Photo of gas flare by Varodrig

Utility agrees to drop hydrogen-blending pilot, cut proposed rate increase in half, advocate for legislation enabling low-income utility rates

For immediate release: May 23, 2022

On Friday, Coalition for Clean Affordable Energy, Western Resource Advocates, PRC staff, the New Mexico attorney general, New Mexico Affordable Reliable Energy Alliance, New Energy Economy, and Incorporated County of Los Alamos reached an agreement with New Mexico Gas Company on its rate case, which had included plans to charge customers for a pilot to blend hydrogen into its gas supply and for compressed-natural-gas (CNG) fueling stations. 

The settlement included: 

  • Agreement that NM Gas will not provide any customers a blend of hydrogen and natural gas without seeking the PRC’s approval in a future case;
  • Agreement that NM Gas will use shareholder funds to pay for its Phase 1 pilot study and will share all data and findings from Phase 1 with parties in this matter.
  • Agreement that the utility will share testing results of a pilot that is studying the impacts and potential hazards of hydrogen on household appliances; 
  • Agreement to analyze electric options when the company purchases passenger vehicles and trucks and to “show a preference” for electric passenger vehicles and trucks when feasible;
  • Agreement to end an offer to finance, construct, and operate compressed natural gas fueling stations for customers on the customers’ property; and
  • Agreement to analyze the feasibility of electrifying some or all of the company’s compressor stations.

Although not included in the settlement, the utility also agreed to work with WRA, CCAE, NEE and others on a legislative proposal to enable reduced utility rates for lower-income New Mexicans. 

Statements in response: 

“New Mexico Gas Company originally requested millions of dollars to test a blend of hydrogen and methane on a section of the company’s system that serves hundreds of customers. But the company has not even completed its initial tests of the safety and air-quality impact of running appliances on a hydrogen blend in a laboratory setting,” explained Sara Gersen, a senior attorney at Earthjustice who represents CCAE in the case. “In the settlement, the company agreed to conduct additional analysis before using hydrogen in its distribution system. Without the distraction of this hydrogen pilot project, New Mexico’s leaders should tackle climate and air pollution by helping customers upgrade to zero-emission electric appliances and quit burning fossil fuels in their homes and businesses.”

“We not only negotiated lower residential rates than the company proposed in its application, but we successfully advocated for New Mexico Gas Company to study important health impacts of residential hydrogen-blend projects. New Mexico Gas must report on indoor air-quality measurements as part of its Phase I hydrogen blend project,” said CCAE attorney Cara Lynch.

“The agreement to work with advocates to develop a low-income rate proposal is wonderful news! A reduction in energy burden via low-income rates will help many New Mexican families who are struggling to balance high energy bills, housing costs, and other essential expenses,” said Tammy Fiebelkorn with Southwest Energy Efficiency Project. 

“This settlement agreement makes important improvements to New Mexico Gas Company’s initial request, including a lower rate increase than the company had sought and steps to strengthen the company’s plans to address climate change,” said Pat O’Connell, deputy director of Western Resource Advocates’ Clean Energy Program. “We look forward to continuing our work with New Mexico Gas Company on further ways to reduce the harmful methane pollution that is a significant contributor to the harmful fossil-fuel emissions that cause climate change.”

“Hydrogen derived from natural gas, the type proposed for this gas blending project, faces nearly insurmountable challenges avoiding emissions of methane and carbon dioxide when it is produced,” said Thomas Singer, Senior Policy Adviser at Western Environmental Law Center. “The gas company’s attempt to get ratepayers to foot some of the bill for this climate polluting project was ill-advised, and we hope to see the company shift focus to research, development, and demonstration projects that reduce greenhouse gas emissions, not increase them.”

Contact: Cara Lynch, Coalition for Clean Affordable Energy, lynch.cara.nm@gmail.com, 1-505-977-3025 

Sara Gersen, Earthjustice, counsel for CCAE, sgersen@earthjustice.org, 413-212-3100

Julianne Basinger, Western Resource Advocates, julianne.basinger@westernresources.org 

Thomas Singer, Western Environmental Law Center, singer@westernlaw.org 505-231-1070

Community groups, NM Gas settle on hydrogen, rate proposal