PRC tells PNM to file San Juan Generating Station abandonment application

FARMINGTON — The New Mexico Public Regulation Commission is ordering the Public Service Company of New Mexico to file an application soon if it wishes to stop operating the San Juan Generating Station in 2022.

The utility has until March 1 to file that application.

During a PRC meeting today in Santa Fe, Commissioner Valerie Espinoza described the case as one of the most important decisions the commission has faced during her six years on the commission.

The meeting can be viewed online at nmprc.nm.state.us.

The future of the San Juan Generating Station is partially in the PRC’s hands.

“We could conclude through an abandonment proceeding that the plant should not close,” said Commissioner Cynthia Hall.

More:PRC ponders action in face of planned plant closure

UNM economist evaluates replacing generating station with solar field

Closing the San Juan Generating Station likely will cause the associated San Juan Mine to close, as well, as its sole customer is the power plant. It would need to find a new customer to remain open. The mine and power plant are major employers and sources of property tax in San Juan County.

University of New Mexico economist Kelly O’Donnell told community members Monday evening during a meeting at San Juan College that building a solar field at the mine and generating site could lessen the impact of the plant's closure.

O'Donnell said a 450-megawatt solar field would increase the number of jobs in San Juan County while it is being built.

According to Four Corners Economic Development, closing the mine and power plant will lead to more than 1,400 jobs being lost in the community. More than 90 companies that provide supplies to the San Juan Mine also would be impacted by the closure, according to Four Corners Economic Development.

O’Donnell said solar field construction could create more than 3,700 jobs. That includes jobs in companies that supply materials to the solar field. It also includes service sector jobs that would be needed to serve the increased number of workers.

However, after the solar facility is built, that number would drop to a little more than 100 jobs.

“I don’t want to minimize the fact that people will be losing jobs,” O’Donnell said.

More:Planned power plant closure generates discussion at PRC, in Farmington

She said the high-paying jobs that the mine and generating station have offered to people with no college education do not exist anymore.

In addition to lost jobs, the closure means a decrease in the property tax base. That will have significant impacts for San Juan County, San Juan College and the Central Consolidated School District. O’Donnell said replacing the facility with a solar field would protect that property tax base.

Utility wanted to wait to file abandonment application

PNM is in the process of deciding what resources will replace the power it receives from the coal-fired power plant in San Juan County.

Some of its decision on replacement resources could be determined by proposed legislation. The New Mexico Legislature will decide if the state should require utilities to include more renewable energy in their generation portfolio.

Currently, state utilities are required to have 20 percent of their energy generated by renewable sources by 2020. House Bill 283 and Senate Bill 275 would increase that requirement to 40 percent by 2025 and 80 percent by 2040.

PNM has stated in PRC filings that it intends to file an application this summer to stop utilizing the San Juan Generating Station. That would give the Legislature time to pass legislation that could impact replacement resources and PNM’s ability to recoup its investment in the San Juan Generating Station using low-interest bonds.

Despite PNM’s desire to wait until after the legislative session to file the application, the PRC decided to move forward with an abandonment case. The PRC stated that PNM began taking steps six months ago to move toward closing the power plant located in Waterflow.

Abandonment case does not mean power plant will close

Utilities are required to file abandonment applications whenever they decide to stop utilizing a certain asset.

The city of Farmington, one of the minority owners of the facility, is searching for a new operator for the generating station. It can acquire the shares in the power plant that it does not own.

If it does acquire those shares, PNM still will be required to go through an abandonment process because it will no longer be receiving power from the generating station after 2022.

Fischmann: Replacing San Juan Generating Station will take a long time

Commissioner Stephen Fischmann said he cannot imagine a scenario under which the San Juan Generating Station discontinues operation in the summer of 2022 and all the sources of replacement energy simultaneously are turned on. He said the transition may take place in phases and will need to begin soon. The abandonment case likely will include discussion of replacement resources.

PNM currently gets about 30 percent of its power from the San Juan Generating Station.

“It’s a big, big deal for customers,” Fischmann said.

Hannah Grover covers government for The Daily Times. She can be reached at 505-564-4652 or via email at hgrover@daily-times.com.