The New Mexico Public Regulation Commission will hear arguments for and against a new liquified natural gas storage facility rather than accepting a settlement stipulation between New Mexico Gas Company and the PRC staff.
The commission voted 2-1 on Thursday rejecting the settlement in favor of moving forward with the hearing process. The commission has until March 2024 to decide whether to grant this request.
That timeline was one of the reasons given for accepting the stipulation. The hearing itself in the process will take place Dec. 4 through Dec. 8. Following that hearing, the parties to the case will have time to file post-hearing testimony.
But all four of the intervenors opposed the stipulation. Those intervenors include the New Mexico Office of the Attorney General, Western Resource Advocates, New Energy Economy and the Coalition for Clean Affordable Energy.
Should the state regulators choose to approve the application, a new liquified natural gas storage facility will be built on the outskirts of Rio Rancho. In its application last year, the utility referenced a severe winter storm of February 2021 known as Storm Uri that forced natural gas utilities to pay high prices for natural gas. In one week that month, New Mexico Gas Company paid more than $107 million for natural gas, which is roughly equivalent to what it paid for natural gas in the entire year of 2020.
These costs were passed on to customers in the form of a charge on their monthly bills that will be in place through December of this year.
New Mexico Gas Company says that a liquified natural gas storage facility would provide a reliable supply for customers and a buffer from price volatility related to things outside of the utility’s control.
However, the proposed facility could also lead to an increase in customer bills of approximately 3.2 percent, or $3.13 for the average gas utility customer, according to the application. This would be done through a rate case that would incorporate the costs of constructing the facility into customer bills. New Mexico Gas Company projects that it will cost $180.9 million to construct.
The utility currently leases storage space at the Keystone Storage Facility in Texas. Should it construct the Rio Rancho facility, the new storage facility will eventually replace the Keystone facility as the place where New Mexico Gas Company stores its liquified natural gas.
The utility hopes to have the Rio Rancho facility filled during the summer and fall of 2026 so that it will be available during the winter of 2026 and 2027 when there is peak demand for gas to heat homes.
The New Mexico Office of the Attorney General argued that a hearing is needed to determine if the facility would indeed improve reliability and mitigate price volatility.
Meanwhile WRA argued that the “marginal improvements to reliability provided by the LNG Facility do not justify the costs and, as such, are not in the public interest,” according to PRC documents.
NEE went further than WRA and stated that the risks of the facility outweigh potential benefits and that alternatives were not adequately investigated. Additionally, NEE states that the facility would lead to continued carbon emissions.
CCAE argued that the utility “has not done its due diligence to consider equity impacts to its customers or nearby communities,” PRC documents state.