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The original item was published from 8/24/2021 7:36:46 AM to 9/4/2021 12:00:00 AM.

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Posted on: August 24, 2021

[ARCHIVED] Las Cruces Utility Successful Protesting Penalties and Price Hike from Winter Storm Uri

Utilities White Pipe

The Federal Energy Regulatory Commission (FERC) approved a waiver of all penalties and interest associated with Winter storm Uri imposed by El Paso Natural Gas Company (EPNG) on utilities, including Las Cruces Utilities (LCU). LCU also negotiated a $1.76 million reduction of the February 2021 invoice from its natural gas commodity supplier. As a result, LCU will reduce the time period of collecting the “emergency commodity recovery surcharge” added to customers’ monthly bills in June from 30-months to approximately 20-months.

The surcharge reflects the recovery of costs related to the extraordinary spike in the market price and penalties for natural gas caused by the February storm. “LCU appreciates EPNG’s request to the FERC to waive all penalties and interest due to storm Uri. The ruling will positively impact our customers by decreasing the recovery surcharge by ten months,” said LCU Gas Business Analyst Mario Puentes.

Utilities across the region experienced exorbitant high prices for natural gas as demand spiked and supply was exceptionally low. Winter storm Uri caused a disruption in the natural gas supply chain extending across the United States, Northern Mexico, and parts of Canada. “In fact, up to 80 percent of natural gas production in the Permian Basin went off-line, many gas utility companies just couldn’t get the supply onto the EPNG pipeline,” added Puentes.

As a result, EPNG, LCU’s natural gas transportation provider, assessed $192 million in total penalties to regional utilities, $4.9 million to Las Cruces. “In March, LCU and many other utilities protested the penalties. We are grateful that EPNG agreed with our position and made the request to the FERC to waive the penalties,” said LCU Deputy Director Business Services Jose Provencio.

In addition, to protesting the transportation penalty, LCU and the City of Las Cruces also disputed the February natural gas price hike. “Reaching an agreement on the February fuel price is a result of our long-term business relationship, we appreciate that our supplier was able to provide a relief to our customers, this was a priority when we initiated the protest,” said Provencio. LCU customers pay the market price of natural gas, the city owned utility supplies the fuel to its customers as a pass-through cost without a mark-up or profit.

Waiving the penalties and reducing the February invoice price allows LCU to cut the recovery period to customers from approximately three years to less than two. “The Uri storm was a once in decade occurrence that caused cascading events along the supply chain. As a utility, LCU did everything to provide uninterrupted gas service during the storm and will initiate studies to evaluate alternatives to lessen the impact of possible supply disruptions in the future,” said Provencio.

The emergency commodity recovery surcharge is $1.69 per dekatherm and will be removed from customers’ monthly bills once the cost of natural gas incurred during the February storm is recovered. LCU estimates the surcharge to culminate in November 2022.

For more information and updates, visit the LCU website or call customer central at 541-2111. The TTY number is (575) 541-2182.

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