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PUBLIC SERVICE CO. OF NEW MEXICO ANNOUNCES COMPLETION OF FUEL ANALYSIS

PUBLIC SERVICE CO. OF NEW MEXICO ANNOUNCES COMPLETION OF FUEL ANALYSIS
 ALBUQUERQUE, N.M., July 17 /PRNewswire/ -- Public Service Co. of New Mexico (PNM) (NYSE: PNM) has determined that conversion of two units of San Juan Generating Station (San Juan) from coal to gas fuel is not economical at this time.
 Six months ago, PNM sought bids for a long-term supply of natural gas to fuel San Juan Units 1 and 2. Fourteen bids were received which show that natural gas prices are competitive with coal. However, economic analysis indicates that fuel savings would not be favorable enough to offset other costs associated with conversion.
 Specifically, detailed analysis indicates that the capital costs of conversion would have been significantly greater than original estimates. Operations and maintenance savings would have been substantially lower than originally anticipated and were offset by minimum coal purchase obligations. Finally, boiler design would have prevented improved operating efficiency with natural gas.
 PNM continues to make progress in its efforts to modify its existing San Juan coal supply agreement. On June 23, PNM and San Juan co-participant Tucson Electric Power Co. reached an agreement in principle with San Juan Coal Co., a unit of BHP Minerals International. This agreement provides for a reduction in the base cost of delivered coal as well as an alternative pricing structure which encourages additional energy sales. These amendments, subject to negotiation of final documentation and to the companies' final approvals, would help PNM's efforts to lower the delivered price of its product to its customers through reduced fuel costs.
 -0- 7/17/92
 /CONTACT: Sam Brothwell, 505-848-2287, Ernie C'DeBaca, 505-848-2806, or Pam Lett, 505-848-4673, all of Public Service Co. of New Mexico/
 (PNM) CO: Public Service Co. of New Mexico ST: New Mexico IN: UTI SU:


MC-BB -- DV002 -- 0183 07/17/92 11:06 EDT
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Publication:PR Newswire
Date:Jul 17, 1992
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