Jan. 30, 2012
PNM Accepting Bids for EPA-Mandated Plant Upgrade Even As It Makes Case for Less Expensive Technology
Albuquerque: Facing an aggressive timeline for complying with a new U.S. Environmental Protection Agency requirement, PNM has issued a request for proposals for the installation of selective catalytic reduction technology at its San Juan Generating Station near Farmington, N.M.
“EPA’s five-year timeline for compliance means we must move forward on initial steps to install this technology even as we continue to make the case that we can meet the federal visibility standard for about one-tenth the cost to customers,” said Pat Vincent-Collawn, chairman, president and CEO of PNM parent company PNM Resources. “PNM is prepared to implement the state plan right away. We are trying to resolve this issue quickly, reasonably and in the best interests of the people of New Mexico.”
The federal Clean Air Act set a long-term timetable for improving visibility in national parks and wilderness areas. Two different plans have been developed for New Mexico to meet its obligation: one developed by the state and the other by EPA. Both plans meet Clean Air Act requirements and would produce a similar visibility improvement as seen by the human eye. But EPA’s required technology could cost almost ten times more than the technology required by the state. Two major engineering firms have estimated the EPA-required technology will cost about $750 million or more and that the state-required technology, selective non-catalytic reduction, would cost about $77 million.
PNM has asked EPA to reconsider its decision and also to put its decision on hold while a federal court considers appeals by PNM, New Mexico Gov. Susana Martinez and the N.M. Environment Department. All three parties support the state plan, which calls for the installation of a different technology, selective non-catalytic reduction, at San Juan. PNM also has asked the court for a stay of the EPA mandate while the court considers the merits of the appeals.
“To meet the current EPA deadline, PNM and the eight other owners of San Juan will have to begin to spend a significant amount of money to install technology that the court may find is unnecessary. For the benefit of customers, an administrative or judicial stay is absolutely critical,” Vincent-Collawn added.
According to PNM estimates, about $246 million of the total project cost of $750 million or more will be spent through next year – a timeframe in which the matter could still be pending in court. As owner of 46 percent of the plant, PNM’s portion of these costs total about $21.3 million through the end of this year and about $112.8 million through the end of 2013.
PNM believes EPA significantly underestimated the cost of installing selective catalytic reduction at San Juan while overstating the visibility improvements that would result. EPA has not yet responded to PNM’s requests for reconsideration and for an administrative stay pending legal resolution.
Responses to the PNM RFP are due April 20. Vincent-Collawn said receiving bids from engineering firms with real-world experience installing the EPA-required technology should provide important information regarding the cost of installing that technology at the San Juan plant.
PNM customers interested in learning more about this issue or taking action in support of the state visibility plan can visit New Mexicans for Common Sense Environmental Policy.
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995
Statements made in this news release that relate to PNM's expectations, projections and estimates are made pursuant to the Private Securities Litigation Reform Act of 1995. Readers are cautioned that all forward-looking statements are based upon current expectations and estimates and PNM assumes no obligation to update this information.