Public Service Co of New Mexico likely will add natural gas-fired generation, solar facilities and existing unregulated nuclear generation to replace 340 MW when two coal-fired San Juan power plant units are retired, utility spokeswoman Susan Sponar said Friday.
PNM expects to add 177 MW of gas-fired generation and 40 MW of solar photovoltaic capacity while shifting 134 MW of utility-owned unregulated capacity at the Palo Verde nuclear plant to its rate base, Sponar said.
PNM's stake in Palo Verde unit 3 currently is sold into the wholesale market. Under the plan, PNM would add the capacity to its rate base and use the power to supply its retail customers.
At issue is a compromise plan released in February that aims to reduce emissions that create regional haze from the 1,800-MW San Juan plant in northwestern New Mexico. A key element of the plan calls for retiring the 350-MW San Juan unit 2 and the 544-MW unit 3 by 2018. PNM and Tucson Electric Power each own half of unit 2. PNM owns half of unit 3 while the Southern California Public Power Authority owns 41.8% and Tri-State Generation and Transmission owns 8.2%.
In July, PNM started an integrated resource planning process. As part of modeling for that process, PNM has identified a preferred set of replacement resources, Sponar said, noting that for the first time utility modeling picked solar resources as a least-cost option.
PNM expects to ask the New Mexico Public Regulation Commission in December for permission to retire the two units at San Juan, Sponar said. Filings to replace the lost capacity from San Juan will be filed separately, she said.
Meanwhile, PNM is considering taking a stake in the 145-MW gas-fired Valencia power plant that is under contract to the utility through a power purchase agreement, PNM Resources, the utility's parent, said in a Thursday filing with the US Securities and Exchange Commission.
"PNM is evaluating its alternatives with respect to Valencia, including exercising its purchase option, with the goal of achieving a fair and economical benefit to its customers," PNM Resources said. "Also, PNM is in the process of developing its integrated resource plan. Through this process, PNM will evaluate all of its resource options, including this PPA, to determine the most optimal way to service its customers."
The PPA, which runs through mid-2028, includes a provision that allows PNM to buy up to half of the plant near Belen, New Mexico.
