PNM settles with regulators on San Juan Generating Station plan

PNM Resources’ New Mexico electric utility, Public Service Co. of New Mexico, filed with the N.M. Public Regulation Commission a settlement that – if approved – would settle PNM‘s request for approvals of changes at the San Juan Generating Station.

An approved settlement would allow PNM to implement a revised state plan that is beneficial to customers and to comply with federal visibility regulations under the Clean Air Act.

The settlement was reached with staff of the NMPRC, the N.M. Attorney General, Renewable Energy Industries Association of N.M., N.M. Independent Power Producers and Western Resources Advocates. Other parties have indicated they may support the filing, but have not yet received internal approval to do so.

The settlement requires approval from the NMPRC to be implemented. The U.S. Environmental Protection Agency announced its final approval of the revised state plan on Sept. 26.

The settlement identifies the regulatory treatment for the following items:

·      A Certificate of Public Convenience and Necessity for PNM’s ownership in Palo Verde Nuclear Generating Station Unit 3;

·      Approval to include in rates the cost of selective non-catalytic reduction equipment for SJGS Units 1 and 4;

·      Retirement of SJGS Units 2 and 3; and

·      A CCN for an additional 132 MWs of SJGS Unit 4.

There are two other power resources proposed by the company that partially make up the power generation lost with the shutdown of SJGS Units 2 and 3. PNM requested that 40 MWs of solar generation be approved in its 2015 Renewable Plan filing. A settlement between the company, staff of the NMPRC, the N.M. Attorney General, N.M. Industrial Energy Consumers, Western Resources Advocates and the Coalition for Clean Affordable Energy was filed on Sept. 25 that, if approved by the NMPRC, would allow construction of the solar facility with costs up to $79 million for recovery in the general rate case that is expected to be filed by year-end.

The other proposed generation source is a $189 million 177 MW gas peaking generation facility that will be constructed at SJGS. An application for a CCN will likely be filed for this resource next year.

The resulting net rate base from the settlement and the other proposed power resources would be about $406 million in 2018. This is in line with the company’s current capital plan that results in a six to eight percent increase in rate base from 2014 to 2018.

More information related to the settlement and the other proposed power resources is included in schedule 1.

On Oct. 7, the parties to the proceeding will meet with the Hearing Examiner to discuss a new procedural schedule for this case.

The closure of SJGS Units 2 and 3 by Dec. 31, 2017 and the installation of the SNCR equipment on the remaining two units would reduce water use and seven different emissions (including carbon) at SJGS by about 50 percent. This puts New Mexico well down the path toward compliance with new carbon regulations that were proposed by the U.S. Environmental Protection Agency in June.

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