EPA Orders San Juan Power Station to Install SCR Equipment to Improve Visibility in Four States

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Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--The U.S. Environmental Protection Agency (EPA) (Washington, D.C.) has ordered the installation of scrubbers to reduce emissions of sulfur dioxide (SO2) and nitrogen oxides (NOx) at the San Juan Generating Station near Farmington, New Mexico. The final order, issued August 5, gives the owners five years to install Best Available Retrofit Technology (BART) on all four units of the 30-year-old, 1,800-megawatt (MW), coal-fired generation station. The pollution-control equipment is intended to reduce regional haze and improve visibility in national parks and wilderness areas in New Mexico, Colorado, Utah and Arizona.

In a 114-page final order, EPA's Region 6 office (Dallas, Texas) ordered the installation of selective catalytic reduction (SCR) equipment at San Juan, which is owned by nine utilities and operated by PNM (Albuquerque, New Mexico), a utility unit of PNM Resources (NYSE:PNM) (Albuquerque). PNM immediately appealed the ruling, saying that installing SCR technology at San Juan would cost at least $750 million. In its rule, EPA estimated those costs at $345 million.

Environmentalists hailed the EPA action. "It's an important affirmation of the need for clean air," said Mike Eisenfeld, New Mexico energy coordinator for San Juan Citizens Alliance, told the The Daily Times of Farmington, New Mexico. "It's perhaps a new day when it comes to continued reliance on coal-fired power plants that emit huge amounts of pollution and affect communities in many ways."

PNM disagreed. In a statement, Pat Themig, PNM's vice president of generation, said the EPA plan "adds unnecessary costs to one of our lowest-cost sources of reliable power. If it stands, it will lead to significantly higher future electric rates for the 2 million customers who rely on the plant for reasonably priced power." News reports said the EPA rule could force closure of the plant.

Themig said the EPA's visibility improvement goals could be met for about $77 million by installing selective non-catalytic reduction (SNCR) equipment at San Juan. The EPA disagreed. In its order, it specifically rejected the use of SNCR technology, claiming its use at San Juan "achieves far less reduction in pollution and less visibility improvement, and does not fully meet the requirement of the (Clean Air) Act for Best Available Retrofit Technology (BART)."

The EPA order noted that by installing SCR technology, San Juan will meet emissions requirements contained in multiple Clean Air Act rules, thus preventing additional environmental retrofits. "This regulatory certainty will help guide PNM's business decisions regarding capital investments in pollution controls," the order noted.

Although it issued the order to address visibility impairments, the EPA noted that there will be a public health benefit stemming from an 80% reduction of NOx emissions at San Juan. Within five years, San Juan will have to lower its NOx emissions to 0.05 pounds per million BTU and its SO2 emissions to 0.15 pounds per million BTU.

The EPA said it was forced to act because a portion of the New Mexico State Improvement Plan (SIP) from September 2007 would not improve visibility in Class 1 areas, as required by the federal Clean Air Act. Class 1 areas are national parks and wilderness areas. The EPA's rule applies only to the San Juan Generating Station.

The agency received more than 13,000 comments on its draft rule over a 90-day period earlier this year. The agency originally required installation of SCR equipment within three years, but subsequently lengthened it to five years. Also, the EPA's earlier draft proposed a 30-day averaging period for emissions, but its final rule called for emissions level calculated on the basis of a boiler operating day.

San Juan's other owners include: Tucson Electric Power (TEP) (Tucson, Arizona), a unit of UniSource Energy Corporation (NYSE:UNS) (Tucson, Arizona); Southern California Public Power Authority (Pasadena, California); Tri-State Generation & Transmission Association (Westminster, Colorado); the City of Anaheim (Anaheim, California); the City of Farmington (Farmington, New Mexico); Los Alamos Department of Public Utilities (Los Alamos, New Mexico); Utah Associated Municipal Power System (Salt Lake City, Utah); and M-S-R Public Power Agency (Modesto, California).

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