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PNM Resources' New Mexico Utility to Appeal EPA Decision on San Juan Generating Station

EPA today finalized its plan to require the coal-fired power plant near Farmington, N.M., to install selective catalytic reduction technology on all four units within five years. In finalizing its plan, EPA has bypassed an alternative technology approved by the state that would meet the same federal visibility rules for a tenth of the cost, according to company officials.

"The EPA plan adds unnecessary costs to one of our lowest-cost sources of reliable power," said Pat Themig, PNM vice president of generation. "If it stands, it will lead to significantly higher future electric rates for the 2 million customers who rely on the plant for reasonably priced power."

EPA's decision would require an investment of $750 million or more, Themig said, while the same federal rules can be met with a different technology for $77 million.

The N.M. Environmental Improvement Board in June approved a state proposal to require the installation of the lower cost option at San Juan. That technology, selective non-catalytic reduction, would meet the federal visibility requirements of the federal Clean Air Act.

Themig said EPA's analysis is flawed, substantially underestimating the cost of installing EPA's recommended technology while overestimating the resulting visibility improvements. Additionally, PNM believes EPA finalized its plan for San Juan without properly reviewing the state's plan as required by the Clean Air Act. The New Mexico plan was approved by the state on June 1.

"The Clean Air Act gives each state the authority to implement a regional haze program appropriate for the state, and New Mexico exercised this authority when it approved its own plan in June," Themig said. "EPA's decision does not relieve it of legal responsibility to fully consider New Mexico's plan."

Appeal of EPA's decision must be filed within 60 days from when the new EPA rule is published in the Federal Register. Publication is expected within the next month.

Background:

PNM Resources (NYSE: PNM) is an energy holding company based in Albuquerque, N.M., with 2010 consolidated operating revenues of $1.7 billion. Through its utility and energy subsidiaries, PNM Resources has approximately 2,630 megawatts of generation capacity and serves electricity to more than 875,300 homes and businesses in New Mexico and Texas. The company also has a 50-percent ownership of Optim Energy, which owns nearly 1,200 megawatts of generation resources in Texas. For more information, visit the company's Web site at www.PNMResources.com.

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