By Robert Gibson
Chair
Los Alamos County
Board of Public Utilities

There’s no way to sugar coat this. Utility rates will be going up. 

The Board of Public Utilities (BPU) and then County Council will soon be considering several utility rate increase proposals from the Department of Public Utilities (DPU). Why?

Inflation is the underlying driver. Most utility costs increase at least as fast as general inflation. Some costs, particularly construction materials and electrical distribution equipment, have gone up much more than the familiar Consumer Price Index (CPI).

Water rates are already slated to increase by 6% in October to cover recent inflation. A similar scheduled increase in natural gas service charges will be offset for typical customers by a discount DPU obtained on wholesale purchases of gas itself.

Wastewater rates are proposed to increase 7% in July. This is largely due to inflation in construction costs for the new White Rock wastewater plant. This increase was not from “gold-plating,” “scope creep,” or anything locally controllable. Concrete, steel, and other construction costs are rising steeply everywhere. Those cost escalations were partially offset by financing the project with a State loan at essentially zero interest. (If only we could get mortgages at that rate!)

The largest and most visible increase proposed is another overall 9% increase in electric rates, starting in July. Most of that would be in the service charge. On top of two other recent 9% increases, this would bring the compounded electric rate increase to 30% in just 21 months. This looks terrible; no argument. It is far higher than inflation over this period. But inflation is behind it, too.

There were no electric rate increases between February 2015 and October 2023. During that eight-plus years, our electric utility more than consumed its previously healthy reserves. That was good for customers but was obviously not sustainable, leading directly to this round of steep hikes.

By July, it appears CPI will have increased around 36% since 2015. The proposed electric rate changes still lag even that index, let alone the more relevant and higher electric utility indices. Hold on to your wallets. Another substantial rate hike will be necessary next year to finish “catching up” with the past decade’s inflation.

To complicate matters, a restructuring of electric rates is proposed in the same ordinance, to be effective in late 2026. That would make major changes in rates and how they are applied, but would not hike bills to the average customer. This restructuring may yet get separated for more deliberate and timely consideration.

These higher electric rates should not discourage conversions from natural gas. Natural gas bills are derived differently and are more directly dependent on the fluctuating market cost of gas itself.  Altogether, over the past decade, natural gas bills to typical customers will have gone up almost exactly the same as electric.

DPU is financially separate from the general county government. Each utility (electric, gas, water, wastewater) stands on its own. Operating and most capital expenses can come only from charges to customers.

To help offset some of the increases in bills, DPU has bolstered its donation-funded Utility Assistance Program to help customers in need. More donations are always welcome.

BPU and Council must concur on any utility rate changes. The BPU hearing on both wastewater and electric rates is scheduled for April 16. Both bodies know nobody likes utility rate increases and they are more of a burden on some than others. You are welcome to tell us that, but it is not necessary. For any inputs, BPU can be addressed either at the hearing (in person or via Zoom at ladpu.com/ratehearing) or prior via email at bpu@lacnm.us.

Note: This column represents the individual views of its author, not necessarily those of the Board or Department of Public Utilities.