ALBUQUERQUE, N.M. (AP) - Replacing a coal-fired power plant that has served customers in the American Southwest for decades won’t be easy, and state regulators suggested Wednesday they will carefully consider the implications for customers and northwestern New Mexico communities affected by the planned closure of the San Juan Generating Station.
The Public Regulation Commission will decide next week whether to approve two hybrid solar-battery storage units to replace part of the lost capacity. Another decision is expected later in the year for other projects that will make up Public Service Co. of New Mexico’s new portfolio.
Commissioners discussed the two hybrid facilities for more than an hour during their regular meeting. All five members raised questions about where the replacement power plants will be located and whether they will offset lost taxes and other revenues that have helped the local school district.
Legislation adopted in 2019 that cleared the way for the closure of the San Juan power plant and mandated more renewable energy also included language to guarantee some replacement power sources would be located in the same area so local government entities could retain tax bases and bond ratings.
The hybrid solar-battery storage units would amount to about $430 million in investment, but neither would be located within the school district’s boundaries. One would be on Jicarilla Apache tribal land and the other to the south in McKinley County.
The commission’s hearing examiners reviewing the case have recommended approval, saying the state’s new Energy Transition Act spells out the factors that must be considered and that the commission can still select other replacement options to directly benefit the area.
“It’s not just one factor that we need to be looking at - we have to be looking at cost, we have to be looking at reliability, we have to be looking at location,” said Ashley Schannauer, one of the hearing examiners.
He added that the commission’s ultimate focus in deciding what the utility’s portfolio will look like in the coming decades should be whether the proposals are reasonable, reliable and in the public’s interest.
The utility has proposed replacing San Juan with a mix of new natural gas plants, as well as solar and battery storage. While the closure of the coal-fired power plant is expected to save customers in the first year, the cost of the new infrastructure and power purchase agreements will be worked into future rates.
The hearing examiners have agreed with environmentalists that the two hybrid solar-battery storage units are among the most cost-effective proposals.
One proposal by the environmental group Western Resource Advocates calls for the two hybrid units along with 100 megawatts of additional solar, 30 megawatts of battery storage, and natural gas capacity to be in San Juan County.
The group contends that would fully restore the utility’s capital investment in the county to the level that exists now with the coal plant operating and that such a mix would still preserve rate savings for utility customers.
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