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San Juan EPA deal reached

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Copyright © 2013 Albuquerque Journal

A settlement announced Friday is expected to end the state’s long-running dispute with the EPA over mandatory controls to reduce haze-causing pollution at the coal-fired San Juan Generating Station in northwest New Mexico.

The agreement, which incorporates most of a compromise plan proposed by the New Mexico Environment Department to the EPA last year, calls for the closure of two of the plant’s four units by Dec. 31, 2017. They would be replaced by a 150- to 200-megawatt natural gas-fueled unit.

The two remaining units would be equipped with state-proposed and less expensive pollution controls using selective non-catalytic reduction technology and permitted to operate indefinitely.

PNM, 46 percent owner of the 1,800-megawatt plant, estimates its share of the capital costs under the settlement would be $400 million to $430 million. It says ratepayers would not see an immediate impact on their bills.

In addition, PNM agreed to no layoffs due to the units’ closures and will provide more than $1 million for job retraining and economic development in the Four Corners area.

The elements in the settlement substantially changed a federal implementation plan for regional haze in an EPA rule issued in August 2011. It called for the owners of San Juan to install selective catalytic reduction on each of San Juan’s four units. The state argued SCR – estimated by PNM to cost $824 million to $910 million – would have a major impact on ratepayers with barely perceptible visibility improvements over SNCR.

The EPA, NMED and PNM and other parties have been negotiating on an alternative for months.

“This agreement reflects a compromise,” Environment Department Secretary David Martin said. “All people are not comfortable with all aspects of it, that’s the nature of a compromise.”

The state originally proposed closing units 1 and 2. The settlement calls for closing units 2 and 3. Martin said unit 3 is a larger unit and closing it will provide more environmental benefits.

The state will have to submit a revised implementation plan for regional haze to the state Environmental Improvement Board for adoption. It would require final approval by the EPA. The Public Regulation Commission would have to approve retirement of the two units and plans for acquiring replacement power.

Both PNM and the state filed appeals of the 2011 EPA rule in federal court, which are pending.

The above chart illustrates the compromise. The red line is the federal proposal, the yellow the state proposal and the blue line the compromise.

 

PDF Document: Next Steps: New Mexico Alternative Approval

 

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