ALBUQUERQUE – New Mexico’s largest electric provider on Monday put out a request for proposals for hundreds of megawatts of power to fill a future void as the utility plans ahead for weaning itself from coal-fired generation over the next several years.
Public Service Co. of New Mexico plans to close two units at the San Juan Generating Station in northwestern New Mexico before the end of the year to meet a federal mandate aimed at reducing haze-causing pollution in the region. By 2022, the rest of the plant could close.
In an announcement late last week, the utility said it is looking for a combination of sources that can ensure the reliability of a system that serves a half-million customers around New Mexico. It pegged the amount at 456 megawatts.
The utility is encouraging renewable and battery-storage options.
The utility also plans to divest its ownership shares in the nearby Four Corners Power Plant when its coal supply contract runs out in 2031. That would leave the company with no coal resources in its portfolio.
Executives at PNM Resources, the utility’s parent company, have pointed to the uncertainty surrounding coal given possible future environmental regulations and ongoing pressure to address pollution concerns.
They also have said replacing the coal supply with renewable energy and more flexible natural gas-powered plants will save money for customers in the long run.
Overall, the amount of U.S. electricity generated by coal has fallen to about one-third in the last decade, mostly as hydraulic fracturing has made natural gas cheaper and more plentiful.
Bidders hoping to supply New Mexico with energy will have until Nov. 30 to announce their intention to bid. Proposals will be due in January.
Utility spokesman Pahl Shipley said Monday the request for proposals is an important step as the company follows through with a resource plan that was adopted earlier this year. However, he said it’s too early in the bidding process to speculate about possible effects, if any, on customer bills.
The utility has said options for filling the void will include building solar farms and more natural gas plants. It also suggests that new transmission lines could alleviate current capacity limits that will prevent more wind energy from being developed in eastern New Mexico.