for no new fossil fuel while scenario four calls for replacing the power with only renewable sources.

More: How San Juan Generating Station went from powerhouse to possible closure

PNM says customers will save money under the proposed scenario

Sandoval said during the first year the third scenario would save customers’ money, however customers would pay $156 million more over 20 years than they will if PNM pursues its proposed scenario. 

He said the proposed scenario will save the average customer $7.11 each month during the first year.

Sandoval said the company cannot project utility rates after the first year due to multiple variables including the cost of fuel.

More information about PNM's filing can be found at pnmforwardtogether.com.

Hannah Grover covers government for The Daily Times. She can be reached at 505-564-4652 or via email at hgrover@daily-times.com.

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This story has been updated to include a public meeting on July 29. PNM had initially stated it would have a meeting for people interested in the filing on July 9 in Farmington, but later said that meeting would be for employees only.

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