by G.H. Scott
Published in the Las Cruces Sun-News 09.05.2021
While we continue savoring the waning days of summer, Winter Storm Uri is still making news for Las Cruces Utilities (LCU) and customers. Recently the Federal Energy Regulatory Commission (FERC) approved the LCU challenge of all penalties and interest from Winter Storm Uri levied by El Paso Natural Gas Company (EPNG). LCU was also successful in negotiating a $1.76 million reduction of the February 2021 invoice from its natural gas commodity supplier. The FERC’s decision and invoice adjustment with the supplier, benefits LCU customers as the City owned utility will shorten the collection period from 30-months to 20-months for the “emergency commodity recovery surcharge” that began with the June monthly bills.
“LCU appreciates EPNG working with our team to request a waiver of $4.9 million in penalties and interest due from Uri. This development is a win for customers as the surcharge will be shortened by ten months,” said LCU Gas Business Analyst Mario Puentes. The LCU surcharge reflects the recovery of costs related to the spike from the market price and penalties for natural gas caused by the February storm.
Attorney John Gregg, an expert in how natural gas is priced, transported, and regulated says Uri created a gas shortage of a magnitude and duration not seen in the Southwest before. “Demand for natural gas in other states also was high and competed for supplies of gas that otherwise might have flowed on EPNG’s pipeline,” said Gregg.
Interstate natural gas pipelines like EPNG transport volumes of natural gas around the country under high pressure. If more gas is withdrawn than is injected, the pressure drops and when that happens natural gas stops flowing, and customers are stranded. To prevent this from occurring, FERC allows transport providers such as EPNG to impose penalties on utilities who fail to deliver sufficient natural gas onto the pipeline.
Prior to Uri, LCU ordered extra gas in anticipation of cold weather, but the supplier was unable to meet the additional requests invoking a “force majeure.” It was a scramble over President’s Day weekend to find gas wherever possible, since the price of natural gas is not regulated, sellers were demanding extraordinary prices. “The record shows that LCU ordered sufficient quantities of gas to serve its customers and comply with the pipeline tariff and agreed to pay prices never imagined,” said Gregg.
It is not common for penalties to be forgiven or waived, and FERC seldom steps in. FERC agreed that EPNG should waive all of its penalties ($192 million) as it had agreed to for other pipelines affected by Uri. “However, EPNG did not file a request for waiver until after LCU and several other utilities filed complaints with FERC asking to direct a waiver, thus there were several months of uncertainty for LCU,” said Gregg.
“As a utility, LCU did everything to provide uninterrupted gas service during the storm and will study alternatives to lessen the impact of possible supply or price disruptions in the future,” said LCU Deputy Director Business Services Jose Provencio.
LCU Customer Central can be reached at 575-541-2111 from 8 a.m. - 6 p.m. Monday through Friday. LCU provides clean, safe, and reliable services to Las Cruces residents and businesses. Learn more at: las-cruces.org/180/Utilities For emergencies, call Dispatch at 526-0500.
PHOTO 1: “An LCU gas crew expels trapped air out of the newly installed natural gas line”- Courtesy of Cassie McClure