Hannah Grover, Farmington Daily TimesPublished 12:28 p.m. MT April 1, 2020 | Updated 10:22 p.m. MT April 1, 2020
- The decision does not impact Farmington and Enchant Energy’s plan to keep the San Juan Generating Station open through a carbon capture retrofit.
- April 1 was the deadline for the PRC to issue a ruling on the application.
- After shutting down the 9:30 a.m. meeting, the PRC reconvened and screened participants before letting them into the Zoom meeting.
AZTEC — After the initial New Mexico Public Regulation Commission was interrupted, the PRC reconvened its meeting and unanimously approved Public Service Company of New Mexico’s application to end its operations of the San Juan Generating Station.
April 1 was the deadline for the PRC to make a ruling on the San Juan Generating Station abandonment case based on guidelines outlined in the Energy Transition Act. If it had not made a ruling, the application PNM filed on July 1 would have been deemed approved.
The PRC also approved a financing order that allows PNM to issue low-interest energy transition bonds as outlined in the Energy Transition Act that became law in 2019.
Those bonds include $283 million of refinancing of past investments into the San Juan Generating Station as well as $19.2 million for decommissioning of the power plant, $9.4 million for reclamation at the associated San Juan Mine, $20 million for job training and severance pay for workers at both the mine and power plant, $1.8 million for the New Mexico Indian Affairs Department, $5.9 million to a fund to help with economic diversification efforts in impacted communities and $12.1 million to help displaced workers.
Some of the money to assist power plant and mine workers will be available this year before the bonds are issued.
The energy transition bonds will be paid off by an energy transition charge on PNM customers’ bills. For most residential ratepayers, that will be $1.90 monthly.
PNM Resources’ Chairman, President and CEO Pat Vincent-Collawn said in an emailed statement that it is pleased with the commission’s decision.
“Our customers, communities, and environment will benefit as we move to exit all of our coal-fired generation and replace it with lower-cost, cleaner energy resources,” Vincent-Collawn said. “The use of securitization tool under the ETA provides $40 million to help workers and the communities affected by the closure. We will continue to look for the right opportunities to provide cost-effective, environmentally friendly energy to our customers.”
Enchant Energy COO praises PRC ruling
The PRC decision will not impact the ability of the City of Farmington to take ownership of the power plant following successful negotiations with the other owners. The city plans to transfer that ownership to Enchant Energy. The company hopes to retrofit the power plant with carbon capture technology and keep it open as a merchant plant, meaning it would sell electricity on the market to utilities in the western United States. The company would also sell carbon dioxide to be used in oil extraction or other industries.
Enchant Energy Chief Operating Officer Peter Mandelstam praised the PRC’s decision and said that it will help move the carbon capture project forward.
“Farmington and Enchant are pleased that this means that PNM and the other participant owners can now move forward with the transfer of the San Juan assets,” he said. “This is really the next logical step in the process to build carbon capture.”
Mandelstam said the coronavirus has not delayed the project and Enchant’s partners remain committed to the project.
Carbon capture critics have questioned the financial viability of the project as the oil prices have plummeted in recent months.
Mandelstam said the company has options in addition to enhanced-oil recovery and did anticipate wide fluctuation in oil prices. He added that even if the oil prices make it uneconomic to sell the carbon dioxide, Enchant Energy would still have the option to pump carbon dioxide into underground reservoirs for permanent storage. This would result in higher tax credits, but no revenue from the sale.
“Nothing about the current crisis puts this project in jeopardy,” he said. “Quite the contrary. We’re able to move through this current turmoil and finish developing this project and build it.”