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New Mexicans Win! PRC Issues Final Order Rejecting New Mexico Gas Company proposed LNG plant



Today the Public Regulation Commission held a Special Session in which it unanimously approved a final order in Case No. 22-003039-UT denying the New Mexico Gas Company’s application for a Certificate of Convenience and Necessity (CCN) to build a Liquefied Natural Gas (LNG) plant in Rio Rancho. The Final Order mimics what the Commission discussed at today’s open meeting “NMGC has failed to establish that the LNG Facility provides a net public benefit, that NMGC adequately considered alternatives to the LNG Facility, or that the LNG Facility is the most cost-effective among feasible alternatives.” (Final Order, p. 5, ¶14.)


In considering whether to grant a CCN, a project must be proven to provide a “net benefit to the public,” and the utility must also show that it has considered (financial and storage) alternatives, confirming that the resource it is proposing is the most cost-effective among feasible solutions. The Hearing Examiner’s Recommended Decision in this case affirmed New Energy Economy’s arguments, finding that NMGC failed to provide convincing evidence of either standard, and that “NMGC failed to perform the rigorous investigation that a prudent utility should perform prior to making a significant resource decision.” (Final Order, p. 2, ¶4.)


The Recommended Decision stated “the evidence indicates that the proposed LNG Facility is not required for NMGC to provide reliable service” and that “while the record shows a substantial benefit to Emera shareholders in terms of after-tax return on equity (ROE) and enhanced earnings with the LNG Facility in rate base, NMGC neglected to provide a corresponding quantification of benefits to ratepayers and, crucially, failed to show that the Facility would be cost-effective for ratepayers.”


Internal documents obtained during the case revealed the true intent behind NMGC's proposed LNG plant - an explicit plan to expand the use of gas and increase ratebase from $833 million in 2023 to $1.229 billion in 2027 “primarily resulting from the construction and ownership of the LNG storage facility."


As Commissioner O’Connell commented during today’s Special Session “The company’s own testimony is that it is more expensive than the status quo…Will this solve the risks? The testimony is that it doesn’t solve the big risks. You know, very expensive customer bills like what we saw last winter… Also the risk of loss of supply. That comes from the interstate pipe system...I’m sitting here balancing the certainty of an expensive facility against uncertain benefits. And so it’s hard to say yes to that.”


Commission Ellison also rightly pointed out that New Mexico Gas Company failed to consider alternatives, and that a careful analysis of the benefits of financial hedging needs to be undertaken.


This is a victory for the health, safety and economic security of New Mexicans. We applaud the Commission for their decisive rejection of the proposed plant and for their careful consideration of the facts in this case - that an expensive and dangerous plant was being proposed without proof of any real benefit to customers. Instead of being locked into a fossil fueled plant for the next 30 years, we can now invest in energy efficiency, electrification and a transition to solar and wind energy to heat our homes.

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