Ledes from the Land of Enchantment

Tucson Electric, PNM seek FERC’s OK to end their San Juan plans ownership pact ahead of decommissioning

Tucson Electric Power Co., a Fortis utility, on Friday asked the Federal Energy Regulatory Commission to accept the Public Service Co. of New Mexico’s request to approve the cancellation of the San Juan Project Participation Agreement, which outlines the responsibilities of the owners of the San Juan Generating Station.

FERC’s approval is needed so PNM, the coal-fired plant’s operator, can decommission the four-unit generating station near Farmington, New Mexico, according to TEP.

San Juan’s 369-MW Unit 1 was shut in June and the 555-MW Unit 4 was shuttered last month, PNM said Sep 30. Two units totaling about 924 MW were retired at the end of 2017.

However, one of San Juan’s five owners, the city of Farmington, New Mexico, has an agreement with Enchant Energy to install carbon capture equipment at the plant and keep it running.

PNM; TEP; the County of Los Alamos, New Mexico; and Utah Associated Municipal Power Systems have rejected Farmington’s proposals to transfer the power plant to the city, the city said in an early-October filing at FERC. PNM’s filing at FERC to terminate the ownership agreement is an “end run” around litigation launched last month by Farmington, the city said.

“The commission should deny PNM’s blatant and flawed attempt to undermine existing litigation and arbitration that would be undercut by this Notice of Cancellation, allow the litigation and arbitration to conclude and permit the parties to inform the Commission of the contractual rights as properly determined before it entertains an application for cancellation of the [ownership agreement],” Farmington said.

Farmington’s filing is effectively moot, according to an Oct. 20 response from PNM. Farmington has withdrawn his litigation and the San Juan owners are in arbitration to settle the dispute, according to the Albuquerque-based utility.

Canceling the ownership agreement won’t prevent the power plant’s owners from resolving their disagreement, PNM said.

Enchant Energy’s planned project will capture 95% or more of the lifetime carbon dioxide emissions from the San Juan plant under a performance warranty provided by Mitsubishi Heavy Industries America, Farmington told FERC.

The CO2 from the power plant would either be put into underground injection control wells or be used for enhanced oil recovery in the Permian Basin, according to the city. The project would qualify for federal carbon sequestration tax creditsFarmington said.

The Institute for Energy Economics and Financial Analysis issued a report in August disputing Enchant Energy’s carbon capture efficiency claims for a retrofitted San Juan power plant.

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