APS plan to restructure power plant moves forward

March 24, 2012 • State News

FILE – This April 6, 2006 file photo shows the Four Corners [auth] Power Plant, one of two coal-fired plants in northwest New Mexico, near Farmington. Two environmental groups are asking a federal court to set a deadline for the U.S. Environmental Protection Agency to issue mandates for pollution controls at two power plants, including Four Corners, on the Navajo Nation.(AP Photo/Susan Montoya Bryan, File)

ALBUQUERQUE, N.M. (AP) — A plan by Arizona’s largest utility to restructure the ownership of a coal-fired power plant it operates in northwestern New Mexico is moving forward.

California utility regulators on Thursday approved the sale of Southern California Edison’s 48 percent share of two units at the Four Corners Power Plant to Arizona Public Service Company for $294 million. APS expects to close on the sale later this year.

“It’s an important step, but there’s still more work to be done,” APS spokesman Damon Gross said Friday.

APS announced plans in 2010 to seek majority ownership of the two units and shutter the plant’s other three, more polluting generators. APS would lose 560 megawatts of power from the shutdown but would gain 740 megawatts from Southern California Edison.

APS proposed the buyout as a result of Southern California Edison’s decision to terminate its interest in the plant in 2016 to comply with California laws that prevent the state’s utility providers from investing in most coal-fired power plants. A U.S. Environmental Protection Agency proposal to upgrade the plant to reduce nitrogen oxide emissions also was a factor, APS said.

Rather than comply with mandates to upgrade the three more polluting units, APS wants to permanently close them and install $290 million in controls at the newer units that were built in 1969 and 1970.

The power plant located on the Navajo reservation provides electricity to about 300,000 households in New Mexico, Arizona and Texas. The tribe approved a lease extension for APS last year, marking the first step in a plan that APS says will reduce pollutants and ensure affordable power for its customers. The lease now expires in 2041.

APS still is working on securing a fuel agreement from BHP Billiton, which supplies the coal to run the plant.

The utility also needs the approval of the Arizona Corporation Commission. An administrative law judge with the commission recommended earlier this month that APS be allowed to pursue the acquisition of Southern California Edison’s shares and the retirement of the three units, but the commission has not yet voted.

Environmental groups have been pushing for a transition from coal. The Four Corners plant is the largest single source of nitrogen oxide emissions in the United States, but EPA’s proposal would reduce those emissions by 87 percent.

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