The City of Farmington, N.M. signed an agreement last week with a company that proposes to use carbon-capture technology to keep the region’s San Juan Generating Station (SJGS) coal-fired power plant open past a planned 2022 closing date — a move the city says would preserve nearly 1,600 direct and indirect jobs and save millions of dollars in tax revenues.
The Farmington City Council signed the contract agreement with Enchant Energy Corp. under which the city would keep its 5 percent share of the SJGS, while Enchant would acquire 95 percent ownership and would strive to sell the electricity both in New Mexico and beyond.
The agreement was required for Enchant Energy to complete various negotiations related to its acquisition. The SJGS and its adjacent San Juan coal mine are major employers in northwestern New Mexico.
Meanwhile, Public Service Co. of New Mexico, or PNM — the state’s largest electricity provider — has plans to shut down the plant in 2022 as the state begins implementing its Energy Transition Act (ETA). The utility’s decommissioning plan is before the state’s Public Regulation Commission along with plans for replacing the lost electricity capacity once the plant closes.
Enchant says if the negotiations with PNM and others go through it would retrofit the plant to meet ETA standards and would work on attaining customers for the generated power.
“The San Juan Generating Station is attached to a transmission [line] that connects to Colorado, Utah, Arizona and New Mexico and it also gets power to Nevada and California,” Enchant spokesman Wally Drangmeister told InsideSources. “So the plan is to send power to utilities that need a reliable source of power to complement the renewables and to also market power directly to large-end users in jurisdictions who have the authority to make such a purchase.”
As InsideSources reported, Gov. Michelle Lujan Grisham signed the ETA in late March, which sets a statewide renewable energy standard of 50 percent by 2030 for New Mexico investor-owned utilities and rural electric cooperatives.
In June, Enchant released a study by Maryland-based engineering consultant Sargent & Lundy, which supports the use of carbon capture and storage technology to keep the coal-fired plant operating and provide cheap electricity, while still conforming with the ETA. (The report is available on the Enchant website.)
“The results of this study are a significant milestone towards successful implementation of our project and the numerous positive benefits that we envision will follow,” Enchant Energy CEO Jason Selch said in a statement at the time. “This project will demonstrate that it is possible to comply with stringent CO2 emissions standards for electricity generation using carbon capture utilization and storage technology while providing high-paying jobs and maintaining state and local taxes that are so vital to the northwest region of New Mexico.”
Enchant Energy will pay for installing the new emissions equipment, estimating it would pay about $1.2 billion for retrofitting the plant, but that it would benefit from federal tax credits related to spending in carbon-capture technology.
Farmington Mayor Nate Duckett said the agreement is significant for the city, customers of the Farmington Electric Utility System (FEUS), and San Juan County, which stands to lose tens of millions of dollars in tax revenues if the plant closes as scheduled.
By operating the power plant another five years, city officials say customers of the Farmington utility would save $27 million. As for the carbon dioxide that would be captured, company officials have said the primary customers would be oil and natural gas producers.
“Successfully completing carbon-capture retrofitting at SJGS will keep the plant operating, retain hundreds of power plant and mine workers’ jobs, maintain the tax base and revenues for local schools and ensure that electric rates remain among the lowest in New Mexico for FEUS customers,” Duckett said in a statement.
Opponents to keeping the plant open say there are now less expensive and cleaner options for generating electricity than coal, Enchant’s is an unproven technology and the company would have to overcome numerous hurdles to reach its goals.
“San Juan Generating Station energy is more expensive than any of the alternatives for replacing it that PNM has proposed,” Camilla Feibelman, director of Rio Grande chapter of the Sierra Club said in an email to InsideSources. “So even if you can keep the plant open at the same or a slightly higher price, it’s unlikely that anyone will want to purchase the energy when there are cheaper cleaner alternatives out there.”
Larry Behrens, Power the Future western states director, disagrees.
“Here is an agreement that it looks like the city of Farmington is behind, that helps save jobs in their area and they are looking to do that in a way to reduce emissions and reach the threshold given in the transition act,” Behrens told InsideSources. “So one would think that such an opportunity would be welcome in the environmental community.
“I would think that [environmentalists] would embrace innovation — and there are parts of renewable energy that aren’t viable either in larger scales,” said Behrens of the pro-industry group. “Yet, they seem to be OK with putting us on a course that takes us from Power the Future’s point of view to more costly energy and technology that hasn’t been proven in a lot of ways.”