Federal court rejects delay of coal-fired power plant's emissions controls

A federal appeals court has ruled that the owners of the San Juan Generating Station must continue with plans to install emissions controls. The 1,800 MW coal-fired power plant near Farmington, N.M. was ordered by the U.S. Environmental Protection Agency last fall to install strong selective catalytic reduction (SCR) equipment to cut its output of fine particulate matter and other emissions in order to meet federal standards.

The plant’s owner, PNM (NYSE: PNM), is appealing the EPA ruling, and the company and New Mexico Gov. Susana Martinez had motioned to delay the implementation of those controls until the appeal is decided. The U.S. 10th Circuit Court of Appeals denied the motion on March 1 in a ruling.

PNM, which owns about half the San Juan plant, has estimated the cost to retrofit the generating system to be between $750 million and $1 billion. The EPA estimates the cost to be much lower — around $345 million.

The conflict, says PNM, is really not whether there will be emissions-control equipment installed, but what kind. The EPA had mandated the SCR gear after New Mexico failed last summer to meet a federal deadline for an implementation plan to meet air-visibility standards.

Since that time, however, the state has filed its plan, which is to install lower-cost selective non-catalytic reduction (SNCR) equipment. PNM and New Mexico are now appealing the EPA ruling so that the cheaper state plan will be considered.

According to the EPA ruling, the controls must be in place by September 2016. PNM has already put out a request for bids on the more expensive SCR technology, and company officials are proceeding with that plan. However, they are also asking the EPA for an administrative stay.

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