San Juan Generating Station

Reducing Coal Power at San Juan Generating Station

Steve Michel“PNM’s plan to retire two of the four coal-fired generators at San Juan Generating Station is a very important step towards assuring low-cost, reliable and less polluting energy for PNM’s customers for many years to come. But those retirements, while very significant, must be followed up with further advances in reducing coal-fired generation and replacing it with clean energy. WRA’s advocacy has achieved a path to that future” – Steve Michel, Chief Counsel, Clean Energy”

San Juan Generating Station to Reduce Air Pollution

Western Resource Advocates works to reduce pollution from coal-fired power plants that causes visibility impairments in national parks, health problems, and climate change.

The San Juan Generating Station is a large, coal-burning power plant located in northwestern New Mexico. Since it began operation in the 1970s, the four coal-fired boilers have been the largest source of air pollution in the state and have impacted Arizona, Nevada and Colorado in the Four Corners area. The plant releases over 13,000,000 tons of carbon dioxide a year and contributes to haze pollution, acid rain, and health issues in the region.

Closed Two Coal-fired Units – Seeking Ways to Close Four

To fulfill obligations under federal air quality regulations, Public Service Company of New Mexico (PNM) filed a plan with the New Mexico Public Regulation Commission to restructure San Juan Generating Station and retire two of the four coal-fired units at the plant. While delighted with the proposed closures, WRA was also concerned that, given PNM’s large outstanding investment in the remaining San Juan units, the Company would seek ways to continue operating the dirty power plant for many years.

After two years of difficult and contentious litigation, on December 16, 2015 the New Mexico Public Regulation Commission approved a Stipulation entered into by Western Resource Advocates and others to close one-half of the capacity, nearly 850 megawatts, of the coal-fired San Juan Generating Station in New Mexico. The Stipulation also lays a foundation for further closures in 2022, advances the development of substantial amounts of new renewable energy, and positions PNM, the state’s largest electric utility, to comply with EPA’s Clean Power Plan.

Crafting a Strong Environmental Outcome for the Present and the Future

In entering into the Stipulation, Western Resource Advocates recognized that the environmental situation at San Juan Generating Station (SJGS) would be the same at the conclusion of the case regardless of what the New Mexico Public Regulation Commission ordered: two units at SJGS would close and two units of SJGS would keep running. Therefore, the outcome we sought, and achieved, was to foster the strongest environmental outcome possible for both the present and the future. We did this by an agreement that establishes a 2018 New Mexico Commission case to determine SJGS’s future, by restricting the ability of PNM shareholders to perpetuate the life of SJGS, and by matching over one-third of PNM’s SJGS output with new renewable energy.

  1. The agreement requires PNM to file a 2018 Public Regulation Commission case to determine the extent to which San Juan Generating Station should continue operating after 2022. The year 2022 is important and appropriate because the coal supply and SJGS ownership agreements expire in 2022. It is also the first year EPA’s Clean Power Plan requires CO2 reductions at SJGS. By having the case filed in 2018, we provide ample time to develop cleaner energy alternatives that can support further SJGS closures in 2022.
  2. The agreement prohibits PNM from using its unregulated affiliates to acquire and uneconomically perpetuate the life of SJGS. If such a restriction were in place today, the economic viability of the remaining portion of SJGS would be very different. PNM has agreed that neither it, nor its affiliate companies, will acquire any more unregulated coal-fired generation, ever.
  3. Starting in 2020, the agreement requires PNM to match every megawatt-hour produced from one-third of its remaining San Juan interest with one MWh of new renewable energy. PNM is to accomplish this matching with the purchase of credits that must be recognized by EPA for compliance with its Clean Power Plan to reduce power plant CO2 emissions. This agreed-to renewable procurement is in addition to PNM’s 20% renewable energy requirement in 2020 under New Mexico law. Over 400 MW of wind or solar power, from new facilities, will be needed to generate the renewable energy required by the agreement – 1.4 million MWh per year.

Advancing Cleaner Energy as Quickly as Possible

WRA’s goal throughout the San Juan case has been to reduce PNM’s reliance on dirty power, and advance its use of clean energy, as quickly as possible. We believe the agreement accomplishes this goal in a way that best protects our environment and addresses the many competing interests and concerns surrounding SJGS. See this guest editorial by Steve Michel that appeared in the Albuquerque Journal for more details.

Although the Commission’s approval has been appealed to the New Mexico Supreme Court, WRA has intervened in that appeal and is hopeful the Commission decision will be upheld