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The Daily Times toured the San Juan Generating Station. Here's a look inside the coal-fired power plant at the center of the state's energy debate. Sam Ribakoff, Farmington Daily Times

CCSD, Farmington and legislators are concerned about economic impact of closure

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WATERFLOW — The skeletons of two units at the San Juan Generating Station remain standing — a stark reminder of what could happen to the remaining units in less than three years.

Walking through the generating station, a line of pulverizers that once crushed coal for unit three are now empty and opened up for safety reasons.

Two smoke stacks no longer puff out water vapor and emissions, but they are framed by the two remaining smoke stacks.

Some of the parts from the closed units are being sent to coal-fired power plants in other parts of the country. One of those parts was waiting to be shipped off on Sept. 25.

The employees walking through the coal plant, riding bikes to get from one area to another, operating equipment or sitting at desks in the control room all know that their jobs may end on June 30, 2022, when the coal supply contract with Westmoreland Coal Company expires.

More: PNM proposes plan to move toward renewable energy sources, close SJGS

Derek Bailey, an operations supervisor, said he has not yet thought about what he would do if the plant closes in 2022 and has not decided if he would stay on after 2022 if it remains open. 

"At this point in time, I'm not too concerned," Bailey said. "I'm not losing sleep yet."

He said he was nervous when he first heard the news that the plant could close about two years ago, but then he realized the closure is still years away.

As 2022 approaches, employees look to the future

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While San Juan Generating Station has traditionally had a low turnover rate, with many employees starting and ending their careers at the power plant, some employees have already left in anticipation of a 2022 closure.

"A lot of people that are leaving San Juan today ended up in good places," said Plant Manager Omni Warner.

Some are now working at Hilcorp, switching from coal to natural gas. Others have gotten similar jobs across the river at Four Corners Power Plant.

PNM spokesperson Raymond Sandoval said the utility does not know exactly how many employees will be searching for jobs if the power plant closes in 2022. When PNM closed two units a few years ago, it did not lay off any employees because there had been enough attrition.

Warner said the attrition rate has been faster than anticipated the last couple of years.

Last year, 25 employees left, either for other jobs or to retire. He said there have been about the same number of employees leaving this year, and San Juan Generating Station hasn't hired new employees for three years.

Warner said PNM may need to contract with outside sources for some of the operations if enough people leave.

For those who will be losing their jobs, the Energy Transition Act passed after PNM announced plans to close the power plant includes money for training and severance packages. 

But there is a chance the New Mexico Public Regulation Commission will not apply the Energy Transition Act to the case and, if that decision is held up by the New Mexico Supreme Court, there could be less money available for training and severance.

Not applying the Energy Transition Act will also impact mine workers and the community. That is because the new law allowed PNM to refinance its investments into the power plant and required some of the money from the refinancing be set aside to assist impacted workers and communities.

Sandoval said PNM will leave its share of the power plant regardless of what happens with the Energy Transition Act.

"The process, though, is going to be a lot more mess, a lot more complicated," Sandoval said when asked about what would happen if the Energy Transition Act is not applied.  

More: The Energy Transition Act outlined a path away from coal. The first steps are underway

Workers have varying interests for future employment

Plant Manager Omni Warner said between 80 and 90 employees will have the ability to retire in 2022. 

"For the rest of the employees, though, they're going to have to go find some other form of employment," Warner said.  

San Juan College and PNM have partnered for training programs to assist the workers and have talked about training for the renewable energy field. 

Warner said there are many employees who plan on leaving the energy industry once the power plant shuts down.

Those employees who will be searching for new jobs have a variety of interests, according to Sky Northup, the maintenance manager at San Juan Generating Station.

"It runs the gamut," Northup said. "I got a guy that wants to be a farrier, wants to go learn how to shoe horses."

Northup and Warner said many of the employees are hoping to get commercial driver's licenses and others hope to find employment as linemen — a field that is almost always looking for employees.

More: PRC: Energy Transition Act doesn't apply to PNM's plan to close San Juan Generating Station

Work will not completely cease at the power plant in 2022

Not every one of the 220 employees at the power plant will have to leave the San Juan Generating Station at the end of June 2022. Sandoval said about 50 employees will be needed to decommission the power plant.

And decommissioning will also create a need for a different, specialized workforce. If the plant does close in 2022, contractors will likely assist with decommissioning and reclamation. It will take several years to fully decommission and reclaim the power plant.

The exact details of what the decommissioning and reclamation will entail has not yet been determined. It will need to be negotiated with all of the plant owners and one owner, the City of Farmington, is working on an alternative that would keep the San Juan Generating Station open.

Unlike PNM, Farmington Electric Utility System is not able to refinance its investment into the power plant using the Energy Transition Act. This is because Farmington is not regulated by the New Mexico Public Regulation Commission. Farmington Electric Utility System will lose millions of dollars of investment into the facility while also having to pay millions of dollars to replace the power generation it will lose.

The impacts to the local economy and the electric utility prompted the City of Farmington to partner with Enchant Energy in an attempt to keep the power plant open.

More: Challenges loom as Farmington works to keep San Juan Generating Station open

While the city and Enchant Energy are optimistic that carbon capture technology can work to keep the plant operating, they must still clear several hurdles, including finding investors and negotiating the transfer of ownership.

Sandoval said there have not yet been formal negotiations about the transfer of ownership.

CCSD, San Juan County legislative delegation file to intervene

On top of the loss of jobs in San Juan County, closing the power plant means less property tax revenue for San Juan County, Central Consolidated School District and San Juan College — as well as the state.

Both Central Consolidated School District and the San Juan County legislative delegation filed to intervene in the PRC case on Sept. 24. That means they will be able to present their arguments as the PRC considers PNM’s application to close the plant.

CCSD states in its motion to intervene that only 2% of property in its district boundaries is taxable, and the mine and power plant are the largest contributor of property tax to the district.

“The abandonment of the SJGS will inevitably affect the economic health and well-being of San Juan County and its residents,” the legislative delegation stated in its motion to intervene.

More: Applicability of new law remains unclear as PRC debates San Juan Generating Station case

San Juan Mine will feel the impacts first

But the power plant is not the only place that could be closing in 2022. If the power plant does close, the neighboring San Juan Mine will likely also close.

That means hundreds of mine workers could face job loss. And those jobs will be impacted much sooner than the San Juan Generating Station jobs. Some could be laid off as early as next summer as PNM reduces the amount of coal it receives from the mine.

Like the power plant, work will continue at the mine even after 2022. It will take years for the mine to be fully reclaimed. However, like the power plant, it takes fewer employees to reclaim the mine than it does to operate the mine. 

How does the power plant work?

The San Juan Mine, owned by Westmoreland Coal Company, delivers coal to the San Juan Generating Station. The coal is three quarters of an inch in diameter or smaller, but that is not small enough for the power plant’s operations. Coal mills at the power plant crush the coal even smaller and dry it out. Giant fans blow the coal through tubes into the furnace, where it is ignited.

Water is pumped from the San Juan River into a reservoir at the power plant. The water then goes through a treatment process that makes it cleaner than typical tap water. This water is placed in pipes to be heated by the burning coal. The water turns to vapor and is sent through turbines connected to a generator. The vapor causes the turbines to rotate, which then creates electricity.

“The whole plant is giant and there’s a million things going on and it’s all to rotate this one piece of equipment,” Northup said.

The electricity then goes through a transformer, which increases the voltage. Transmission lines then take the electricity from the power plant to substations throughout the southwest.

That water vapor is later condensed and recycled. Most of the water is lost over time before it becomes too dirty for continued use in the power plant. However, some water is placed in lined evaporation ponds. Eventually those evaporation ponds will be capped when they can no longer be used.

Over the years, the power plant has gone through various renovations to reduce emissions. That includes a baghouse to capture fly ash, which is then taken to the San Juan Mine and placed in open pits prior to reclamation.

PNM plans for the future as the industry continues to change

Warner said the electrical generation industry is changing. When the San Juan Generating Station was built in the 1970s and 1980s, coal-fired generation was considered the best way to provide low-cost, reliable electricity.

The rise in wind, solar and other forms of renewable generation, along with the growing concern about coal power has led to power plants closing at a rapid rate nationwide. Many, like the San Juan Generating Station, are closing decades before the end of their useful lives.

“Our whole industry and our economy is making a technology shift,” Warner said.

PNM is currently in the process of developing its 2020 integrated resource plan — a document the utility is required to file every three years that outlines its plans for generation sources over the next 20 years.

Sandoval said the 2020 plan will take a fresh look at the utility's future. He said it will consider future transmission, closing gas plants, meeting new state goals and leveraging new technology.

"I think that this IRP is going to be very different from the IRPs in the past because we really do have to plan for the next 20 years ... the scary thing is nobody knows what the next 20 years is going to be for our industry," Sandoval said. "But at the same time, that's a huge opportunity to think outside of the box."

He compared it to changes in the entertainment industry.

"Are we Blockbuster and solving for rewinding video tapes or are we Netflix and figuring out how to offer new services to customers in a completely different way?" Sandoval said.

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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