HomeMy WebLinkAboutF-4 Status of San Juan Divestiture Information Item
Presented 611-1 F-4
*Or
INFORMATION ITEM
TO: HONORABLE CHAIRPERSON AND MEMBERS OF THE AZUSA UTILITY
BOARD
FROM: GEORGE F. MORROW,DIRECTOR OF UTILITIES
DATE: MAY 27,2014 de.
SUBJECT: STATUS OF SAN JUAN DIVESTITURE
Southern California Public Power Authority has continued its efforts to divest itself of its interest
in the San Juan Generating Station. (Azusa has a 30 MW entitlement in San Juan through
SCPPA.)
After many ups and downs over the past two years, the utilities wishing to leave the project (i.e.
all eight California utilities and one Colorado utility) are closer than ever to accomplishing this
objective. An agreement-in-principle between the Exiting Participants and the Remaining
Participants appears imminent and may be obtained as early as the next negotiating session in
June 2014. If an agreement-in-principle is reached, detailed contracts would be developed to
reflect the parties' agreement.
On April 30, the U. S. Environmental Protection Agency provided a Federal Register notice that
it intends to approve New Mexico's proposed State Implementation Plan (SIP) for San Juan.
They are also concurrently withdrawing the Federal Implementation Plan for the project which
required the installation of Selective Catalytic Reduction controls at San Juan by late 2016 at an
estimated cost of 4900 million. A thirty day comment period was established for the proposed
action.Final action by EPA is anticipated by October,2014.
As a reminder, the State Implementation Plan involves the shutdown of San Juan Units 2 and 3
no later than December 31, 2017 and requires the installation of less expensive Selective Non-
Catalytic Reduction controls (estimated cost of 4150 million) on the remaining two units by late
2016. Azusa is a participant in Unit 3 and hence will no longer receive power from San Juan
beginning in 2018. Replacement resources include the Lodi Energy Center and new renewable
energy project participation necessary to meet the State's 33%renewable energy goal by 2020.
Among the thornier issues under negotiation between the Departing and the Remaining
Participants are ownership "restructuring" costs, coal mine reclamation costs, residual
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San Juan Divestiture Update
May 27,2014
Page 2
environmental liabilities, plant decommissioning, capital costs prior to 2018, coal supply
including treatment of coal reserves, indemnification,and regulatory approvals.
The annual budget for San Juan includes sufficient funds to pay off all San Juan bonds by 2018
and also to create a small reserve fund for other exit costs.
Prepared by: George F. Morrow, Director of Utilities
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