Ledes from the Land of Enchantment

Hearing examiner recommends regulators deny LNG storage in Rio Rancho

A hearing examiner recommended New Mexico utility regulators reject a gas utility’s proposed liquified natural gas facility in southern Rio Rancho at an upcoming meeting in March.

The hearing examiner wrote the New Mexico Gas Company failed to “persuasively show” the facility was needed and the most cost-effective alternative, in a 123-page decision released Wednesday.

Chief Hearing Examiner Anthony Medeiros said the New Mexico Gas Company failed to “clearly demonstrate” the facility’s benefits and costs to determine if the project was contrary to the public interest.

“Accordingly, considering that the LNG Facility would not provide a net public benefit, the additional public interest considerations corroborate the Hearing Examiner’s findings that the LNG Facility would not promote the public interest,” Medeiros wrote.

Medeiros noted the record showed substantial benefits to shareholders, but the New Mexico Gas Company “neglected” to show how it would be cost-effective for the ratepayers.

Mariel Nanasi, executive director of Santa Fe nonprofit New Energy Economy, called the recommendation “quite thorough and pretty scathing against the gas company” and said the decision was a win for Rio Rancho organizers.

“I feel quite confident that the commission will uphold his recommended decision, but it is up to them,” Nanasi said.

A hearing examiner is equivalent to an administrative law judge, creating a legal record during disputes on state agency actions. The recommendation does not have legal weight, and the final decision rests with the three-member Public Regulation Commission.

The deadline for the Public Regulation Commission to make a decision on the case is fast-approaching, listed as no later than March 16, according to a scheduling order. The Public Regulation Commission can deliberate behind closed doors beforehand, but the final decision must be made in a public meeting.

The New Mexico Gas Company can list their objections with the hearing examiner’s recommendation by Feb. 28, and other parties can respond to those arguments by March 5.

“We are determining whether to file exceptions but no decision has been finalized,” said Tim Korte, a spokesperson for New Mexico Gas Company in an email to Source New Mexico.

The decision

The 12-million-gallon storage facility was first proposed in 2022. According to a timeline for the project, it would be in operation by winter 2026 if approved by state regulators.

The final costs for building and equipping the facility are unknown, but New Mexico Gas Company projected it to cost at least $180 million.

A map of of the proposed facility New Mexico Gas Company submitted to the New Mexico Public Regulation Commission for approval. (Courtesy of New Mexico Gas Company).

The New Mexico Gas Company argued that storage inside of New Mexico would “provide certainty about access to stored gas when needed most” on cold winter days or low supply. Officials also claimed it would protect customers from “market swings” on natural gas prices.

Currently, the company leases space at a salt cavern storage facility in Pecos County, Texas in the Permian Basin, to supplement gas supplies in the even of winter events, according to the document.

Environmental groups disputed those claims, saying in their objections the company failed to prove it would increase reliability, and failed to do its “due diligence” in picking the site.

Medeiros, the hearing examiner, applied higher scrutiny to the project, saying it was discretionary, because it was not needed to provide gas services, nor required by rule or law.

Much of the testimony alludes to the deadly Winter Storm Uri, which killed more than 200 people in Texas, but also spiked gas rates, which were often passed onto customers in surcharges.

New Mexico was spared much of the outages faced in Texas, and New Mexico Gas Company did not have to curtail services, but did incur “approximately $107 million in extraordinary gas costs over a period of six days.”’

The New Mexico Gas Company previously asked for a LNG storage facility at the same Rio Rancho site over a decade ago, after a 2011 winter storm where the company was forced to cut off or limit heat for more than 28,000 people. The gas company withdrew its application when intervenors argued its use did not justify projected costs of $40 million at the time, according to footnotes in the decision.

If regulators accept a separate rate hike based on those costs and approve the Rio Rancho storage facility, New Mexico ratepayers could experience a rate hike “of over 35% by 2027,” according to the decision.

Medeiros also noted the significant public opposition from residents, lawmakers and in a resolution from the Bernalillo County Commission, urging rejection of the facility based on concerns of health impacts.

Rio Rancho is one of the fastest-growing areas of the state, with 51 schools and multiple neighborhoods within 10 miles of the facility, according to the county commission’s resolution.

“Public opposition expressed against the proposed siting of the LNG Facility coupled with the significant unaddressed issues and concerns over the potential safety effects and environmental impacts associated with locating the Facility at [New Mexico Gas Company’s] predetermined location counsel against approval of the Application,” Medeiros wrote.



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