PNM Customers To Pay To Reduce Haze

PNM customers will foot the bill to reduce haze-causing pollutants at the San Juan Generating Station near Farmington, but how much will depend on how it’s done.

PNM says the state’s plan, which it supports, would cost customers an average of $11 a year, while the federal plan would cost $85 a year.

A hearing begins Wednesday on the New Mexico Environment Department’s $77 million alternative to a far more costly federal proposal, which PNM estimates will cost $1 billion, to reduce the haze-causing pollutants.

There’s no certainty that even if adopted, the plan will change what the federal Environmental Protection Agency proposes for the coal-fired power plant.

Whatever plan is approved, though, customers of the Public Service Company of New Mexico, which owns almost half of the plant, can expect to pay for the improvements — atop of whatever rate increase state regulators might approve this summer.

PNM is supporting the NMED plan, contending it strikes a balance between reducing air emissions and protecting ratepayers from undue costs.

But the state plan has been harshly criticized by environmental groups as “woefully inadequate” and an attempt by PNM to get by on the cheap at the expense of public health.

The state Environmental Improvement Board will begin a hearing on the proposal Wednesday in Santa Fe, then move to Farmington for Thursday, Friday and Saturday as necessary.

At issue is an EPA directive that operators around the country retrofit their generating plants using the best available technology to reduce nitrogen oxides and other pollutants that cause haze in national monuments and wilderness areas.

For the San Juan plant, the agency in December proposed requiring the owners to install a technology called selective catalytic reduction, or SCR, to reduce emissions within three years. The Environment Department, under the Gov. Bill Richardson administration, proposed a rule-making effort similar to the EPA effort last summer, but later withdrew it.

Not long after Gov. Susana Martinez took office, the Environment Department proposed an alternative plan that calls for selective non-catalytic reduction technology, which it says could meet the federal haze requirements at a cost of about $77 million.

Department officials in March said the SRC cost impact on ratepayers was the “compelling” information that resulted in the change from what the department proposed last year.

“The state plan is far more reasonable than the EPA’s plan,” PNM spokesman Don Brown said. “It’s one-tenth or less of the cost and yet still gives us significant emissions reductions.”

But the Sierra Club, WildEarth Guardians, National Parks Conservation Association, San Juan Citizen Alliance, Dine CARE and others aren’t buying it. They say the state’s plan would reduce nitrogen oxides by 20 percent compared with 80 percent with the SCR technology, which they consider the most efficient and effective way to meet the pollution requirements. They also contend that PNM’s estimate for the SCR technology is highly inflated and being used as a scare tactic.

EPA’s own estimate puts the cost in the range of $250 million.

“This plan is weaker than what the Environment Department originally proposed and what the EPA has proposed,” said Jeremy Nichols, climate/energy program director for the WildEarth Guardians. “It seems to be more a deliberate rollback to further PNM’s politics and does not truly address the air quality challenges we have before us.”

He added, “I think it’s pretty safe to say the status quo is not cutting it. It is not just haze, but a public health concern … It is really time to take a look at the liabilities of burning coal.”

PNM’s Brown defended the company’s SCR cost estimate, contending the EPA did not factor in “hundreds of millions” in capital and ongoing yearly costs.

The company maintains a recent $320 million environmental upgrade at San Juan is the best available technology to comply with the federal emissions requirements.

“But given the reality of a federal plan that could add a billion dollars of costs at San Juan, the state plan is something we can certainly live with,” he said.

The EIB, which gained all new members after Martinez took office, set the hearing for early June to give the state enough time to submit a plan to the EPA before the agency makes a decision. EPA had been bound by a consent decree in a lawsuit filed by WildEarth Guardians to adopt a plan for San Juan by June 21.

Nichols said his organization agreed to extend that date to Aug. 5 to give EPA staff more time to respond to comments on its plan.

PNM did not figure the San Juan compliance costs into its $85 million rate increase request pending with the Public Regulation Commission. A stipulation signed by PNM and six other parties, however, would allow PNM to file to recover actual costs related to environmental regulations mandated by federal or state governments, such as the pollution controls proposed at San Juan.

— This article appeared on page A1 of the Albuquerque Journal