PNM to finalize San Juan coal agreement in August

OREANDA-NEWS. June 08, 2015. New Mexico's largest utility expects to take another two months to finalize ownership and fuel supply agreements for the 1,684MW San Juan coal-fired power plant.

Public Service of New Mexico (PNM) must negotiate with eight other owners of the plant and finalize a fuel supply agreement with Westmoreland Coal before submitting the agreements for New Mexico Public Regulation Commission approval.

State regulators last month directed PNM to finalize the agreements by 1 July, with the possibility of an extension until 1 August if good cause is shown. PNM yesterday asked the commission for the delay, saying all but one of the owners can complete ownership transfers by 1 August.

Units 2 and 3 of the San Juan plant must close by the end of 2017 to comply with New Mexico's plan for regional haze abatement. PNM will have to give up the 418MW it owns at those units. The utility wants to buy another 132MW at the plant.

Ownership of San Juan is split among public and municipal utilities in California, Utah, Arizona and New Mexico. PNM will buy stakes owned by three California utilities and the southwest cooperative group Tri-State Generation and Transmission Association.

The New Mexico commission still has to approve the request for a delay until 1 August. Commissioners at the last meeting expressed concerns about the cost of replacement capacity and fuel supply arrangements for the San Juan plant. PNM already missed the May deadline for completing ownership talks.

"This extension is reasonable and will allow PNM to complete this very complex process which would result in a large cost savings for customers," chief executive Pat Vincent-Collawn said.

One of the San Juan's smaller owners, the city of Anaheim, California, may not finish the approval process for selling its stake until 4 August, PNM said.

The New Mexico utility commission said last week PNM would have to file an alternative replacement plan to replace the capacity of Units 2 and 3 if it misses the 1 August deadline for the agreements.