The Los Alamos County Council held a public hearing for changes to the natural gas rate ordinance and adopted the changes proposed by the Department of Public Utilities (DPU) Tuesday night.
The changes will take effect April 8.
DPU’s natural gas rate includes a fixed portion that covers operating expenses and a variable pass-through component that covers DPU’s actual cost of the natural gas commodity. The changes adopted are all in response to recent volatility in the cost of gas. The fixed rate portion did not change.
“In December, DPU began to see unprecedented increases in the cost of gas that exceeded the $0.99/therm rate cap on the variable rate component for gas,” DPU Utilities Manager Philo Shelton said, adding that the San Juan Index price was $1.03/therm in December, $3.30/therm in January and $1.15/therm in February. “The DPU’s bill for the cost of gas in January during peak heating season was $4.85 million in one month, which exceeded the department’s annual budget for gas of $4.31 million. After all the winter usage bills come due, the department is projected to have a $7.22 million revenue shortfall. For a community-owned utility, that’s a tough pill to swallow.”
Under the new ordinance, customers will see a new recovery rate component that allows DPU to recover actual costs incurred that were beyond the allowable charge under the previous rate ordinance. This new component equals $0.44/therm and will be charged until the previously unrecovered costs are collected, or up to two years, whichever comes first.
The other ordinance changes are an increase to the variable rate cap and a compensatory minimum value for the variable portion of the gas rate. All previous pass-through gas rate ordinances have capped the variable portion of the rate at $0.99/therm. This cap is the restraint that recently prevented full recovery of natural gas costs for the utility and is now set at $4.00/therm.
“As an enterprise fund, DPU needs to charge compensatory rates to cover the costs incurred,” Shelton said. “Increasing the rate cap protects this public utility from falling into a deficit.”
The compensatory minimum prevents the variable portion of the rate from falling below $0.11/therm and will soften any month-to-month rate swings caused by volatile commodity costs. Shelton pointed out that a compensatory rate for gas consumption is required by the County Charter.
Recognizing the potential impact rate increases can have on customers, DPU management has suggestions for softening it.
“If it helps you to know your monthly rate for gas in advance, you can find it on our website by the 8th of each month,” Shelton said. “We offer Budget Billing to help customers level out their bill payments, a Utility Assistance Program (UAP) for customers in need, and education programs regarding conservation to arm you with information to help you lower your energy and water bills.”
Utility customers are encouraged to sign up for Budget Billing if they live at a property with active utility service in Los Alamos for the past 12 months or more. Under Budget Billing, a customer pays the same amount each month for a year with a settling adjustment on the 12th month. This type of program can ease the burden of seasonally high bills. Information on Budget Billing can be found at https://ladpu.com/BBilling .
UAP is available to qualified low-income customers. Funded by donations from utility customers, the program assists with bills from October 1 through March 31 for most recipients. Year-round assistance may be granted for customers over the age of 65 or for those who are qualified through the Social Security Administration for Supplemental Security Income (SSI). UAP also provides one-time assistance to account holders who demonstrate need due to unforeseen or unusual circumstances. Information on UAP can be found at https://ladpu.com/assist .
Customers can lower their bills by reducing utility usage, even through simple methods that don’t require appliance replacements or large financial investments. For instance, a resident with a gas-powered hot water heater can reduce natural gas consumption by using less hot water. They can run the dishwasher only when it is full and take fewer or shorter showers. They can also adjust laundry habits by washing and/or rinsing with cold water instead of hot water. These types of habits will not only save money on gas but also on water. A couple of sites with low-or-no-cost utility reduction tips can be reached through https://ladpu.com/ReduceGas and https://ladpu.com/SaveEnergy .
More information about the new rates, including a detailed FAQ document, can be found online at: https://ladpu.com/rates under the folder “Recently Adopted Rate Changes.” The current gas rate schedule can be found at https://ladpu.com/gasratenow.