billion is PNM’s cost estimate for installing proposed emissions controls at its San Juan Generating Station.
per year is the amount PNM says it may have to increase residential electric bills to recoup costs.
Speculation may be a word you can use. Or it could be that seldom does the cost of anything go down.
—Nancy Norem, principal engineer at PNM
On Aug. 11,
Public Service Company of New Mexico
, the state’s largest utility, issued a press release warning that pollution controls proposed by the New Mexico Environment Department would result in significant costs to PNM customers.
Specifically, $90 per year, per customer for an “estimated” 20 years.
Based on that estimate, PNM requested a three-month extension to “consider and respond to” NMED’s plan for reducing haze—per
Environmental Protection Agency
requirements—in national parks and wilderness areas.
The problem? According to PNM’s numbers, a $90 rate hike would bring in a minimum of $900 million—on a project the New Mexico Environment Department says would cost PNM approximately $330 million.
“Their press release had a number of things that just didn’t add up,” Mary Uhl, the air quality bureau chief for NMED, tells SFR. “It didn’t mesh with what we know.”
Uhl says prior PNM estimates put the total cost of the pollution control project at $700 million—and PNM, which holds a 46 percent share in the station, would be responsible for less than half of that.
But even those estimates, Uhl says, “seemed inflated. We’ve seen estimates for similar technology applied at other plants at a lower cost—in some cases, 30 percent lower—so it does raise the question of the accuracy of the numbers.”
PNM’s Nancy Norem acknowledges that “the costs for installing this equipment were done in 2007. They have not been updated; they are being updated right now.”
And linking those estimates to a rate hike is premature at best, Uhl notes, since PNM can’t raise rates without the Public Regulation Commission’s approval.
Even so, PNM’s bid for an extension was successful. The haze control issue won’t come up until next January.
“The state is the regulator for PNM,” New Mexico Environment Secretary Ron Curry admits. But, he says, “We let PNM go because we were convinced that no matter how hard we worked, they weren’t going to follow our advice because they wanted to take it into the next administration.”
Do they know something we don’t know?