PNM contracts Texas company to combat regional haze

Public Service Company of New Mexico has entered into a contract with the Irvine, Texas-based company – Fluor Corporation – to provide environmental services upgrades to the four units at San Juan Generating Station.

“Time really was running out – we couldn’t continue to put off our planning,” said Valerie Smith, spokeswoman for PNM.

The Environmental Protection Agency placed a deadline of September 2016 for the coal-fired power plant to be compliant with regional haze reduction. This means a plan had to be in place and being implemented to install selective catalytic reduction, or SCR, equipment on the four units.

“If we do not move ahead now, we will be putting our compliance at risk,” Smith said. The cost of the project is estimated to exceed $700 million with the costs most likely being passed onto PNM’s utility customers.

In the meantime, PNM continues to pursue two concurrent plans. One includes a state of New Mexico proposal to install selective non-catalytic reduction equipment on all four units at a significantly reduced cost. The other plan would be to retire two of the San Juan Generating Station units by 2017 and install selective non-catalytic converters on the remaining units.

“We continue to pursue litigation, hoping the 10th Circuit Court of Appeals will agree with us,” Smith said, of the process PNM is going through to fight the regulations that require the plant to reduce its regional haze output and repair the air quality by 2064 to what it was before the arrival in the Industrial Age, more specifically around Class One areas that include national parks. There are 15 to 16 national parks in the “prescribed radius” of San Juan Generating Station, said Ron Darnell of PNM.

Fluor will provide full engineering, procurement and construction services to design, build and install the equipment for each of the San Juan Generating Station’s four units, totaling 1,848 megawatts of capacity, which will significantly reduce the nitrogen oxide, or NOx, emissions. When the environmental upgrades are completed the equipment utilized will provide one of the highest NOx removal efficiencies in the country and will comply with the Environmental Protection Agency federal plan to address regional haze at San Juan Generating Station, according to a press release from Fluor.

“This first phase contract for a new SCR project has been the result of a highly collaborative process with PNM,” said Dave Dunning, president of Fluor’s power group. “Fluor is a leader in providing environmental compliance services for power plants across the country with more than 39,000 megawatts of SCR upgrade projects completed. We will assist PNM with creative, flexible solutions to bring cleaner power to its customers.”

PNM Senior Vice President Ron Talbot said the power company has been impressed by Fluor. “We appreciate Fluor’s willingness to develop approaches that keep our compliance with the federal regional haze rule on track while also giving PNM and the other San Juan Generating Station owners the flexibility to aggressively explore alternatives to the federal plan. Minimizing the cost impact to customers while alternatives were explored is important, and Fluor has helped us achieve that.”

Smith added that the contract does have “various exit ramps” should PNM be successful in court.

Business lobby weighs in

In the meantime, the Rio Grande Foundation and the Competitive Enterprise Institute, CEI, have issued a press release to criticize the both the federal and state regional haze settlement agreements.

“EPA’s Regional Haze plan would impose almost $375 million in compliance costs on PNM ratepayers in order to achieve an ‘improvement’ in visibility that is imperceptible,” said William Yeatman, CEI policy analyst. “Unfortunately, the state’s alternative proposal is even worse — it would cost almost $20 million more, yet it would significantly diminish PNM’s firm generating capacity. To put it another way, the state’s alternative would cost more, for less.”

Yeatman encouraged PNM and New Mexico to continue fighting the issue in court, saying the lawsuit has good prospects for success. “Even were New Mexico to lose its case, suffering the EPA’s regulation would be better than the settlement negotiated by the New Mexico Environment Department,” he said.

 “New Mexico rate payers deserve the best rates possible. While environmental concerns are important as well, the original proposed retrofit is far more sensible and cost-effective than the other two options.”  Rio Grande Foundation President Paul Gessing added.