New Mexico Utility Cites EPA plan to Cut coal emissions cost $ 1 billion

Haze from large coal-fired power plants affects scenic views at parks in parts of the Southwest, according to federal and state environmental officials and conservation organizations. Above, Grand Canyon National Park in Arizona. The U.S. Environmental Protection Agency has endorsed an emissions reduction plan for a coal plant in northwestern New Mexico, near Mesa Verde National Park.

Published Dec. 22, 2010

New Mexico’s biggest electricity provider, PNM, says a plan recommended by the U.S. Environmental Protection Agency to reduce emissions at one of the West’s largest coal-fired power plants would likely cost up to $1 billion or more.

The EPA says the equipment to be used “will significantly reduce harmful emissions” and will protect people’s respiratory health and improve visibility by cutting back the small particles and haze the power plant emits.

Power plant emissions are said to contribute to the obscured distant views that visitors may notice at national parks and monuments, such as Mesa Verde National Park in Colorado, which is roughly 30 miles from two large coal-fired plants, and Grand Canyon National Park, which is near a third coal-fired plant in the region.

Regulatory actions affecting coal-fired power plants ultimately have an effect on the solar industry; coal has been an inexpensive fuel for generating electricity in part because the costs of any health effects that may result from its use have been borne by individuals, while the society at large benefits from the provision of lower-cost electricity. Cleaner coal power, while more healthful, is more expensive, making solar electricity more cost-competitive as an energy source.

PNM officials say they can sufficiently reduce emissions from the 1,800-megawatt San Juan Generating Station near Farmington, N.M., with technology that costs less than the EPA is proposing. The San Juan power plant is the largest single source of electricity in New Mexico.

The EPA has proposed a plan requiring the installation of selective catalytic reduction as the “best available retrofit technology” to reduce certain emissions at the San Juan plant. The federal Clean Air Act’s Regional Haze Program targets emissions from what the EPA says are “some of the oldest pollution sources in the country.” According to an announcement by the agency, the San Juan plant was built more than 30 years ago and “has not yet updated its pollution control technology to meet current air quality goals.” The EPA decision calls for the emissions equipment to be installed within three years.

PNM says it recently installed $320 million in environmental retrofit technologies to reduce plant emissions of nitrogen oxides, sulfur dioxide, particulate matter and mercury. The utility company said in response to the EPA decision that “a study by a respected international engineering firm found that the upgrades meet the federal requirement” for best available retrofit technology.

“Above everything else, we are concerned about the impact this could have on customer bills,” said Pat Vincent-Collawn, PNM’s president and chief executive. “We believe we already have the technology in place to meet the haze reduction requirements of the federal Clean Air Act and do so at a far lower cost.”

PNM previously estimated that the installation of selective catalytic reduction technology at the San Juan coal plant, if done over a five-year period, would cost $750 million to $1 billion, to be shared among the power plant’s owners. The company said it has not yet assessed the cost of the three-year installation proposed by the EPA, but believes it would likely increase the cost of compliance.  PNM has estimated that the installation of selective catalytic reduction would cost its average residential customer about $90 a year for 20 years, and would cost larger electricity users significantly more.

The EPA said in its announcement that “selective catalytic reduction is a cost-effective technology and will bring about the greatest improvements,” including protection of public health and improved scenic views.

The utility company said in a news release that its initial analysis indicates the emissions plan is “far more aggressive” than a recent EPA recommendation for the coal-fired Four Corners power plant, which is on Navajo Nation land near the San Juan plant. The agency recommends selective catalytic reduction for both plants, but the company said the allowed emission level for nitrogen oxides would be significantly lower at San Juan than at Four Corners. In addition, PNM said, the EPA proposed to give Four Corners five years to comply, while it proposes three years for San Juan.

The 2,038-megawatt Four Corners plant also has been in the news recently. Southern California Edison announced last month that it plans to sell its share of the Four Corners plant to another utility, Arizona Public Service Co. The transaction is expected to result in the shutdown of three of the plant’s five generating units. Southern California Edison in the past two years has been signing contracts to receive large amounts of electricity from new solar power plants and wind farms, as well as from solar photovoltaic installations on commercial rooftops.

In recent months, California has moved aggressively toward adopting solar electricity. The state has licensed proposed solar plants with the capacity to generate more than 4,000 megawatts of power when the sun is at its strongest.

Ms. Vincent-Collawn said the cost of PNM’s complying with the EPA’s proposed rule would be in addition to the cost of other environmental regulations, including any costs associated with meeting state or federal carbon regulations or the addition of more renewable energy resources as required by New Mexico state law.

She said the EPA has recognized that states play an important role in carrying out the Clean Air Act and hopes EPA will take recommendations from New Mexico into account when making the rule final this spring. The EPA’s plan is now open to a 60-day period for public comment. A public hearing is to be held in Farmington, N.M., but the date as not been set.

The utility company noted that the incoming administration of New Mexico Gov.-elect Susana Martinez will have an opportunity to analyze the issue and make a state recommendation.

PNM owns 46.3 percent of San Juan and said it would expect to pass its share of retrofit costs along to customers through electric rates. PNM operates the power plant on behalf of several owners. The four power units at the plant are divided among owners that also include Tucson Electric Power;  the Southern California Public Power Authority; Tri-State Generation and Transmission Association; MSR Public Power Agency; the city of Anaheim, Calif.; the city of Farmington, N.M.; Los Alamos County, N.M.; and the Utah Associated Municipal Power Systems.

The MSR agency is a joint powers arrangement among the Modesto Irrigation District, the city of Santa Clara and the city of Redding, all in California. The Southern California Public Power Authority includes as members the cities of Anaheim, Azusa, Banning, Burbank, Cerritos, Colton, Glendale, Los Angeles, Pasadena, Riverside, Vernon and the Imperial Irrigation District. The Utah group has 52 members in eight states.

In 2009, PNM paid the state $6.9 million to settle air quality violations at the San Juan Generating Station. The violations occurred between 2005 and 2008, after the company, the state, the Grand Canyon Trust and the Sierra Club entered into a federal consent decree for previous air quality violations.

That decree involved state and federal air quality violations that occurred at the facility between 2001 and 2004. The decree settled more than 60,000 violations of air quality permit limits for nitrous oxides, sulfur dioxide and opacity.

Under the decree, PNM agreed to install more than $300 million in new pollution-control equipment at the San Juan plant.

The EPA said its plan would be expected to reduce emissions of nitrogen oxides by 83 percent. This chemical can react with others to form both ozone and small particles that can be inhaled. Both are harmful to people’s health, the agency said.

The emissions reductions would improve visibility in the area, which includes parks and wilderness, by about 65 percent, and would reduce the number of days the plant causes noticeable visibility impairment by more than 80 percent, according to the agency.

A third major coal-fired power plant also operates in the region, the 2,250-megawatt Navajo Generating Station near Page, Ariz. It is a major energy supplier to the city of Los Angeles. The power plants were built in this area partly because coal supplies are nearby.

Despite having three of the country’s largest and highest-emission power plants on or adjacent to their land, the Navajo Nation’s residents have some of the most limited access to electricity in the United States. As of 2004, about 18,000 Navajo households had no electricity, according to a report by the U.S. Department of Energy’s Office of Energy Efficiency and Renewable Energy.

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