State Proposal to Resolve EPA Dispute Calls for Retirement of San Juan Coal Units

A settlement proposed by New Mexico’s Environment Department on Wednesday calls for retiring two units at the 1,800-MW San Juan Generating Station located 15 miles west of Farmington, N.M., by December 2017 and installing selective noncatalytic reduction, a less-costly air emissions control technology than one proposed by the U.S. Environmental Protection Agency (EPA), on the other two units, 3 and 4. Plant owner PNM Resources  said in statement that it was hopeful the state’s proposal would resolve a long-standing dispute with the EPA to address regional haze.

At issue is an August 2011 EPA mandate that would require the San Juan plant to install selective catalytic reduction equipment to address regional haze by September 2016. PNM has argued—with the backing of the New Mexico Environment Department and New Mexico Gov. Susana Martinez (R)—that the federal agency’s mandate would cost New Mexico’s electric ratepayers about $750 million or more. The EPA’s estimate was $345 million. The parties contend that a technology proposed by the New Mexico Environment Department, selective noncatalytic reduction, could meet the same federal visibility rules for just $77 million—or about one-tenth of the cost.

The matter is being considered by the U.S. Court of Appeals for the 10th Circuit in Denver, but the court ruled earlier this year that the Albuquerque, N.M.–based utility could not delay enforcement of the EPA’s mandate while the issue was under consideration. The EPA in July granted PNM a 90-day stay in the effectiveness of the federal plan that would force the company to install pollution controls. New Mexico’s governor and Environment Department have also appealed the EPA’s decision to adopt a federal implementation plan in federal court, though the court has not yet ruled on the matter.

On Oct. 3, PNM acknowledged that the state’s proposed settlement agreement would first need the EPA’s approval before being adopted by the state’s Environmental Improvement Board and Public Regulation Commission. 

"The state proposal announced today appears to be an important step toward meeting our objectives of addressing the environmental needs of the regional haze program while lessening the cost impact to consumers and minimizing economic impact to the Four Corners region," said PNM Chairman, President and CEO Pat Collawn. "We are hopeful today’s announcement will be the basis for a settlement agreement that will include a new state plan that will be approved by the EPA."

PNM said that if the proposed agreement moved forward, it would replace power generated by the two retired units with natural gas and other non-coal generation located in the Four Corners region.

Sources: POWERnews, PNM, NMED, EPA

—Sonal Patel, Senior Writer (@POWERmagazine)

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