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San Juan Generating Station requests extension to keep burning coal

Delays in converting to solar blamed on supply chain issues
The San Juan Generating Station outside Farmington in northwest New Mexico is seen during the evening across the plant’s cooling pond. (Courtesy of PMN)

Utility executives at the San Juan Generating Station near Farmington are requesting a three-month extension to keep the coal-fired power plant in operation, despite originally planning to abandon the location in June.

The Public Service Co. of New Mexico, which owns the largest stake in the plant, made the proposal in a plan submitted to state regulators on Thursday. The owners hope to avoid rolling blackouts after supply chain issues created delays in the transition to solar-based replacement power. The company and other co-owners have been planning to abandon the plant June 30 in favor of transitioning to electricity from renewable sources.

A bill filed in the New Mexico House of Representatives earlier this week would have extended the plant’s operations for two years, but it failed to gain enough support from state Democrats, who control the House.

Farmington Mayor Nate Duckett said that while he doesn’t anticipate power blackouts in his area, he is concerned that if the plant shuts down completely on June 30, the city will have to purchase energy from other sources.

Keeping one unit running through September could save the city between $8 million and $10 million, Duckett estimated.

“As part owner of that power plant, the city of Farmington has about $28 million to $30 million of unappreciated assets, and, frankly, we would like to see that power station remain operating so that we can get the full value of those investments in that power plant out of it,” he said. “... We’re looking at a loss of around 1,600 jobs associated with the coal mine, the power plant and then all the contractors who work throughout this area to service the different needs of the power plant.”

Between lost jobs and tax revenue streams, Duckett estimates Farmington and other regional entities, including the state, school district, San Juan College and others, could lose as much as $54 million a year.

Hank Adair, Farmington’s utility manager, said if the station shuts down for good, electrical utility rates for customers may increase by as much as 6% in the long term. But PNM has estimated that fully transitioning to renewable energy will save utility customers about $7 per month.

Camilla Feibelman, director of Sierra Club’s Rio Grande Chapter, said attempts to continue coal-based operations are environmentally and economically counterproductive in the long term.

“The problem with burning fossil fuels is that you endlessly have to extract them, endlessly have to burn them and endlessly have the associated pollution spewing into the air and leaching into the water, and that never ends,” she said. “... PNM, through the Energy Transition Act is allowed to securitize $40 million for work for severance and retraining plus another $40 million for community-based economic development projects, and so all of that was meant to help cushion the blow for the community.”

To avoid lost jobs and other economic impacts, Duckett hopes that Enchant Energy, a company founded in 2019, can take over plant operations. The company is proposing the world’s largest carbon-capture project, which would retrofit the San Juan Generating Station to capture 95% of CO₂ emissions and inject them into the ground. The project is slated to cost $1.5 billion.

But plans for Enchant’s takeover and carbon capture appear highly speculative, said Mike Eisenfeld, energy and climate program manager for the San Juan Citizens Alliance.

He cited the lack of permits Enchant Energy has obtained for its proposed underground carbon sequestration project and other work. The underground well alone would require scoping meetings, public meetings, draft documents and more, which could take years, Eisenfeld said.

Previous reports have found the project to be behind schedule and lacking investor interest.

“I think that what they’ve been doing is sort of leading the community on that this is a possibility,” Eisenfeld said. “When they first announced it in 2019, they were like, ‘We have investors, we’re gonna get this all in place,’ and we think that it's disingenuous for them to be perpetuating this idea that they can pull this off.”

Cindy Crane, the CEO of Enchant Energy, told The Durango Herald the company is focused on completing a front-end engineering and design (FEED) study before applying for project funding and carbon-capture permits.

“We are making great progress on the FEED study, which is what we have been with for the last nine to 12 months, and we are nearing completion,” she said. “The city and Enchant continue to work very closely with the ownership group of the plant on the terms of the transfer and the potential extended operations of the existing owners do not impact Enchant and the city's plan.”

Skye Witley, a senior at American University in Washington, D.C., is an intern for The Durango Herald and The Journal in Cortez. He can be reached at switley@durangoherald.com.

An earlier version of this story reported Farmington Mayor Nate Duckett said Farmington could lose up to $54 million per year in lost wages and tax revenue. Duckett said that figure includes the city of Farmington and other entities such as the state, school district, San Juan College and others.

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