Recent agreement appears to pave way to keep plant operating
FARMINGTON — As a Wednesday state Public Regulation Commission meeting approaches that could determine the fate of the San Juan Generating Station, local officials expressed cautious optimism that commissioners will vote to keep the plant in operation.
The PRC will meet in Santa Fe on Wednesday morning and take up a Public Service Company of New Mexico plan — approved by the Environmental Protection Agency, the state and others — that would retire two coal-fired generating units by the end of 2017 and replace the lost power with additional coal-generated power from another unit at the plant, Arizona-based Palo Verde nuclear plant power 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 too expensive and result in the utility closing the station.
One recent agreement may have breathed life into local officials' hopes for the plan's ultimate approval.
On Aug. 13, PNM, the majority owner of the Waterflow plant, and other key parties, or "intervenors," reached a settlement agreement on objections that included concerns about electricity rates and a coal supply agreement for the plant. The key parties that reached the settlement with PNM include state Attorney General Hector Balderas, Western Resource Advocates and the New Mexico Coalition for Clean Affordable Energy.
On June 26, the PRC ordered settlement discussions between the key parties after disputes over the plan delayed a vote.
In a County Commission meeting last month, Assistant Attorney General Cholla Khoury asked the county to intervene in the plan by sending a representative to the state capital. That would allow the county to enter evidence into the record before the PRC makes a decision.
Last week, San Juan County commissioners declined to become more involved in the plan.
San Juan County CEO Kim Carpenter said in a phone interview on Monday that the settlement changed the county's earlier intention to intervene formally in the case. He also said that he remains hopeful that the plan will ultimately be approved by the five state regulators, but he added that any defense of fossil fuel-based power generation will be an uphill battle.
"We're cautiously optimistic," Carpenter said. "I'm very cautious at this point in time. It's like playing with a yo-yo when you're not sure the string won't break at any moment."
Four Corners Economic Development CEO Ray Hagerman said in a phone interview Monday that the settlement agreement meant that intervening late in the case would be unnecessary.
"Why muddy the water by creating more opportunity for more disagreement?" Hagerman said. "The county's attorney and an attorney I consulted said to actively do nothing. That's where we are. And in my mind, all the issues that the hearing examiner had previously have all been cleared up. We still should have a good outcome. We should have a 4 to 0 vote ... I'd be very satisfied with that."
Hagerman said that if the plan fails and the generating station closes, 350 jobs at the utility and 400 at the coal mine that supplies it would be lost.
Those jobs represent a collective annual payroll of about $88 million, he said.
Hagerman cited a recent study analyzing the Four Corners Power Plant that showed that for each direct job at the plant, there are an additional three and a quarter indirect jobs such as truck drivers and vendors that would be lost.
"That's over 3,000 jobs at stake and that's absolutely something we can't afford," he said.
Carpenter said environmental groups like New Energy Economy — an intervenor that backed out of settlement negotiations with the utility — have shown that they are willing to pursue their fight against fossil fuels in the courts, which has added to delays that have caused the PRC case to drag on for two years.
Mariel Nanasi, New Energy Economy president and executive director, could not be reached for comment late Monday.
"We think environmental groups will want to push this all the way to the Supreme Court," he said. "It's just very frustrating when other parties ... try to dictate what we do up here when they've never stepped foot in this county. But there's nothing economic about renewable energy. It takes money and it depletes jobs. Wind and solar — you can't show me a city that runs on it."
Carpenter said that each year, the generating station and nearby Four Corners Power Plant pay an estimated $4.5 million in property taxes, significant revenue that would be lost if the plan fails.
Primary recipients of that annual revenue include San Juan College at $900,000, Central Consolidated School District at about $1.7 million and San Juan County at about $1.6 million.
Carpenter said that the compromise plan is a bitter pill supporters of the power plant and coal mine have agreed to take to ensure the jobs and tax revenue continue.
"We've lost three stacks at (Four Corners Power Plant), we've lost (revenue from) the Navajo Mine," Carpenter said. "We don't agree, but we understand we have to come to the table and strike a balance. We don't agree with it up here but we realize we have to compromise ... You've got hundreds of jobs that are going to be affected by this plan. We're going to see attrition and losses. We're losing jobs and my priority in this county is not renewables. It's jobs."