Santa Fe Standard

From December 23, 2022

Officials from the Los Alamos Department of Public Utilities (DPU) are encouraging county residents to consider the impact of natural gas usage on their pocketbooks this winter as rising market costs are driving the local natural gas rate up. The high price may motivate consumers to use less natural gas than usual when they are able to do so.

“The market price that DPU pays for gas is more than double what it was at this time last year,” said DPU Utilities Manager Philo Shelton. “With gas consumption rising as it gets colder, winter utility bills will be higher than in the past and those high rates may last a while.”

Abbey Hayward, DPU’s water and energy conservation coordinator, said there are things residents can do to reduce the financial impact of heating their homes this winter. Aside from the obvious suggestion of putting on extra layers to turn down the heat, Hayward suggests the following.

• Seal air leaks around doors and windows, behind outlets and around plumbing pipes.
• Wash laundry with cold water.
• Keep fireplace dampers closed when the fireplace is not in use. An estimated 8% of heat loss escapes through the chimney.
• Prepare several meals in advance so you can maximize residual oven and stove heat without reheating cooking appliances daily.
• Put your thermostat on a schedule: 68F when home during the day, 62F at night or when away.
• Cover bare floors with rugs or carpets and replace light curtains with thicker drapes.

In Los Alamos, natural gas customers pay a pass-through cost-of-gas rate. More specifically, they pay a 3-piece charge that includes a standard service charge, a fixed rate per therm and a variable rate per therm. That variable rate changes from month to month to match the customer’s share of the actual cost that DPU paid to purchase the natural gas commodity. The fixed rate and service charge cover the expenses budgeted for infrastructure, maintenance and operations.

DPU’s pass-through rate for customers is capped at $0.99/therm plus the fixed rate portion of $0.25/therm, and 2021 was the first time that the rate had ever exceeded $1/therm. Since then, it has been greater than $1/therm five times and has now reached its all-time high of $1.24/therm—the variable $0.99/therm cap plus $0.25/therm fixed charge.

With gas costs continuing to rise, DPU management predicts the rate will stay at or near the cap for the foreseeable future. There are two considerations to keep in mind about the cap. 1) It doesn’t prevent the full costs from being passed back to customers, it simply postpones pass through of the full cost. In other words, if the rate should have been $1.30/therm but was capped at $0.99/therm, there is still $0.31/therm that will need to be collected and that will be pushed forward to a later date in time. 2) It doesn’t include the $0.25/therm fixed portion of the rate. Customers will be billed $1.24/therm at the cap.

Original source can be found here.