New Mexico regulators demand answers from PNM on coal silo collapse

April 27, 2018 GMT

The Public Service Company of New Mexico has 13 days to explain the cause of the March coal silo collapse and resulting fire at its San Juan Generating Station, according to an order issued Wednesday by the New Mexico Public Regulation Commission.

The order also requires PNM to explain what repairs it plans to make and when it will make them to restore the coal-fired unit No. 1 to service at the power plant near Farmington.

Eight advocacy groups, led by Santa Fe-based New Energy Economy, petitioned the PRC on April 12 for an investigation of the collapse and fire and a cost-benefit analysis by PNM to justify the unit’s continued operation. The petition asked whether further investment in the generation plant is fair to ratepayers compared to investment in other energy sources. The San Juan Generating Station, in operation since 1973, is scheduled to close in 2022.

The PRC order also requires PNM to address the New Energy arguments for an analysis that compares the cost to repair the unit to replacing it with an alternative source of power. PRC staff was ordered to make its own assessment, due 13 days after PNM submits its response.

The silo, where coal is stored, collapsed March 17, causing an explosion and fire near unit No. 1, a 16-story structure that produces 340 megawatts of power, according to the petition by New Energy Economy and the other groups. No one was injured in the incident.

PNM expects unit No. 1 to come back online by mid-June, according to an email statement Wednesday from PNM spokesman Dan Ware.

He wrote that PNM would comply with the PRC order but has already provided detailed information about the incident.

He said previously that the utility, in addition to repairs, used the downtime to do scheduled maintenance to unit No. 1. Only unit No. 4, of four generating units at the power plant, is still in operation. To make up for the loss of unit No. 1, PNM draws power from the Afton gas-fired plant near Las Cruces, Ware wrote. PNM shut down units No. 2 and No. 3 at the station in December.

When the petition was filed, the executive director of New Energy Economy, Mariel Nanasi, said it was meant to force PNM to explain what happened March 17 at unit No. 1 and explain to what extent repairs constituted a major investment, the cost of which ratepayers would bear.

“We know already that it’s cheaper today to buy electricity on the open market than it is to buy coal-generated electricity from San Juan. We know that already,” Nanasi said Wednesday. “The plant’s inoperable; why fix it?”

The utility dismissed the claim that PNM would pass unit No. 1 repair costs to ratepayers.

“As we’ve explained, insurance will pay for repairs to the damaged equipment, minus a deductible that will be absorbed by the normal operating budget,” Ware wrote. “The insinuation that customers would be on the hook for a big repair bill is just flat wrong.”

Contact Joseph Ditzler at 505-986-3034 or jditzler@sfnewmexican.com.