New Mexico's PNM Looks to Shut Down Two Power Units, Improve Pollution Control

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Researched by Industrial Info Resources (Sugar Land, Texas)--Public Service Company of New Mexico (PNM) (Albuquerque, New Mexico), a unit of PNM Resources Incorporated (NYSE:PNM) (Albuquerque), plans to shut down two units at the San Juan Generating Station in Waterflow, New Mexico. PNM also plans to install better pollution controls on the remaining two units at the plant.

The plant has been operational since 1976 and has a capacity of 1,779 megawatts (MW). The shutdown of the two units would cut the facility's capacity by 884 MW, of which 340 MW belongs to PNM. The units would be closed in 2018.

San Juan Generating Station has a complicated ownership structure. It is jointly owned by nine entities. Units 1 and 2 are owned by PNM (50%) and Tucson Electric Power Company (Tucson, Arizona) (50%); Unit 3 is owned by PNM (50%), Southern California Public Power Authority (Glendora, California) (41.8%) and Tri-State Generation and Transmission Association (Westminster, Colorado) (8.2%); and Unit 4 is owned by PNM (38.457%), MSR Public Power Agency (Modesto, California) (28.8%), the city of Farmington, New Mexico (8.475%), Los Alamos County, New Mexico (7.2%), the city of Anaheim, California (10.04%) and Utah Associated Municipal Power Systems (Salt Lake City, Utah) (7.028%). The ownership structure of the plant is likely to change if the two units in question close, but the future structure is not clear at this point.

In addition to the planned unit closures, PNM plans to install a selective non-catalytic reduction (SNCR) system to reduce nitrogen oxide, carbon dioxide and mercury emissions from the remaining units by up to 50%. The estimated cost of this project is $85 million. The engineering and general contractors for that project already have been selected and the kick off date is set for September of this year.

The plan has been in the works since 2013 and is part of PNM's strategy to reduce the coal-fired generation portion of its portfolio. For related information, see October 31, 2013, article - PNM Sees Future with More Solar, Gas and Nuclear Generation.

The plan has been approved by the U.S. Environmental Protection Agency and the New Mexico Department of Environment, but is awaiting final approval from the New Mexico Public Regulation Commission. The exact date for a decision is not yet known. One of the factors under consideration is how the project will be financed. PNM has stated that ratepayers would be asked to cover the costs through an increase of about 7% to their monthly electricity bills.

Making up the Deficit
PNM's loss of 340 MW at San Juan Generating Station will have to be replaced. Industrial Info is tracking several projects in the state that could make up part of the shortfall. The project with the most capacity is a $100 million, 330-MW combined-cycle addition at the Rio Bravo Generating Station in Albuquerque. The project would convert the existing simple-cycle combustion turbine site into a two-on-one combined-cycle plant by installing an additional combustion turbine and steam turbine generator. That project is still in the very early planning stages and is not expected to begin for another five years.

A smaller project under consideration for the San Juan Generating Station would install multiple natural gas-fired combustion turbines and generator sets to supply 150 to 200 MW of peak load and partly replace capacity lost at the closed units. This project is estimated to cost about $200 million, and is presently set to kickoff in March 2017. It would take about a year to complete.

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