Hearings set for Rio Rancho gas storage plan
Attorney General’s Office, environmental groups call $180M facility risky, costly
Opponents of a liquefied natural gas storage facility proposed for Rio Rancho say the project would have detrimental effects not only on surrounding residents but also on the pocketbooks of New Mexico Gas Co. customers.
Construction of the facility could add about $3.13 to average residential monthly gas bills starting in 2026, its first year of operation, according to the utility’s application to state regulators.
New Mexico Gas Co. officials contend the project is necessary for price control and reliability. They say they developed the plan after former members of the Public Regulation Commission ordered the company to mitigate price spikes — like the one that cost customers more than $100 million during six days of Winter Storm Uri in February 2021.
The current three-member Public Regulation Commission is expected to decide whether the utility can go ahead with the gas storage project in the coming months.
Beginning Monday, hearings are scheduled to take place before the commission, involving attorneys representing the utility company as well as several groups opposing the project.
Regulators then will decide whether to grant approval for the facility, which the utility says would cost about $181 million and span 25 acres on the southern edge of Rio Rancho.
The project has met opposition from the state Attorney General’s Office as well as from three advocacy groups: Western Resource Advocates, New Energy Economy and Coalition for Clean Affordable Energy. All three will present expert witnesses and cross-examine the utility’s executives during the commission’s hearing.
In testimony, the groups have accused the company of understating the project’s costs and neglecting to analyze other options to mitigate natural gas price spikes.
The company proposes building the liquefied natural gas storage facility on the same site it identified for a similar facility more than a decade ago, Andrea Crane, a utility expert and witness for the Attorney General’s Office, has testified. Although analysis was performed to determine the viability of the location, Crane argues, the site was chosen in advance.
The Attorney General’s Office has argued the facility risks putting “stranded assets” on gas customers, given “the general uncertainty surrounding the long-term future of natural gas in New Mexico and elsewhere.”
Santa Fe-based New Energy Economy has argued the project is being proposed to ensure a growing rate base, and therefore return for shareholders, for New Mexico Gas Co.
Executive director Mariel Nanasi provided an internal report from the company that states the utility “would be positioned to leverage the investment in LNG storage and liquefaction to pursue future growth and obtain new revenue,” listing a national laboratory and Department of Defense facilities as emerging fuel customers.
Nanasi has argued former commissioners instructed the company
to address price fluctuations and instead it produced a plan that seeks to address reliability.
New Mexico Gas Co. spokesman Tim Korte wrote in an email Friday the facility is a capital expenditure, and costs would be added to rates if approved in a future proceeding, but he said that was “a consequence, not the rationale” of the project.
“The proposed facility is about reliability and price volatility protection,” Korte wrote. “We
believe the facility is needed, will deliver value for customers, and look forward to providing
our perspective to the hearing examiner.”
The hearings will be run by commission staff hearing examiner Anthony Madeiros, who was in charge of recent hearings for Public Service Company of New Mexico’s rate case, on which commissioners recently ruled.
On Thursday, several dozen residents and climate activists who oppose the project held a rally outside New Mexico Gas Co.’s office in Albuquerque, calling on the company to withdraw its application from the commission. During a public hearing in November, dozens of residents, many of whom belonged to neighborhood associations located near the proposed facility’s site, spoke against the company’s plans.
Fourteen state legislators from Bernalillo County signed a letter in November opposing construction of the facility, citing safety risks from possible gas leaks and fires as well as exacerbated air quality problems in “the most populated valley in New Mexico.”
The Bernalillo County Commission passed a resolution against the proposed facility in October.
The company has a pending rate case with the commission: It requested an 11% rate hike in September. Costs of the proposed liquefied natural gas facility are not included in the pending rate case.