PRC hearing examiner recommends against LNG facility in Rio Rancho; decision expected in March

Community members, local and state officials and environmental advocacy organizations have been loud in their efforts not to let New Mexico Gas Co. set up a liquefied natural gas facility in Rio Rancho. It may not happen after all, if the New Mexico Public Regulation Commission next month follows a recommendation its hearing examiner released on Wednesday.

PRC hearing examiner Anthony Medeiros is advising state regulators not to allow New Mexico Gas Co. to build its proposed LNG facility, saying the facility wouldn’t provide the public benefit necessary to justify the facility.

New Mexico Gas spokesperson Tim Korte told the Journal the company is disappointed with the recommendation and is carefully reviewing the examiner’s decision.

The final say in the matter is up to the PRC commissioners. They’re expected to make a decision in March.

In December 2022, New Mexico Gas asked the PRC to approve a “certificate of public convenience and necessity,” or CCN, for the company, allowing it to build and run an LNG facility in Rio Rancho. The facility would cost about $180 million with contingency, according to the utility, and be operational by or during the 2026-2027 winter season.

This LNG facility request came in light of increased costs New Mexico Gas had to pay after the 2021 Storm Uri blew through New Mexico. Customers stopped paying a surcharge for those high costs last month.

New Mexico Gas contended a storage facility would help protect against extreme price volatility, which happened after Storm Uri.

The LNG facility would also replace the current storage arrangement the gas company has with the Keystone Storage Facility in the Permian Basin in Texas, according to the recommendation, which the New Mexico Gas Co. has concerns about regarding reliability and performance.

Organizations that oppose the LNG facility, including the Coalition for Clean Affordable Energy, New Energy Economy, Western Resource Advocates and the New Mexico Department of Justice — formerly known as the New Mexico Attorney General — disagree.

The recommendation says the intervenors don’t support the LNG facility largely because the gas company didn’t prove it would improve reliability or protect against price volatility, and the concerns with the Keystone facility are “exaggerated and controllable.”

Medeiros largely echoed these arguments in explaining why state commissioners shouldn’t allow the LNG facility.

He also said New Mexico Gas didn’t prove how the facility would be cost-effective for its customers, especially in light of benefits shareholders would get.

Additionally, Medeiros wrote, the gas company didn’t investigate alternatives sufficiently before making “a significant resource decision and committing to substantial, long-term capital investment expenditures” and didn’t update timely elements of its analyses of alternatives.

“Accordingly, the Hearing Examiner finds that the LNG Facility would not provide a net public benefit and therefore recommends that the Commission disapprove NMGC’s Application,” he wrote.

Medeiros said state regulators should also consider all the public opposition to this facility. Local residents rallied against the facility proposal last month, and state lawmakers and the Bernalillo County Board of Commissioners have asked the PRC to turn down the request as well.

They have voiced significant concerns with the potential safety and environmental impact and risks from an LNG facility. However, the hearing examiner didn’t take much space in the 173-page decision to touch on those concerns. Medeiros said because his recommendation is not to approve building the facility in the first place, “such findings would be superfluous in any event.”

Despite that, he said, his decision takes into account the legitimate concerns from “a substantial number of people who would have little choice but to live in the vicinity of the facility” as well as those of their elected county and state representatives.

Medeiros said the PRC needs to consider how the gas company didn’t clearly justify its need for the LNG facility and how any uncertainties with the facility could create unreasonable financial risks for customers.

New Energy Economy Executive Director Mariel Nanasi said in a statement on Wednesday the hearing examiner affirmed that a rigorous investigation into alternatives must happen before making a significant resource decision. She said now is a time to invest in efficiency and alternative clean energy resources, not “new fossil fuel infrastructure.”

“Today the people of New Mexico can breathe a sigh of relief,” she said. “We commend the hearing examiner’s diligence and careful application of the law, and look forward to the commission’s affirmation of the recommended decision.”

New Mexico Gas Co. has another case before the PRC that would increase monthly gas costs by about 11% for the average residential bill, according to the company’s 2023 application. A hearing is scheduled for April, though New Energy Economy on Tuesday asked the PRC to dismiss the case with allegations of misleading numbers on how the rate increase would impact people’s bills.