Questions about whether Public Service Company of New Mexico is adding costly pollution-control technology that critics say isn’t required by regulators at the coal-fired San Juan Generating Station could be a key issue in regulatory hearings that began Monday in Santa Fe.
PNM contends the technology is required by the state and federal governments, but a top state environment official disputed that in a Dec. 9 email.
Under an agreement with the U.S. Environmental Protection Agency, PNM is seeking Public Regulation Commission approval to shut down two of San Juan’s four generating units and to install pollution controls on the remaining two units to meet federal haze regulations.
But environmentalists and clean-energy advocates say PNM is going beyond what the EPA or the state Environment Department require to meet air quality regulations by proposing to install two distinct pollution controls on each of the generators that continue to operate at San Juan – one that reduces haze and a second that reduces particulate emissions.
Some of the utility’s critics argue that all four of the coal-fired units should be shut down and the power replaced with renewables. In essence, they’re now saying PNM’s proposal is “greener” than it has to be to meet air quality regulations.
Close scrutiny of the “balanced draft” issue is expected in the San Juan hearings that began Monday, and in PNM’s new rate case if the investment is approved by the PRC, said Steve Michel, chief counsel for Western Resource Advocates.
“Balanced draft may produce environmental benefits, but it’s not required under any law or regulation,” Michel said. “PNM asked to have it in their permit. It’s a fabricated need.”
By doing so, the total cost for new technology at San Juan will rise from $41 million if PNM simply meets EPA requirements to $157 million for all the controls the utility proposes. That’s according to PNM cost estimates included in its filings with the PRC.
Much of those costs will be borne by New Mexico ratepayers.
PNM says both controls – which include selective noncatalytic reduction (SNCR) and balanced draft technology – are needed at the plant. SNCR helps lower nitrogen oxide emissions, which cause haze, and it’s an EPA requirement for San Juan.
Balanced draft, meanwhile, will provide better control of air flow through boilers, allowing PNM to further reduce particulate emissions from leaky ducts and piping. It’s the balanced draft technology that opponents are challenging.
PNM says balanced draft is required under the plant’s air quality permit approved by the state Environment Department for the power plant. It’s also justified to better enable San Juan to comply with EPA’s National Ambient Air Quality Control Standards, PNM spokeswoman Susan Sponar told the Journal.
But in a Dec. 9 email to PRC staff, the head of the state Environment Department’s Air Quality Bureau, Richard Goodyear, disputed those claims. The email was obtained by the Coalition for Clean Affordable Energy through the Inspection of Public Records Act.
“Please note that PNM’s assertion that the state of New Mexico required the balanced draft conversion is incorrect,” Goodyear wrote in the email. “PNM’s request to implement the balanced draft project was entirely voluntary and only appears in the air quality permit because PNM requested the inclusion of the project in their air quality application.
“As PNM was in compliance with ambient applicable air quality standards in effect prior to the proposed installation of the balanced draft project, it should be noted that the project is not required to comply with any applicable ambient air standard.”
In response to Goodyear’s email, PNM confirmed that it proposed balanced draft as part of its permitting application in 2011 to “best address” issues regarding the emission of particulate matter, and to improve its ability to meet air quality standards.
“PNM worked proactively with the New Mexico Environment Department to propose a solution balancing the interests of customers and the environment,” Sponar said in an email to the Journal on Monday.
Environmental organizations say the extra costs for balanced draft is unjustified, since it’s not required to meet state or federal regulations.
New Mexico ratepayers would bear the lion’s share of the extra expense, since as majority owner at San Juan, PNM will pay $92 million, or nearly 60 percent of the total $157 million in pollution control costs. That includes $24 million for SNCR and $68 million for balanced draft.
“PNM is saying balanced draft will help them meet fugitive emissions standards, but nobody ever said they were out of compliance with those standards,” said Chuck Noble, attorney for the Coalition for Clean Affordable Energy. “That makes it look like PNM is just putting this investment in to pad its rate base, which allows it to earn more profits.”