Letter To The Editor: County Needs To Leave San Juan Coal Generating Station – Go Solar To Cut Costs

By ROBERT FALCO, PhD
Los Alamos

Los Alamos County has a unique opportunity to make a quantum leap into the future of clean renewable energy.

It is at a cross roads, where it must decide to cut its losses by selling or abandoning its share of the San Juan power generating station to PNM, rather than pay millions to put pollution abatements on it, and instead use these monies to establish a PV solar farm.

The economics of moving away from the San Juan power plant, if LAC acts now, can save a lot of money. And in seven years, only seven years, all monies spent now on pollution controls will be wasted because the San Juan coal mine will be shut down in 2022, after which the cost to produce a BTU of coal based electrical power at the San Juan Power station will go up, because of coal transportation costs, and ongoing tightening of pollution controls.

At that time, even PNM is likely to shut it down, as 2022 is the end of its normal lifetime. Even at today’s prices its overall costs are high compared to a BTU of PV solar, but will be dramatically higher than solar by then.

The current costs of PV are already at ‘grid parity’. Dramatic costs reductions have occurred within the last year. The city of Austin Texas is currently receiving bids of 4 cents a kilowatt hour. Nevada Energy just purchased 100 MW of PV solar for 3.87 cents per kilowatt hour for a 20 year fixed rate contract.

PNM is installing a PV farm near Santa Fe, which will produce electricity for 7 cents a kWh when costs are amortized over 10 years, and for almost nothing for the remaining 15 years of its nominal lifetime.

Certainly Los Alamos County can get bids in these ranges. As the reader of course knows, LAC now charges 11.52 cents a kWh for residential electricity.

Imagine your electricity bill decreasing to a third of its present cost in the future, and, you will be using clean energy – not associated with one the dirtiest power plants in the nation.

To understand the complexity of the supply requirements, we must separate out the Lab from the rest of the Los Alamos County. LAC draws 36 MW from the San Juan power plant, but the towns of Los Alamos and White Rock use only 11,000,000 kWh/mo or 132,000,000 kWh/yr of the 315,360,000 kWh/yr San Juan can produce (DPU 2013).

Assuming LAC has to pay the highest rate of the three PV solar installations mentioned above, i.e., 7 cents per kWh, its costs will be be $92,887,200 if all of the town’s electricity needs were to be obtained from solar. But it acquires a percentage from water power and some PV, and will need base line power from the grid at night. However, with net metering, it can get back at night kWh for kWh any extra it puts into the grid during the day.

So, let’s say it needs all 132 million kWh/yr. The solar would produce an income for LAC (if current charges of 11.5 cents a kWh were continued until the Capitol LAC electric power costs were paid off) of $15,180,000 per year. So a bond could be easily raised, needing a little over six years to pay back.

After the bond is paid off the electricity charge of 11.52 cent per kWh could then be lowered to say, 5 cents a kWh, for future electricity bills, to enable the county to amass a fund to buy more solar. This scenario is opposed to a rate hike of unknown amounts to ‘fix’ the San Juan pollution problems. (In 2011, DPU estimated Los Alamos’ share of the pollution upgrades would be anywhere from $2 million to $20 million and would translate into a potential 13 percent rate increase to Los Alamos customers.)

If the Lab is used as an excuse to keep supporting the San Juan Power station for 7 more years, then it is clear that the citizens of the towns of Los Alamos and White Rock will be paying dearly. The county together with the Lab should also look into solar.

The county’s current thinking is to ‘shore -up’ San Juan (Los Alamos Daily Post, July 10) — after all, it has provided us so well all these years – and we own 7 percent!

But the better idea is to sell our portion to PNM, or even to leave San Juan as a stranded asset. It is akin to leaving a sinking ship. Why should we stay onboard when the options to get off are much better?

Since a final plan has not been put forth by majority owner PNM, LAC’s non-binding term sheet signature to support the San Juan Power Plant, which was signed before the new EPA CO2 regs, is open to reversal.

The PNM final proposal is due Aug. 1, and the LA Board of Public Utilities will decide on July 15.

LACs contribution to this agreement will run more than $5,000,000 for the just the NOx abatement. And, if LAC goes forth, the new EPA CO2 abatement costs will run millions more (not in the above mentioned 2011 estimates). Putting money into it is literally putting money into a black hole.

With solar costs equal to or lower than grid costs, our health, our economy and our earth demand cutting our losses, and looking towards a cleaner, cheaper, sun filled future.

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