PNM: Rejecting San Juan plan will hurt customers

Apr 21 - McClatchy-Tribune Content Agency, LLC - Kevin Robinson-Avila Albuquerque Journal, N.M.

 

Public Service Co. of New Mexico says rejection by state regulators of its proposals for shutting down half of the coal-fired San Juan Generating Station near Farmington could endanger the plant's continued operations, leading to higher electricity costs for utility customers.

The company on Monday filed its "exceptions," or objections, to a hearing examiner's recommendation last week that the Public Regulation Commission reject most of PNM's proposals for San Juan.

PNM wants to close two of the plant's four generating units and install pollution controls on the remaining ones to meet federal environmental regulations. It also wants to replace the lost coal with a mix of nuclear, natural gas and solar generation.

But while the hearing examiner, Ashley Schannauer, supports PNM's plan to close two San Juan units, he recommends that commissioners reject a PNM proposal to absorb 132 megawatts of excess coal capacity in one of the two remaining units. PNM says that's necessary to pick up slack left behind by some current San Juan co-owners who will exit the plant in 2017.

Schannauer said lack of an agreement with other co-owners on the restructuring of plant operations, plus the lack of a new coal contract to supply fuel for the plant after the current one expires in 2017, means PNM is placing a lot of potential liability on ratepayers' shoulders if it absorbs excess coal capacity from departing plant owners.

But PNM says rejecting its proposal to pick up slack at San Juan will undermine negotiations with co-owners who intend to stay at the plant, while making it much more difficult to sign a new coal fuel supply contract.

"The consequences of such a decision will likely lead to a collapse of the restructuring of the San Juan ownership interests...and ultimately endanger continued operations at San Juan," PNM wrote in its filing on Monday.

If PNM has to find alternative generating sources to make up for even more lost coal, ratepayers could end up paying a lot more for electricity, said PNM Vice President for Public Policy Ron Darnell.

"The company has worked diligently to find the best balance among affordability, reliability, and environmental protection, and the hearing examiner's recommendations could have the opposite impact," Darnell said in a statement.

PNM also objected to a recommendation that commissioners lower the amount PNM can charge for new nuclear energy it sells to customers, plus a recommendation that PNM justify in a rate case the need for some of the new pollution controls it proposes for the remaining units.

Schannauer will present his recommendations to the PRC on Wednesday, although commissioners likely won't rule on the case until May.

"Wednesday's presentation is for discussion only," said Commissioner Chair Karen Montoya. "No vote will take place."

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