The estimated $100 million Estancia Basin Power Project has officially lost renewable energy tax credits from the state of New Mexico.

The Energy Conservation and Management Division of the New Mexico Energy, Minerals and Natural Resources Department has rejected Western Water and Power Production's application for the state Renewable Energy Production Tax Credit.

A March 12 letter from the state to WWPP stated the project had not met the milestone requiring them to generate electricity by the 24-month deadline as required by the state.

The credits are worth up to $27.4 million over a 10-year period.

In order to keep the credits, the plant had to be up and running within two years of the application approval.

David Cohen, president of WWPP, had submitted a waiver of the rule and an extension on the deadline, which the March 12 letter from the state denies.

"We do not find that the information in the request supports such a waiver or your request for a hearing," the letter states.

Cohen said Monday he will be appealing the decision.

"We're disappointed," he said. "And we will appeal it."

He added that he will have to evaluate whether the project can move forward without the tax credits.

WWPP has until March 29 to appeal the decision, according to the letter from the state.

Conservation groups and local residents are praising the department's decision.

"The revocation of the nearly $30 million in New Mexico state tax credits from the Western Water and Power Production LLC is a significant turn of events for clean energy in the state and a portent for woody biomass energy nationwide," said Bryan Bird, program director for WildEarth Guardians. "Dirty energy produced from the destruction of native forests cannot be considered clean and renewable and should be rejected as such by the states and the federal government."

Tajique resident Bud Latven also agreed this was the right decision.

"It's about time," he said. "They've been trying to hang in there and the project hasn't had any feet for quite a while."

The project has had its share of setbacks since the application was approved by the state in February 2008.

In June 2008, Public Service Company of New Mexico terminated WWPP's contract with Public Service Company of New Mexico. A year later, Cohen said the company had executed a power purchase agreement with a California utility.

In September 2009, a hearing was called by the state to determine whether WWPP had met the milestone that construction had to have commenced by Feb. 21, 2009. The state later ruled it had.