NM: $180M LNG Storage Facility Close to Denial

Update: The New Mexico Public Regulation Commission has officially denied New Mexico Gas Company's proposed LNG storage facility (March 14, 2024). 

This week, the New Mexico Public Regulation Commission received a Recommended Decision to reject New Mexico Gas Company’s proposal to build a new liquefied natural gas (“LNG”) storage facility. The Commission should adopt this decision, which would represent a major win for the climate and affordability.  

The LNG storage facility, if approved, would cost gas customers more than $180M over the next 30 years – even as New Mexico takes strides to reduce gas use in homes in order to meet climate goals. This Recommended Decision is a step in the right direction towards securing an affordable transition to clean, all-electric buildings in the state. 

LNG Facility Deemed Not Necessary 

New Mexico Gas Company sought to gain approval of the costly LNG storage facility to store and deliver gas to in-state customers, arguing that the facility would bolster system reliability and improve customer affordability during extreme weather events. The Recommended Decision affirms stakeholders’ arguments that evidence in the case proved that the facility was not truly necessary to improve reliability or reduce costs for customers.  

To the contrary, NRDC, Western Resource Advocates, and other parties argued that approving an $180M gas facility as New Mexico transitions to clean, all-electric buildings to cut climate emissions would represent a gross misuse of gas customer money – increasing customer bills while delivering no benefit to New Mexico households. 

The Recommended Decision asserts that New Mexico Gas Company failed to show the facility would be cost-effective for ratepayers and found that the facility “would not promote the public interest.” 

Tribal and Environmental Concerns  

The Recommended Decision also noted that there is strong public opposition against the siting of the facility and “significant unaddressed issues and concerns over the potential safety effects and environmental impacts” with locating the facility at the gas company’s proposed site. The LNG facility would have been situated only 1.35 miles from the Petroglyph National Monument, a site of cultural significance to tribes in the area – and yet the gas company had not adequately consulted with local tribes or pueblos prior to requesting project approval. The company also failed to analyze the facility’s potential air and water impacts, including climate emissions that would result from the LNG facility’s use. 

The Future is All-Electric 

The proposed LNG storage facility has no role to play in New Mexico’s clean energy future, particularly as the state transitions to zero-emission, electric buildings to meet climate targets. New Mexico has a goal to reduce emissions 45% by 2030 and is committed to transitioning to a zero-carbon electricity system by 2045.  

To decarbonize buildings, New Mexico’s Draft Climate Action Plan recommends converting at least 1/3 of gas space and water heating in the state to clean, all-electric appliances by 2030, and Governor Lujan Grisham has pledged to deploy 20 million electric heat pumps across New Mexico by the same year. Even New Mexico Gas Company’s parent company, Emera Inc., recognizes that the future is all-electric, stating that “[a]cross all industries, the transition [to cleaner energy] is heavily reliant on electrification.” 

As households transition to clean, electric appliances, states must take action to reduce unnecessary gas system spending. This is critical to ensuring that households who remain on the gas system the longest – who, without intervention, are likely to be low-income households – are not left paying for underutilized gas investments as better-resourced households transition to clean energy. With this Recommended Decision, New Mexico takes a step in the right direction towards protecting households – and the climate – from poor gas investments.  

The New Mexico Public Regulation Commission will vote on whether to adopt the Recommended Decision shortly.