San Juan Generating Station (SJGS)
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SJGS Reports and Planning Documents Library

Please visit our Reports and Documents Library to view all SJGS related documents, such as restructuring presentations.


 

Restructuring Ownership

DPU is one of nine owners in the San Juan Generating Station, a four unit coal-fired plant in the Farmington area. Specifically, DPU owns a 7.2% share in unit 4 and 2% in the entire plant. To meet the State Implementation Plan (SIP) which was approved to reduce regional haze, environmental upgrades were performed on units 1 and 4 in 2016.  The other two (units 2 and 3) will be permanently taken off-line on December 31, 2017.

Per a 2015 agreement to restructure the ownership of the Plant after units 2 and 3 are taken off-line the following will occur:

  • Four owners will leave the plant and a new owner will join, adjusting the number of owners from nine to six;
  • So as not to financially harm the remaining owners (which includes DPU) from the restructuring, the leaving owners agree to provide the remaining owners a demand charge and a restructuring fee. The leaving owners will also absorb a portion of the remaining owners' share of O&M expenses.  
  • DPU’s ownership in the plant will be adjusted from 2% to a little more than 4%; and
  • Emissions from the Plant will be reduced by more than 50%;

 


Exiting SJGS After 2022


Per the New Exit Date Amendment Amending and Restating the Amended and Restated San Juan Project Participation Agreement (PPA) Among Public Service Company of New Mexico (PNM), Tucson Electric Power Company, The City of Farmington, New Mexico, The Incorporated County of Los Alamos, New Mexico and the Utah Associated Municipal Power Systems, section 40B.1 requires all of the project participants to notify PNM (Plant Operator) in writing whether they wished to extend the Coal Sales Agreement and term of the PPA beyond July 1, 2022.

In May of 2018, both the Board of Public Utilities and the County Council authorized the Utilities Manager to notify the San Juan Project Participants of the County's intentions to exit the station at the end of the current Project Participation Agreement. 

On January 20, 2016, the Board of Public Utilities adopted several strategic initiatives for Electrical Energy Resources.  One of the recommendations was to “plan to exit San Juan Generating Station ownership share in the mid-2020’s, under the most opportune circumstances.”
 
In August of 2017 an Integrated Resource Plan was completed.  The IRP identifies a preferred strategy for satisfying the County’s electric power requirements over the 2017 - 2036 timeframe while also meeting DPU’s goal of being a carbon neutral electrical energy provider by 2040.  The IRP concluded the County need not rush to commit to new resources until several uncertainties regarding SMNR’s, solar and storage are resolved.  A staged approach to add smaller and incremental capacity resources on a need basis provides overall cost benefits for the Los Alamos Power Pool (LAPP) and maintains the flexibility in the face of future uncertainties.  Based on the projected market prices over the planning horizon, the IRP recommended exiting the San Juan Generating Station at the expiration of the current Purchase Power Agreement on June 30, 2022.
 
The Operating Committee for the Electric Coordination Agreement (ECA) has agreed to exit the San Juan Generating Station on June 30, 2022 and purchase the replacement power from the market for the remaining three years of the current ECA.  

In addition to our IRP findings, the most significant finding of PNM’s IRP is that retiring PNM’s 497-MW share of SJGS in 2022 would provide long-term cost savings for PNM’s customers.
 
As part of Tucson Electric Power Company’s (TEP), longer-term portfolio diversification strategy, TEP also plans to exit San Juan at the end of June 2022.