ALBUQUERQUE — The state’s largest electric utility has a plan for replacing power that will be lost when it shutters two units at a coal-fired power plant in northwestern New Mexico that’s long been a target for environmentalists.
Public Service Company of New Mexico filed its plan with state regulators late Friday. The utility also asked the Public Regulation Commission for permission to recover costs associated with the partial closure and installing pollution control equipment on the remaining two units.
PNM and Gov. Susana Martinez’s administration negotiated a compromise earlier this year calling for the partial closure and pollution controls. The plan needs to be approved by the PRC and the Environmental Protection Agency.
Federal regulators, the state, the utility and environmentalists have been fighting for years over the best way to reduce pollution at the plant amid concerns about increasing electric costs to customers.
PNM says the plan will cost less and result in greater environmental benefits than a proposal by federal regulators to install a different type of pollution control equipment. It says electricity generated by one of San Juan’s other units, the Palo Verde nuclear plant in Arizona and a new natural gas-fired plant would replace the lost power.
Critics, including environmental group New Energy Economy, argue that PNM’s effort to recover its investment in the aging plant will ultimately end up costing customers through higher rates.
“They want ratepayers in New Mexico to pay for their losses. They want New Mexicans to pay for their poor financial and resource planning,” said Mariel Nanasi, New Energy Economy’s executive director.
The group plans to fight PNM’s proposal.
PNM contends its plan will end up costing less than if the utility continues to operate all four coal-fired units. The utility pegs the saving for customers at more than $780 million over the next 20 years compared with what federal regulators had sought.
If state regulators approve, PNM says the plan will clear the way for the utility to reduce its use of coal and minimize the potential impact of future fuel cost fluctuations.
While closing part of San Juan would be a step in the right direction, Nanasi said, she questioned PNM’s plan to replace the lost power.
The utility is missing an opportunity to fold more renewable energy into its portfolio, Nanasi said.
It likely will be months before the Public Regulation Commission schedules any hearings to consider PNM’s proposal.
Initially, the EPA ordered the utility to equip the plant with certain technology to cut pollutants that cause haze and visibility issues in national parks and wilderness areas in the region. The order sparked a round of appeals and lawsuits by the state and PNM over concerns of higher electric bills for customers.
PNM has said the compromise negotiated with the governor, if approved, would result in an increase in customers’ bills of about $67 a year starting in 2017.