COUNTY News:
The natural gas rate structure for Los Alamos Department of Public Utility (DPU) customers was updated in April. As temperatures outside drop and customers notice their gas charges rising, the Los Alamos Department of Public Utilities (DPU) offers the following information to help customers understand the breakdown of the rate.
The total gas charge on a customer’s bill comprises a flat monthly service fee plus three other components that make up the variable portion of the rate. Those are a fixed cost per therm, a variable pass-through cost of gas per therm, and a sunset recovery mechanism per therm.
Fixed cost per therm
The fixed component covers DPU’s natural gas maintenance and operations expenses. DPU collects this portion of the rate to ensure the gas distribution system infrastructure is safe, reliable, and well-maintained, and to pay the labor and benefits costs to make that happen. For residential and commercial customers, this rate is $0.27/therm.
Pass-Through Cost of Gas
The pass-through rate allows DPU’s actual cost to purchase the natural gas commodity to be passed directly to the customer. This price is projected each month based on the San Juan Index and then adjusted based on the actual cost from the prior month to ensure a settling of true costs. This piece of the rate has a minimum value of $0.11/therm and a maximum rate of $4/therm. The minimum value helps to prevent wild swings in the rate that were occasionally seen prior to the rate structure adjustments made in April. While the greatest value that DPU has thus far charged for this portion of the rate is $1.07, the maximum was set at $4 to ensure the DPU’s cost to obtain the commodity can be recovered in case of unprecedented increases in costs. As such, DPU’s ability to continue purchasing the commodity for distribution to Los Alamos County customers would not be at risk.
Sunset Recovery Mechanism
The April update to the rate structure included a temporary mechanism to recover cost-of-gas expenses that DPU was unable to pass through to customers last winter when gas costs exceeded historical norms. The previous maximum cap was set at $0.99/therm and it wasn’t quite enough to capture all costs. The recovery rate mechanism began in April and will end when DPU’s uncollected costs have been recovered or in two years, whichever comes first.
The variable portion of DPU’s natural gas rate is updated on the 8th of each month based on San Juan Index pricing. In December, the variable portion of the gas rate is $0.42/therm, plus the fixed portion of $0.27/therm, plus the recovery rate of $0.44/therm, for a total of $1.13/therm.
To budget for seasonal fluctuations in utility costs, DPU management encourages customers to participate in the Budget Billing program where monthly bills are levelized to prevent large seasonal fluctuations that are often caused by winter heating and summer irrigation. More information on that program can be found at https://ladpu.com/BBilling.
Additionally, customers can check their utility usage at any time on the Automated Metering Infrastructure customer portal. Find information at https://ladpu.com/step1.
The gas rate schedule and calculation are posted monthly on DPU’s website at https://ladpu.com/rates.