Westmoreland board approves San Juan mine purchase

OREANDA-NEWS. Westmoreland Coal's board has approved the company's proposal to buy the San Juan mine from BHP Billiton and enter into a new long-term coal supply agreement with the owners of the San Juan generating station.

The plan is still subject to approval by the New Mexico Public Regulation Commission. Westmoreland plans to meet the commission's 1 July deadline for filing its binding coal supply agreement with Public Service of New Mexico and other owners of the San Juan plant.

"While we understand the importance and complexity of the decision, Westmoreland hopes that the Public Regulation Commission will approve (the plan) so that we can move towards closing," Westmoreland chief executive Keith Alessi said.

The acquisition is expected to close on 31 December and includes the possibility of the mine, in Farmington, New Mexico, supplying the plant through 30 June 2022. BHP has an agreement to supply the plant until the end of 2017.

Regulators will also determine the future of the mine. The majority owner of the San Juan generating station, Public Service of New Mexico (PNM), plans to retire units 2 and 3 of the plant by the end of 2017 to comply with New Mexico's plan for regional haze. PNM owns 418MW of those two units and another 385MW elsewhere at the plant, including 195MW of unit 4. The generator wants to replace the lost power by buying an additional 132MW of San Juan unit 4. Other replacement generation would come from nuclear generation, new natural gas-fired peaking capacity and 40MW of solar photovoltaic capacity.

The Public Regulation Commission will decide on the generator's request to raise rates to pay for replacement power at San Juan sometime this year. Several cities including Albuquerque and Santa Fe as well as environmental groups have raised opposition to the plan.