The once-giant, 1700-MW San Juan coal plant outside of Farmington, N.M., near the Colorado border, could have a new lease on life. But the details look problematic.
POWER magazine reports that a rather unknown New York real estate hedge fund real estate investor, Acme Equities LLC, has offered a deal to the city to keep the remaining 847-MW two-unit plant running beyond 2022.
The deal is far from done and appears to have lots of problems.
The arrangement involves a non-binding letter of intent between Acme and the city of Farmington, the Farmington Daily Times reported. The city would buy the plant from its current owners and sell it to Acme for a dollar. The proposed deal involves several significant tax breaks from the city to benefit Acme. That has raised opposition, including from the local Sierra Club chapter.
The local newspaper commented, “While the city has not finalized these negotiations, one term would require Acme to have entered into purchase power agreements. That means, depending on negotiations, Acme will need a set number of utilities to buy the power when the contract closes.” That’s a dicey proposition.
The majority owner, Public Service of New Mexico (PNM), the Associated Press reported, “wants the state Supreme Court to delay regulatory proceedings related to a coal-fired power plant [San Juan] that is set to close in 2022. The state’s Public Regulation Commission in January ordered shutdown proceedings to begin immediately, rather than waiting for majority owner PNM to file a shutdown proposal.”
Earlier, the current owners of the two units of the once four-unit plant – PNM, the city of Farmington, Tucson Electric Power, Los Alamos County, and Utah Associated Municipal Power Systems, a muni joint action agency – said they would close the plant after 2022. That would have been 30 years before the scheduled life of the plant.
A bunch of California munis, which had long taken power from the original four-unit, 1700-MW plant, in 2017 bailed out on their power purchases from the plants, following a 2015 California law eschewing any electricity produced from coal, even outside the state. Earlier, California ruled out any coal-fired generation from inside the state. As a result, only two San Juan units – units 1 and 4 – remained in service.
The Energy and Policy Institute, a deliberately opaque anti-fossil fuels organization with no disclosed location or funding sources, but fraternal ties to national environment groups, wrote that a term sheet between Farmington and Acme calls for a sale price of the remaining San Juan station for one dollar and the tax breaks.
Who will buy the San Juan power? The environmental advocacy group said, “When asked about the prospective Acme deal in a call with investors yesterday, PNM CEO Pat Vincent-Collawn confirmed that PNM would not buy the power under any circumstances:
“So regardless of what theoretically has been proposed by Farmington, from our view we’re exiting San Juan, and we’ll replace the power accordingly to meet the objectives of — hopefully supporting the energy transition activities in past. But we will in no way accept any sort of PPA or any continued involvement after 2022 for San Juan.”
What is New York-based Acme Equities? The origin is more mysterious than the Energy and Policy Institute. They appear to have no active website. Online archive searches at the Wall Street Journal and the New York Times found no references to the company.
— Kennedy Maize