Two major milestones occurred in December that lead to next steps in the final approval of this agreement.
At the beginning of 2013, we announced a major decision regarding visibility rules at San Juan Generating Station. The resulting agreement with the N.M. Environment Department and the U.S. Environmental Protection Agency would lead to the retirement of two of the plant’s four units by the end of 2017.
The agreement is important because it reduces more emissions than the federal plan that was in effect. That will help minimize the customer cost of complying with future environmental rules that are coming.
On Dec. 17, the U.S. EPA issued its finding that the state plan submitted is complete. This was an important first step in EPA consideration of the proposal. We hope to have a decision from the EPA by September 2014.
On Dec. 20, PNM filed for some of the approvals needed from the N.M. Public Regulation Commission. This filing is the expected next step in the process outlined in the early 2013 agreement.
The PRC filing outlines the projected costs of the state plan and replacement power but no change in rates is requested in this filing. It addresses:
- Retirement of San Juan Units 2 and 3.
- Recovery of the costs of the two units that are currently in rates but have not yet been recovered.
- Installation of technology on San Juan Units 1 and 4 to reduce nitrogen oxides
- Proposals to use Palo Verde Nuclear Generating Station Unit 3 for some of the replacement power for the retiring coal units
- Restructured ownership of San Juan to allow PNM to keep its retired coal capacity to an estimated 340 megawatts. PNM proposes to achieve this through an exchange of about 78 MW of its ownership position in San Juan Unit 3 with Unit 4, effective in 2015.
The filing also projects that PNM will use two additional resources to replace the retiring coal – solar energy and natural gas.
We will continue to keep you updated as this important project proceeds.