Hearing examiner throws support behind PNM plan

James Fenton
The San Juan Generating Station as seen on April 20 on County Road 6800 in Waterflow.

FARMINGTON — A state hearing examiner has recommended approval of Public Service Company of New Mexico's plan to comply with emissions standards while continuing operations at the San Juan Generating Station.

In a 130-page "Certification of Stipulation," New Mexico Public Regulation Commission hearing examiner Ashley Schannauer said on Monday that the plan — altered after a compromise was reached by PNM and interveners in the case — is "fair, just and reasonable and in the public interest."

Shannauer recommended that PRC officials reject the plan before the changes were made.

Schannauer said in the recommendation to accept the plan that it "represents a reasonable approach to replacing the capacity that will be lost with the retirement of San Juan Units 2 and 3. It also provides a meaningful opportunity to review the future of the entire San Juan (Generating) Station in 2018, based upon the costs of operating the station after the expiration of the current ownership agreement and the new coal supply agreement."

The recommendation paves the way for a vote by the PRC in the coming weeks on the future of the coal-fired power plant. Approval by state regulators of the utility's plan would close one of the more controversial and complicated cases in state regulatory history. State regulators have been considering the case for more than 18 months.

The PNM plan involves retiring two units — No. 2 and No. 3 — at the coal-fired generating station by the end of 2017, and replacing the lost power with additional coal-generated power from another unit at the plant, nuclear power from the Arizona-based Palo Verde plant, and some additional natural gas- and solar-generated power. The plan was developed as a compromise after plant officials said meeting federal haze regulations under the federal Clean Air Act would be prohibitively expensive and result in the utility closing the station.

Ron Darnell, PNM's senior vice president for public policy, said in an email on Friday that the plan to continue operations at the generating station brings many benefits.

The San Juan Generating Station is pictured in Waterflow.

We’re pleased with the hearing examiner’s recommendation which clearly outlines the benefits of the Settlement Agreement for PNM customers and for the state," Darnell said. "The record established during this long and comprehensive process strongly supports this determination. The agreement provides increased environmental benefits, including a significant reduction in PNM’s use of coal generation, while minimizing the cost impact to customers and ensuring reliability. We appreciate the hearing examiner’s thoughtful and thorough evaluation of this complex case."

But Mariel Nanasi, executive director of Santa Fe-based New Energy Economy, said in a press release that she was not happy with Schannauer's recommendation.

New Energy Economy was the one environmental group that broke away from compromise negotiations in August and recently attempted to have four of the five regulators removed from the case over alleged bias that favored the utility.

"The decision is manifestly unjust," Nanasi said. "Not only is further investment in coal an environmental catastrophe, it is absurd economically when we have available and feasible solar and wind that costs less."

Nanasi said her group would consider appealing the recommendation.

James Fenton is the business editor of The Daily Times. He can be reached at 505-564-4621 and jfenton@daily-times.com.