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Council votes to exit coal-fire agreement

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By Bennett Horne

The Los Alamos County Council, acting on the Department of Public Utilities’ recent recommendation to the Board of Public Utilities, voted Tuesday night to authorize the utilities manager to notify the San Juan Project participants of the county’s intentions to exit the station at the end of the current project participation agreement in 2022.

In the mid-1980s Los Alamos County entered into a plant participation agreement with eight other owners of the San Juan Generating Station, a coal-fired plant in the Farmington area.

Four of the owners voluntarily exited the plant with a penalty in December 2017, after an agreement was reached with the State of New Mexico and the U.S. Environmental Protection Agency to shut down two of the four units to meet a regional haze rule.

The remaining owners, one of which is Los Alamos, negotiated a new coal supply agreement with San Juan Coal Company, the fuel provider to the plant. As part of the new coal supply agreement, San Juan Coal requires notice by June 30 from the owners of their intent to either exit or remain in the plant after the 2022 expiration of the plant participation agreement.

During the BPU’s May 16 meeting, the DPU recommended letting the county’s contract for a three-percent ownership share expire in 2022.

“It is no longer cost effective,” Steve Cummins, Los Alamos County’s deputy utility manager for power production, told the BPU. “There are five remaining participants and if any one of them gets out it’s no longer viable as a one-unit operation.”

Cummins said he had spoken with representatives of Tucson Electric Power Company and told the board “they’re trying to get out before 2022.”

He also said Public Service Company of New Mexico (PNM) is not expected to renew their contract.

“It’s very unlikely the plant’s going to run past 2022,” he said. “The City of Farmington, on the other hand, because of the taxes they get from the mine and the operation, they’re sitting in a different position but it’s not looking very good because it’s just not viable as a one-unit operation.”

In 2016, the DPU contracted with Pace Global, an independent, third-party expert, to weigh opportunities, risks and cost of future electric generating resources, while also considering the county’s future goals.

Results from the analysis were compiled into an Integrated Resource Plan, dated June 2017. Pace Global’s findings in the IRP determined that continued participation in the plant, beyond 2022, was not economically viable. Rather, it suggested pursuing other generation options, such as solar with storage and the Carbon Free Power Project, a next-generation nuclear facility.