City of Farmington and Enchant Energy Sign Agreement
Enchant Energy to acquire 95% Interest in San Juan Generating Station in 2022
Farmington, N.M. – The City of Farmington and Enchant Energy Corporation announce they’ve signed an agreement for Enchant Energy to acquire 95% ownership interest in the 847-megawatt San Juan Generating Station (SJGS) from the participants exiting in 2022. The City will retain its current 5% ownership in the plant. The agreement is an important step to allow SJGS to operate economically beyond June 30, 2022, saving nearly 1,600 direct and indirect jobs while continuing to produce highly reliable, low-priced, low-emissions and low-carbon baseload power at no additional cost to Farmington Electric Utility System (FEUS) customers.
“This is a very significant event for the City of Farmington, customers of Farmington Electric Utility System and San Juan County,” said Farmington Mayor Nate Duckett. “Successfully completing carbon capture retrofitting at SJGS will keep the plant operating, retain hundreds of powerplant and mineworkers’ jobs, maintain the tax base and revenues for local schools and ensure that electric rates remain among the lowest in New Mexico for FEUS customers.”
Impacts of the agreement:
- By operating SJGS until 2027, the FEUS Integrated Resource Plan shows customers will save $27 million compared with a 2022 closure, with more savings accruing the longer the plant operates.
- The City is not participating in or investing in the carbon capture portion of the project. The carbon capture retrofit equipment and business is solely owned by Enchant Energy. The City is also not assuming any liabilities for carbon capture.
- Under the agreement, all costs (capital and operating) will be segregated between generation and carbon capture, with FEUS responsible for 5% of costs related to power generation only.
- The agreement includes electricity price protection for FEUS. Under the agreement, the price of power from SJGS to FEUS will be the lower of the actual monthly cost or 80% of the prior five-year average ending in 2018.
- Under this agreement, FEUS is able to defer spending approximately $127 million to replace the SJGS resource per the FEUS IRP.
- Decommissioning costs related to power generation will be governed by the San Juan Decommissioning Agreement, which identifies assignment of these costs to the various owners’ interest in the plant over time. Under the operation of this agreement, the City will be responsible for 5% of the total decommissioning costs before and after 2022 since their ownership percentage is the same for both timeframes. Enchant Energy will be responsible for no generation related decommissioning costs prior to 2022 and 95% of decommissioning costs assignable to the time period after 2022.
“There’s a great deal of momentum in the United States for carbon capture projects using post-combustion amine technology,” said Jason Selch, Enchant Energy CEO. “Recent technology improvements, the financing mechanisms and the ability to profitably capture and use CO2 all come together in this project. Once completed, this project will benefit northwest New Mexico and the entire state by allowing SJGS to continue providing reliable power and meeting the strict carbon emissions standards set by the New Mexico Energy Transition Act.”
A copy of the agreement is available at https://www.enchantenergy.com/farmington-agreement.
Additional information about the project and carbon capture can be found at Enchant’s website: https://www.enchantenergy.com/.
A copy of the Extender Rights Transfer Agreement PowerPoint presentation can be downloaded by clicking here.