PNM: Closing coal-fired San Juan plant makes sense

A preliminary analysis by Public Service Co. of New Mexico shows that closing the entire coal-fired San Juan Generating Station near Farmington after 2022 could provide long-term benefits to customers, the company announced on Thursday.

The utility already plans to shut two of the four generating units at San Juan next year to meet federal environmental regulations. But the remaining two units will remain open until at least 2022, when the plant’s current co-ownership agreement and its coal contract expire.

The company had agreed to begin reviewing the best future options for the remaining units at San Juan next year with parties who participated in the 2015 decision to close half the plant. Under that 2015 accord, PNM agreed to analyze two scenarios for the utility’s generating resources after 2022, one that looked at the total system with San Juan still operating, and one without.

That analysis is part of the company’s triennial integrated resource planning process, which looks at the best options for electric generation and distribution over 20 years. The company reviews multiple scenarios that take into account potential resources to determine the most cost-effective mix for meeting electric demand while complying with environmental regulations and maintaining system reliability.

The first preliminary analysis now shows that retiring the entire San Juan plant after 2022 could benefit customers, provide an opportunity to increase renewable energy production and add operational flexibility to PNM’s system, said PNM Resources chair, president and CEO Pat Vincent-Collawn in a statement Thursday.

“I want to stress that this is only a preliminary finding regarding our San Juan Generating Station,” Vincent-Collawn said. “No decisions have been made. We have a lot of work to do and will be having discussions with the other owners and considering public input before the (integrated resource plan) is finalized.”

The company must still run many more energy scenarios for analysis with a full range of potential generating resources, including solar, wind, natural gas and nuclear. It will hold public meetings to collect comment on the final plan, which must be filed with the state Public Regulation Commission by July for approval.

Even then, PNM would have to discuss the legal and regulatory processes involved with San Juan’s five other owners before reaching a decision. Ultimately, the PRC would have to approve the closure in a separate regulatory proceeding. “A lot of analysis and discussion still needs to be done,” said PNM spokesman Pahl Shipley. “Any decision on San Juan is going to take time.”

Environmental groups, however, welcomed PNM’s preliminary findings.

“I’m very pleased that things seem to be heading in the direction we hoped they would,” said Steve Michel, an attorney with Western Resource Advocates. “The original decision to shut two of the four San Juan units has laid the ground work to consider further action on San Juan.”


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