New Mexico Utility Stands By Plan To Close Coal Power Plant In Four Corners Region

Nov 29, 2019

New Mexico’s largest electric provider says continued operation of a coal-fired power plant using carbon-capture technology wouldn’t be in the best interest of utility customers. Public Service Co. of New Mexico made the declaration in testimony filed with state regulators who are weighing the pending closure of the San Juan Generating Station.

FILE - This Nov. 9, 2009, file photo shows the coal-fired San Juan Generating Station near Farmington, N.M. New Mexico's largest electric provider says continued operation of a coal-fired power plant using carbon-capture technology wouldn't be in the best interest of utility customers. Public Service Co. of New Mexico made the declaration in testimony filed with state regulators who are weighing the pending closure of the San Juan Generating Station.
Credit (AP Photo/Susan Montoya Bryan, File)

The recent filing was in response to concerns that the utility had not presented an alternative case for installing carbon capture equipment at the plant in an effort to reduce emissions and avoid shutting it down as planned in 2022. At issue are the significant economic effects closure will have on the region.

The utility said this week it is standing behind a proposal to end its reliance on coal by moving toward a mix of natural gas, renewable resources and batteries. The utility has said it intends to meet the state’s newly enacted mandate for zero emissions by 2040. “To meet our obligations of affordable, reliable and environmentally friendly energy to our customers, we believe the Energy Transition Act provides the means to transition away from coal-fired energy without leaving our workers and communities behind,” spokesman Raymond Sandoval said in a statement.

The utility pointed to modeling that shows the carbon capture alternative would cost at least $5 billion — slightly less than the $5.4 billion price tag for an all-renewables plan. However, the overall monthly savings for residential customers would be a fraction of what is estimated under PNM’s preferred option or it could possibly end up costing customers more depending on which factors are considered. Utility executives have said residential customers would end up saving nearly $7 a month in the first year after the coal-fired plant closes under its preferred proposal. They haven’t been able to say what, if any, savings customers would see after that.

The proposal for carbon capture gained attention earlier this year when Farmington entered into an agreement with Enchant Energy to keep the plant open. Since the project was announced, the city and Enchant Energy have received federal funding for an engineering study, the Farmington Daily Times reported. “This technology has never been proven at a facility that is as large as San Juan,” Sandoval said. All the power plant owners, except for the city of Farmington, plan to exit in 2022.

If regulators require PNM to install carbon capture and continue operating the power plant, Farmington could still acquire ownership shares belonging to Tucson Electric Power, Los Alamos County and Utah Associated Municipal Power Systems. The city could then transfer that ownership to Enchant Energy.

Enchant Energy has suggested that tax credits could generate $2.5 billion, nearly twice the $1.3 billion estimated price tag of installing the carbon technology. The company plans to use tax-equity financing to fund the retrofit. After installation, Enchant Energy predicts the sales of carbon dioxide would cover the plant’s annual operating expenses.