State, PNM face rigorous timelines to meet haze deal commitments

PNM and the New Mexico Environment Department face rigorous timelines to meet commitments in the recently proposed settlement with the EPA to end the long-running regional haze dispute at the coal-fired San Juan Generating Station.

The agreement, announced last week, calls for closing two of the plant’s four units by Dec. 31, 2017, and equipping the others with selective non-catalytic reduction technology. The closed units would be partially replaced by a natural gas-fired unit.

The plan would supplant a 2011 Environmental Protection Agency order giving PNM and eight other plant owners five years to equip each unit with selective catalytic reduction to comply with federal haze regulations. The state and PNM say the settlement plan will be less costly, meet haze requirements and provide other environmental benefits.

According to the settlement “term sheet,” PNM must submit an analysis of the new compliance plan to the NMED in March. NMED is to begin revising a state implementation plan for regional haze, and in May or June, request a state Environmental Improvement Board hearing. That would trigger a public comment period, with EIB action set to occur in September.

The revised plan would then be submitted to EPA, with final approval by that agency unlikely until late 2014. SNCR installation would have to be completed 15 months after EPA’s approval.

State Public Regulation Commission approval also will be required to abandon the two San Juan units, construct the gas plant and purchase any other replacement power.

“(The timelines) are aggressive, but we think they are all feasible and doable,” PNM spokeswoman Valerie Smith told the Journal.

If the agreement should somehow fall apart, the original, the more expensive haze-reducing technology would be required to be installed at San Juan.

EPA Region 6 Administrator Ron Curry said in a letter that if the state is unable to submit a revised state plan by October or the plan does not win EPA approval, the EPA will work with PNM and NMED on a “reasonable” schedule to comply with the original EPA rule.

In a related development, the court case over EPA jurisdiction in the matter continues.

Both PNM and the state appealed the 2011 EPA rule in federal court.

NMED General Counsel Ryan Flynn told the Journal that the state intends to work with the involved parties to request the court delay a decision while the agreement is implemented.

“Ideally, we would be able to successfully implement all the terms we agreed upon and withdraw the lawsuit altogether,” he said.

Smith said PNM is exploring additional “areas of relief” to ensure it isn’t negatively affected if the deal fails and the original EPA plan and deadline are reinstated.

“One of the areas we are looking at is relief through the court, but I don’t believe we’ve made a decision at this point.”

This week investment analyst Baird Equity Research said it thinks the settlement will have a positive impact on PNM.

“Clearing this hurdle allows PNM to begin pushing for regulatory approvals and investment recovery that is expected to help set the table for accelerated infrastructure investment, which should drive above-average total returns,” it said in a research note.
— This article appeared on page B01 of the Albuquerque Journal