FARMINGTON, N.M. (AP) — The Farmington City Council on Tuesday will consider whether to acquire 65 megawatts of electricity at a power plant in northwestern New Mexico that serves more than 2 million customers in the Southwest.
The Farmington Daily Times reports (http://bit.ly/1aq9Emo) that the proposed deal for the power at the San Juan Generating Station brings with it the promise of cheap electricity with no up-front cost, but could bring significant legacy costs when the plant closes.
Councilor Jason Sandel said the proposal is fool-hardy, adding that utilities in Colorado, California and Arizona are all divesting themselves of coal-fired production.
Sandel said the legacy costs of decommissioning the San Juan Generating Station once it closes could be significant. “There should be no new dollars in old technology,” Sandel said. “Our community, for a whole host of reasons, needs to redouble its support of natural gas.”
Councilor Dan Darnell sees the situation as more nuanced.
Farmington owns 8.5 percent of the shares at the power plant’s fourth unit, or about 40 megawatts, he said.
The California-based utilities that also have ownership in that unit must vacate their shares because of recent changes to California energy policy requiring divestment from coal-fired production, Darnell said. “We’re not purchasing anything,” he said.
The power plant is still going to be producing the same level of megawatts after the California utilities leave, Darnell said.
“We would get (that power) for free,” he said. “We do have operation and maintenance costs.”
Darnell he said his decision rests on what maintenance, operation and legacy costs will be, and what the payment timeline on legacy costs will be once the plant eventually shuts down.
Mayor Tommy Roberts said the city is facing a unique opportunity. “Very rarely do you have an opportunity to acquire more generation without up-front costs,” Roberts said.
A new 60-65 megawatt natural gas plant would cost about $80 million, he said.
“That coal will still be burned,” Roberts said. “Someone will take that power.”