The cost of natural gas rose significantly in the middle of February. As a result, Los Alamos customers can expect to pay more for gas consumed beginning this month according to officials with the Los Alamos Department of Public Utilities (DPU). The charge of $0.55 per therm in March was raised to $1.22 per therm on April 8. This charge could continue for the next four to six months.
Cause for the escalated costs is traced back to the arctic cold snap that occurred the week of February 14. While the natural gas supply for Los Alamos was not threatened, the spot prices for natural gas increased dramatically due to a decrease in production in Texas. The U.S. Energy Information Administration (EIA) reports that natural gas production in Texas fell by almost 45 percent.
DPU budgeted $382,802 for the month of February 2021 to supply natural gas to its customers throughout the county based on historical expenses that generally fluctuate between $200,000 and $400,000. Actual expenses for February, however, were over $1.3 million. While the spike in the market price lasted only six days, DPU will recoup these expenses from its customers over a four- to six-month period, the estimated time to recover these costs.
Eight years ago, the Board of Public Utilities and the County Council adopted an ordinance to change the natural gas rate structure from a fixed rate per therm to a “pass-through” structure. The pass-through structure allows the DPU to be flexible to the market and recover cost fluctuations in near real time. This eliminates the need for DPU to collect from its customers an additional fee to maintain a large rate stabilization fund, benefiting customers immediately when the cost of gas is low as it has been for the past several years. The EIA indicates on its website that in 2020, U.S. natural gas prices were the lowest in decades.
Under the pass-through structure, distribution expenses are charged separately as a fixed rate of $0.23 per therm and DPU’s actual cost of gas is passed through directly to customers at an amount not to exceed $0.99 per therm. For April, DPU customers will be charged $1.22 per therm ($0.23 + $0.99). DPU scheduled the timing of this increase to occur in April when customers typically consume less gas with the expectation that DPU will fully recoup its expenses before the next winter season.
Department officials suggest that customers can predict how this change might affect them on future bills by looking at the number of therms used last year during this time and multiply that by $1.22; this, plus the monthly service fee will help determine what to expect. Of course, the actual bill will be based on the total therms used for that month.
For example, a residential customer who uses 70 therms in April will see a total gas bill of $94.90 ($1.22 x 70 therms totals $85.40, plus the $9.50 monthly service fee equals $94.90). A commercial customer who uses 150 therms in April will see a total gas bill of $211.50 ($1.22 x 150 therms totals $183.00, plus the $28.50 monthly service fee equals $211.50).
DPU customers can view past utility bills online by registering on the department’s Utilities Self-Service portal at https://ladpu.com/Utilities-Portal. Customers who are on Budget Billing may want to contact the department to discuss options to adjust their budget billing amount now, rather than waiting until the annual settlement. Customers may contact the Customer Care Center at 505-662-8333 or CustomerCare@lacnm.us and staff will answer questions or redirect their call as necessary.