PNM's preferred replacement power plan means less property tax for San Juan County

• George Sharpe voices support for 476 megawatts of natural gas generation in San Juan County.
• PNM officials say solar arrays would cost more in San Juan County than in Rio Arriba and McKinley counties.

FARMINGTON — Public Service Company of New Mexico’s preferred proposal for replacing the electricity it currently receives from the San Juan Generating Station would only replace about half of the property tax the utility pays in San Juan County.

Currently PNM pays about $3.2 million in property tax.

“That’s just PNM’s portion of the plant shutting down,” said San Juan County Assessor Jimmy Voita.

He said it does not include the property tax paid by other San Juan Generating Station owners or the San Juan Mine.

The proposal calls for 280 megawatts of natural gas generation to be placed at the San Juan Generating Station site in Waterflow. That is about half of the new generation that PNM plans to bring online by summer 2022.

Meanwhile, two solar arrays would be located a short distance outside of San Juan County in Rio Arriba and McKinley counties. PNM would not own either solar array. Instead it would purchase the power through agreements with the owners.

More:Critic blasts PNM's plan to replace coal; utility defends proposal

PNM explains why its proposal does not include solar in San Juan County

This has San Juan County and Central Consolidated School District officials concerned about the impacts to the tax base. During a stakeholder meeting this week, local leaders asked PNM officials why the preferred solar sites were not in San Juan County.

Voita said the lost property tax could mean San Juan College, San Juan County and Central Consolidated School District may have to cut services or raise taxes.

“There’s going to be controversy over the resource selection and we know that definitely has economic impacts in terms of property tax revenue, which rolls into education,” said PNM Senior Vice President for Public Policy Ron Darnell.

PNM Vice President for Generation Tom Fallgren said the bids for solar in San Juan County came back significantly higher than the bids for solar in Rio Arriba and McKinley counties.

“We would have loved to have seen a scenario where there was another 100 megawatts of solar located in the Central Consolidated School District,” Fallgren said. “We would all be happy with that. The trouble is I had to go with the bids that I was offered. So I got 345 bids and the bids that I got for solar that were located in San Juan County were an upwards of $10 a megawatt hour more than the bids I got in that location.”

Fallgren said one of the factors that made the bids higher in San Juan County was access to transmission. He said the McKinley and Rio Arriba counties sites had cheap land that was essentially beneath transmission lines and made it easy to connect the solar into the transmission system.

Four scenarios include an option for 476 megawatts of natural gas in CCSD

Fallgren said PNM presented four scenarios to the New Mexico Public Regulation Commission for replacing the power from the San Juan Generating Station. He said it is possible that other scenarios could also be considered, including scenarios that do include solar fields in the CCSD boundaries.

San Juan County resident George Sharpe said he favors the scenario that would build 476 megawatts of natural gas generation in San Juan County, which would also benefit the natural gas industry of San Juan County.

That scenario would cost an estimated $54 million more than the $4.7 billion preferred scenario, however it would be less expensive than the other two scenarios presented by PNM.

More:How San Juan Generating Station went from powerhouse to possible closure

The natural gas scenario would mean three percent more carbon dioxide emissions.

“That three percent is not going to make the difference in reaching two degrees or not,” Sharpe said, referencing an agreement between nearly 200 countries to work to prevent global warming of more than two degrees Celsius compared to pre-industrial levels.

Sharpe also asked PNM to make a scenario that includes solar and locates 450 megawatts of power generation in San Juan County.

County commissioner asks about PNM's plans to be carbon-free by 2040

PNM has also committed to phasing out natural gas generation.

 “With your plans to do carbon free by 2040, will you only be paying property tax for 18 years?” asked San Juan County Commissioner GloJean Todacheene. “And what keeps you from pulling the gas turbines earlier than that and stop paying property taxes?”

Fallgren said that is up to the New Mexico Public Regulation Commission and its appointed hearing examiner.

“They can decide if it’s 18 years or they can decide if it’s longer,” Fallgren said.

Fallgren said a gas plant can be converted to a carbon-free resource. He highlighted carbon capture as a way to convert the gas plant to generating virtually no carbon emissions. PNM had previously said carbon capture was not economical for a coal-fired power plant, however Fallgren said it can work for a gas plant.

“We’ve got 20 years to figure out that technology,” he added.

More:PNM official explains why the utility did not pursue carbon capture technology

Fallgren said gas turbines can also be run on hydrogen, which would eliminate carbon emissions.

“The long-term solution is yet to be determined, I would say, on the gas plant,” Fallgren said.

Hannah Grover covers government for The Daily Times. She can be reached at 505-564-4652 or via email at hgrover@daily-times.com.

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