After less than a year, NM Gas Co. will ask for another rate hike
New Mexico Gas Co. has announced its intention to seek a rate increase from state utility regulators in September, a move that comes less than a year after implementing its most recent rate adjustment. The company has received an extension to submit its application for the proposed rate increase, with a deadline set for September 15, as disclosed in filings with the Public Regulation Commission.
Pending approval from the Gov. Lujan Grisham-appointed PRC and a potentially lengthy hearing process, the new rates could become effective in October 2024. However, the specifics of the forthcoming rate increase application, including the requested amount and the underlying cost factors, remain undisclosed. Tim Korte, the spokesperson for New Mexico Gas, has refrained from providing detailed information, stating that the company is diligently working on the rate case and will unveil the details upon filing.
The most recent rate increase, which became effective in January, resulted in an average monthly rise of $3 for residential gas bills. This increase followed the natural gas utility’s ongoing efforts to balance its financial structure.
Meanwhile, New Mexico Gas is advancing plans for a liquefied natural gas (LNG) storage facility in Rio Rancho, despite opposition from rabidly anti-oil and gas eco-leftists, many of whom want even gas-powered kitchen stoves banned.
The proposed facility, estimated to cost approximately $180 million, has prompted debates regarding its necessity and safety. Korte clarified that the expenses related to this facility would not be included in the imminent rate increase but would be gradually incorporated into gas bills after the facility becomes operational, likely in 2027.
According to the company’s application for the facility, the projected cost on an average bill would amount to $3.13 per month, with a decreasing price trajectory in the subsequent years due to depreciation.
The origins of this initiative can be traced back to a directive from the commission, which instructed New Mexico Gas to explore measures aimed at shielding consumers from market volatility. This move followed the significant financial impact of Winter Storm Uri in February 2021, which incurred a staggering $107 million in costs for New Mexico Gas ratepayers over a span of a week. The financial burden associated with this event will persist until December, as consumers continue to cover the expenses resulting from the market fluctuation.
In response to these market dynamics and the commission’s directive, the company initiated plans for the LNG storage facility. A commission proceeding is scheduled in the near future to assess the viability of the project. Various groups, including the environmentally focused New Energy Economy, Western Resource Advocates, and the state Attorney General’s Office, have become involved in the process by intervening in the case.
Mariel Nanasi, Executive Director of New Energy Economy, expressed her skepticism about the facility, citing concerns about potential risks such as gas explosions. She questioned whether the touted benefits of the project outweighed the inherent dangers. In response, Korte emphasized the company’s commitment to implementing the best practices accumulated over 40 years of operating similar LNG storage facilities to ensure safety and minimize risks.
Other intervenors are currently evaluating the project’s merits, withholding judgment until a comprehensive assessment is conducted on New Mexico Gas’s plans and their potential impact on ratepayers.
Korte reiterated the company’s assertion that the new LNG storage facility would ultimately prove advantageous for gas customers. Citing extensive research and analysis, he maintained that the facility’s projected savings for ratepayers exceed the associated costs, providing tangible benefits to consumers.
The unexpected move to request the rate hike comes amid radical anti-energy policies being implemented in New Mexico after the passage of the Energy Transition Act (ETA), which is the state’s version of the Green New Deal championed by socialist Congresswoman Alexandria Ocasio-Cortez (D-NY). Nationally, the Joe Biden administration has harshly attacked the oil and gas industry, leading to rising gas prices, peaking in June 2022 at an average of $4.831 per gallon. Since the beginning of the year, gas prices, which momentarily dipped, have increased again.
