New Mexico attorney general eyes utility costs during freeze
ALBUQUERQUE, N.M. (AP) — The New Mexico attorney general’s office has opened an inquiry into utility costs during a recent winter blast that plunged New Mexico and other states into a deep freeze and upended the natural gas market.
Attorney General Hector Balderas said the weather emergency that spanned Texas and parts of New Mexico caused tremendous damage and he wants to ensure customers won’t be further harmed by skyrocketing bills.
“We understand utilities in the state had no choice but to pay. As these fuel costs flow through to customers, there is a strong likelihood that New Mexicans will receive utility bills that are hundreds of dollars higher than they were last month,” his office said in a letter to New Mexico Gas Co. and other providers that serve more rural parts of the state.
His office set a deadline of Friday for utilities to provide analyses of customer impacts and options for addressing the potential price shock. The utilities also are being asked to explain to their customers the circumstances and the steps being taken to mitigate the situation.
Utility executives testified Thursday before a panel of state lawmakers that they were able to cushion some of the blow by shifting from natural gas to other fuel sources. El Paso Electric tapped nuclear power from Arizona and fuel oil units, while Public Service Co. of New Mexico relied on the coal-fired San Juan Generating Station to meet demands.
Still, the executives acknowledged that higher natural gas prices ultimately will trickle down to customers through increases in their monthly bills. The utilities will have to seek regulatory approval to recover the costs of paying more for natural gas.
Sen. Liz Stefanics, chair of the Senate Conservation Committee, said Thursday that some of her constituents have seen their monthly bills this winter increase by as much as 800%. She said a federally funded program to help low-income people with their energy bills won’t go far enough because the assistance amounts to only a couple hundred dollars for the season.
“If we start talking about low-income and moderate-income individuals being saddled with a bill they cannot pay, we don’t have any protections here,” she said. “This is a shortcoming in our statutes.”
Nationally, the Federal Energy Regulatory Commission and the North American Electric Reliability Corp. already have announced that they would be looking into utility and transmission operations during the cold weather. Some members of Congress separately called for federal investigations into possible price gouging as natural gas spot prices spiked and millions of homes and businesses dealt with power outages.
Executives with El Paso Electric, Xcel Energy and PNM told New Mexico lawmakers that they tried to prepare but were still forced to buy some natural gas on the spot market.
With Xcel buying roughly half of its natural gas off the spot market, the company said preliminary estimates put the total cost for New Mexico and Texas customers at about $2 million. Profits from sales to other providers in the Southwest Power Pool will help offset that, but customers could still see their monthly bills increase by about $7 over a two-year period.
New Mexico Gas Co. officials said it’s too early to know the impact on its customers’ bills. They did say they would work with state regulators to minimize the effects to the greatest extent possible.
Under PNM’s cost adjustment clause, there’s a 5% cap on changes in customer bills.
Tom Fallgren, PNM’s vice president for generation, said the utility had learned lessons from a record freeze in 2011 so equipment was winterized and protocols were in place for a situation like the one in mid-February. By having contracts already in place and making other preparations, he said PNM saved about $15 million for customers.
The utility executives talked about the benefits of being able to source natural gas from other areas and the ability to switch to other fuels to continue meeting demands. They said that kind of diversification will be key to avoiding problems in the future.
Fallgren said they’re all on a path to get to 100% carbon-free generation but the manner in which that electricity is provided and its reliability will be critical. For example, he said, current battery storage technology is good for several hours but noted that some weather events can last days.
“I go back to that obligation to serve,” he said. “As we look at the different generation providing opportunities, is it just a low-cost option that’s available when it’s available or does it also have the obligation to serve when these critical time periods come? I think if you look over the history of the electrical grid, we’ve always been making that trade-off of that cost versus that obligation to serve.”