PNM Asks for Stop to New EPA Visibility Rule During Legal Review

Published on Thursday, 01 December 2011 19:40 Written by TradersHuddle Staff

ALBUQUERQUE, N.M.-( Business Wire )-

PNM Resources’ (NYSE: PNM) New Mexico utility, PNM, has asked a federal appeals court to suspend a stringent new U.S. Environmental Protection Agency requirement on its coal-fired San Juan Generating Station while the court considers whether to overturn the EPA action.

“The San Juan plant meets all federal ambient air quality standards and will continue to do so,” said Pat Vincent-Collawn, PNM Resources president and CEO. “What we are asking is for the court to place EPA’s new visibility decision for the plant on hold while it decides whether that decision is consistent with federal law and EPA’s own rules.”

Without a stay, PNM and the plant’s eight other owners will incur substantial costs beginning to install the EPA-required technology, selective catalytic reduction, before the company’s appeal of the decision is resolved. “This poses a financial risk that the plant’s owners and 2 million electric customers should not have to bear,” Vincent-Collawn said.

PNM estimates installing the technology will cost about $750 million or more. An estimated $246 million of this will be spent through 2013, a timeframe in which the matter could still be pending in court. According to the filing, PNM’s share of estimated costs total about $21.3 million through the end of 2012 and approximately $112.8 million through the end of 2013.

“EPA’s aggressive compliance timeframe means that we are moving forward to install a technology that the court may find is unnecessary,” said Pat Themig, PNM vice president of generation. Fees for engineering, planning and construction will begin to be paid early next summer and other payments to cover equipment costs will follow, Themig added.

PNM supports a New Mexico plan under which the San Juan plant would install a different technology, selective non-catalytic reduction, for a cost of about $77 million. “PNM is prepared to implement the state plan right away, knowing that it will meet the visibility requirements of Clean Air Act and do so at a reasonable cost,” Themig said.

PNM has established a web site (www.SupportTheNMPlan.com) for those customers who want to take action in support of the state regional haze plan.

Key points in the filing, made with the U.S. Court of Appeals for the Tenth Circuit, are:

• EPA’s decision ignores the primary leadership role that the Clean Air Act grants to the states in determining how best to address regional haze.
• EPA incorrectly determined the cost to comply with its rule, greatly understating the cost of SCR, thereby artificially overstating the cost-effectiveness of the technology.
• EPA’s projections on visibility improvements resulting from SCR conflict with EPA’s own rules. Additionally, EPA’s visibility projections are based on an early version of a respected computer model that the model’s developer says significantly overstates SCR’s visibility effects.
• A stay is necessary to avoid significant and irreparable harm to PNM and its customers.

In addition to PNM, EPA’s decision is being appealed by New Mexico Gov. Susana Martinez and the New Mexico Environment Department. All three parties also have petitioned EPA to reconsider its decision and have asked the agency to place a stay on its own decision while the court resolves the appeals.

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995

Statements made in this news release that relate to PNM's expectations, projections and estimates are made pursuant to the Private Securities Litigation Reform Act of 1995. Readers are cautioned that all forward-looking statements are based upon current expectations and estimates and PNM assumes no obligation to update this information.

Background:

PNM Resources (NYSE: PNM) is an energy holding company based in Albuquerque, N.M., with 2010 consolidated operating revenues of $1.7 billion. Through its utility subsidiaries, PNM Resources has approximately 2,530 megawatts of generation capacity and serves electricity to more than 730,000 homes and businesses in New Mexico and Texas. For more information, visit the company's Web site at www.PNMResources.com.

PNM ResourcesAnalystsLisa Eden, 505-241-2691MediaDon Brown, 505-321-8856