Dive Brief:
- Public Service Co. of New Mexico (PNM) and mining company BHP Billiton reached an agreement expected to keep New Mexico’s San Juan Generating Station supplying coal-generated electricity for 2 million-plus Southwestern region customers through 2022.
- According to PNM’s filing with the New Mexico Public Regulation Commission, Westmoreland Coal Co. would purchase the coal mine that supplies the San Juan plant from BHP Billiton and take over operations in 2016, saving the utility and its customers 15% to 20%. State regulators must approve the deal before the sale goes through.
- With utilities in the region divesting coal because of operations costs under new EPA pollution control regulations, PNM plans to exercise what it argues is the lowest cost option to ratepayers by shuttering two of San Juan’s units and keeping two operating at a cost of $6.8 billion over 20 years.
Dive Insight:
PNM will retire San Juan’s 375 MW unit 2 and its 544 MW unit 3 by December 31, 2017, and retrofit units 1 and 4 in early 2016 to comply with EPA emissions regulations so they can continue operating until fully depreciated by 2052. This plan will allow PNM to assume a larger percentage of ownership as other utilities decline to renew existing power purchase agreements.
PNM wants the commission to allow it to replace the coal generation lost to shutterings by buying Arizona’s Palo Verde Nuclear Station generation, and adding new natural gas capacity and a small amount of solar capacity.
Environmentalists and consumer advocates argue that PNM’s increasing ownership in San Juan heightens the financial risk to ratepayers. New Energy Economy (NEE) claims the utility did not include the costs of meeting EPA regulations and the cost of coal ash disposal from the remaining San Juan units in its projections. Sierra Club believes the plan should include more renewables.
