PRC denies request to build LNG storage facility

The New Mexico Public Regulation Commission unanimously rejected a request by the New Mexico Gas Co. to build, own and operate a liquified natural gas storage facility in Rio Rancho. During a special meeting on Thursday, commissioners said that the costs related to the proposed facility outweighed the benefits that it could provide to consumers […]

PRC denies request to build LNG storage facility

The New Mexico Public Regulation Commission unanimously rejected a request by the New Mexico Gas Co. to build, own and operate a liquified natural gas storage facility in Rio Rancho.

During a special meeting on Thursday, commissioners said that the costs related to the proposed facility outweighed the benefits that it could provide to consumers in terms of reduced exposure to price spikes and increased reliability during winter storms.

Commissioner James Ellison said he does believe that if NM Gas Co. had operated such a facility in 2011, it would likely have prevented 30,000 customers in northern New Mexico losing access to natural gas during a winter storm. Additionally, he said it could have saved the company $14 million during a winter storm in 2021 that led to spikes in natural gas prices. Those gas spikes led to $107 million in additional costs to purchase gas for customers.

But, to get those benefits, it would cost $20 million a year and those extreme winter storms are infrequent events. Those costs would likely have been borne by ratepayers.

“It seems like a fairly hefty price tag to pay for something that should occur on a relatively infrequent basis,” Ellison said when discussing the potential of improved reliability.

NM Gas Co. currently rents storage capacity at the Keystone facility in Texas, which will remain an option going forward. Had the PRC approved the storage facility in Rio Rancho, it would have replaced the rented capacity at Keystone.

The commission did not discuss the various concerns regarding air quality and public health impacts. While located within Rio Rancho, the proposed facility would have been close to several Albuquerque neighborhoods as well as schools.

Commissioner Gabriel Aguilera said he is glad that the application received a thorough review.

“I want to thank all of the parties that participated in and made tremendous efforts to make sure that this case was discussed to the length that it was,” Aguilera said. “It’s a case of a lot of significance and so I’m glad that it got the attention that it deserved.”

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