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PRC OKs plan for partial shutdown of San Juan plant

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Public Regulation Commissioners Lynda Lovejoy, right, and Patrick Lyons discuss a plan for closing down part of a coal-fired power plant during a hearing in Santa Fe, N.M., Wednesday, Dec. 16, 2015. Commissioners voted 4-1 to approve the plan to shut down two units at the San Juan Generating Station to curb haze-causing pollution to meet federal standards.(AP Photo/Susan Montoya Bryan)

SANTA FE, N.M. — State regulators on Wednesday adopted a plan to shutter part of a coal-fired power plant that serves customers across the Southwest, bringing to a close years of wrangling over the best way to curb pollution while limiting the effects on utility bills and northwest New Mexico’s economy.

The 4-1 vote came as environmentalists, consumer advocates, state lawmakers and lawyers for the utility that runs the San Juan Generating Station packed a hearing before the Public Regulation Commission.

The plan, based on a settlement reached after months of negotiations, had the support of the commission staff, state attorney general’s office and a coalition of environmental groups.

The only commissioner to vote against the proposal was Valerie Espinoza of Santa Fe.

“I don’t want to be one of those on the wrong side of history. Times are changing. There are 184 countries that want to see reduced emissions,” she said, suggesting New Mexico missed an opportunity to add more renewable energy to the grid.

Questions about the future of the San Juan plant began to percolate about a decade ago as the federal government began talking about reducing emissions. In the Four Corners region — where New Mexico, Arizona, Colorado and Utah meet — environmentalists had been complaining about poor visibility caused by San Juan and other coal-fired plants.

Public Service Co. of New Mexico, the plant’s operator, reached an agreement with the state and the U.S. Environmental Protection Agency in 2013 to close two units by 2017 and install more pollution controls on the remaining stacks in order to meet federal standards for haze-causing pollution.

The resulting debate centered on how PNM planned to replace the lost capacity. The utility called for a mix of coal, nuclear, natural gas and solar power, saying it would be the most cost-effective option for customers.

But one environmental group, New Energy Economy, challenged the plan at every corner, saying customers would end up footing the bill for continued investment in coal at a time when the federal government was considering stricter environmental regulations.

Mariel Nanasi, executive director of New Energy Economy, reiterated her concerns Wednesday and challenged the commissioners to identify the costs of the plan based on testimony and charts provided by the utility.

“You can’t. The testimony is convoluted, contorted, wrapped up in a hornet’s nest of deliberate confusion,” she said. “There is no substantial evidence to even explain in coherent form what the cost will be for ratepayers as a result of their dangerous plan.”

Utility attorney Rick Alvidrez argued that customer bills will increase by less than $1 a month starting in 2018 and they will benefit from a $340 million savings in coal costs through 2022.

Aside from the economics, Alvidrez said the plan will result in a net reduction of nearly 290 megawatts of coal-generated electricity from PNM’s portfolio.

“If you listen to the rhetoric, it sounds like PNM is investing in new coal or investing in more coal. Nothing could be further from the truth,” he said.

New Energy Economy plans to appeal the commission’s decision to the New Mexico Supreme Court.

The court already has ruled on questions about the commission’s impartiality, and Steve Michel with Western Resource Advocates said the plan adopted by the commission calls for bigger reductions in coal and the addition of more renewable energy than any courtroom battle could achieve.

Under the plan, PNM will be allowed to absorb excess capacity from those utilities divesting ownership in the plant. Most environmentalists and clean energy advocates had previously opposed that, but PNM agreed to a new review by regulators in 2018 to determine whether more or all of the plant should be shut down after 2022.

PNM also agreed to lower ratepayer costs for the nuclear energy that will be tapped to fill part of the void and to support more renewable energy development in the next few years.