PRC approves San Juan Generating Station plan

James Fenton
The San Juan Generating Station is pictured in Waterflow.

FARMINGTON — By a vote of 4-1, the state Public Regulation Commission on Wednesday approved a plan that allows the San Juan Generating Station to continue operating.

The final PRC vote on the plan — a compromise that will bring the coal-fired power plant into compliance with federal haze regulations by shutting down two of its four generating units — ends an often contentious and controversial two-year case before state regulators. Wednesday's vote drew a full room that included state Reps. James Strickler, Rod Montoya, Paul Bandy and Sharon Clahchischilliage.

PRC Vice Chairwoman Lynda Lovejoy, D-Crownpoint, voted in favor of the plan, along with Commissioners Karen Montoya, D-Albuquerque; Patrick Lyons, R-Cuervo; and Sandy Jones, D-Williamsburg.

Commissioner Valerie Espinoza, D-Santa Fe, a former Santa Fe County clerk who represents District 3, cast the dissenting vote.

Espinoza said that the plan would likely hurt ratepayers and voiced concerns over the continued use of coal and replacing lost power generation at the plant with 134 megawatts of nuclear power.

"I don’t believe that more coal or nuclear is the best alternative,” Espinoza said.

The Public Service Company of New Mexico plan will replace the lost generating capacity from the shutdown of the two units — representing 800 megawatts of power — at the Waterflow plant by Dec. 31. 2017. That power will be provided by additional coal-generated power from another unit at the plant, power from a proposed natural-gas plant, nuclear power from the Palo Verde Nuclear Generating Station in Arizona and a small amount of renewable power from wind and solar sources. The remaining units at the plant are currently being retrofitted with selective non-catalytic reduction, or SNCR, technology, which reduces nitrogen oxide emissions that contribute to haze.

The compromise was developed after PNM officials said complying with federal Clean Air Act regulations would be too expensive and cause the plant's closure. PNM is the majority owner at the generating station.

Pat Vincent-Collawn — PNM chairman, president and CEO — said in a statement after the vote that the regulators' approval ensures the power plant will comply with federal rules and protect the local economy.

"We are very pleased to have commission approval of the agreement," Vincent-Collawn said. "The record for this case over the last two years has demonstrated our continued commitment to customers to provide reliable, affordable and environmentally sustainable power. This plan not only represents the least-cost alternative for compliance with federal environmental regulations, but also protects the economy of the Four Corners region and the state."

During oral arguments at the meeting in Santa Fe, proponents of the plan argued that the compromise would cut the plant's coal-fired power generation in half and provide a savings for ratepayers while allowing for a 2018 review of the power plant's operations and economic viability beyond 2022.

Opponents, including Santa Fe-based renewable energy attorney Bruce Throne and Mariel Nanasi, executive director of Santa Fe-based New Energy Economy, said a continued investment in coal was a mistake that harms the environment and the public interest.

Nanasi, perhaps the plan's most outspoken critic, said the utility should be pursuing investments in renewable energy sources like wind and solar. Collapsing coal markets — 29 U.S. coal companies have gone under since 2009, she said — and the threat of climate change made further investment in coal "arbitrary and capricious," she told commissioners at the meeting, which was broadcast through a live video feed on the PRC website.

Nanasi told commissioners that "no other utility in the nation is investing in coal except PNM."

Cholla Khoury, speaking on behalf of state Attorney General Hector Balderas, said "New Mexico is a poor state with a fragile economy" and the plan, which was recently modified, lowers "the rate impact on ratepayers throughout the state while transitioning away from coal."

In a press release sent during the meeting's lunchtime recess, Lovejoy, who represents this area, said the plan was a compromise among competing interests.

"This case has been extremely important to the New Mexico Public Regulation Commission due to the long-term, potential impacts throughout the state of New Mexico stemming from the decision the commission has been tasked with making," Lovejoy said in the release. "As the commissioner representing District 4, where the San Juan Generating Station is located, I was particularly aware of the impacts that would be felt by the ratepayers as well as the communities that are directly tied to San Juan. At the end of the day, I believe the very best compromise has been reached, and that the Four Corners region as well as ratepayers throughout the state will greatly benefit from the hard work undertaken by numerous dedicated professionals who worked tirelessly to ensure a fair and reasonable outcome was met."

James Fenton is the business editor of The Daily Times. He can be reached at 505-564-4621.