Copyright © 2023 Albuquerque Journal
Average residential customers were hit this month with a New Mexico Gas Co. heating bill that’s 56% higher than in January 2022, thanks to a 15-year high in natural gas prices.
This January’s average residential consumer bill climbed to $211, up from $135 in the same month last year, and just $80 in January 2020, before the global pandemic broke out.
It’s a winter budget-buster that New Mexico Gas executives and industry experts had predicted in November when wholesale market prices hovered near $7 per 1,000 cubic feet of natural gas – it’s highest level since at least 2008.
A number of things are to blame, starting with a global recovery in post-pandemic energy demand and then the outbreak of war in Ukraine last February, which crippled European fuel supplies and reduced domestic gas stocks significantly as U.S. exports of liquid natural gas soared to unprecedented levels.
Add to that last summer’s scorching heatwaves, which ignited an inflationary spiral as electric utilities everywhere sucked up supplies for natural gas-based generation to keep air-conditioners running full blast during peak summer demand.
Consumers nationwide are feeling the price pinch, said New Mexico Gas Vice President for External Affairs Gerald Weseen.
“What’s happening in New Mexico is happening everywhere,” Weseen told the Journal. “We’re seeing people in most other places experiencing the same impact on heating bills.”
In fact, despite the price crunch, things could have been much worse, save for abnormally warm winter weather for most of December and since the start of the new year.
The Arctic chill that engulfed most of the U.S. during Christmas aggravated prices significantly in late-December, driving up consumer fuel demand to heat homes and buildings, and diminishing domestic stocks as natural gas production in some basins plummeted temporarily during the storm, according to global consultant Rystad Energy.
But, since early January, warmer-than-normal weather has endured and the industry has replenished stockpiles, pushing wholesale prices down significantly, at least temporarily, depending on weather patterns going forward.
New Mexico Gas customers have also fared better than other places because the company buys all its gas from New Mexico producers in the northwestern San Juan Basin and the Permian Basin in southeast New Mexico, where prices are usually much lower than on other wholesale markets.
In addition, the utility has hedged its own fuel supplies for the December-February period by locking in prices at more advantageous levels as much as possible through advance purchases, rather than relying on daily wholesale markets, which are extremely volatile, said utility Vice President of Gas Management and Technical Services Tom Bullard.
That daily “swing gas” goes up and down constantly depending on weather and consumer demand.
“The good news is prices for our customers would have been much higher had we not hedged the gas for December-February – like three times higher,” Bullard told the Journal. “That really helped this month. Without it, customers would have paid about $3.30 per therm of gas consumption on their January bill, but we managed to keep the cost for the (advance) baseload gas that we purchase at $1.27 per therm.”
January bills indicate average residential consumption of about 124 therms this month, according to the company.
Colder weather is forecast for the coming week. But, overall, warmer-than-normal winter weather is still expected for the rest of the season in New Mexico and the Southwest.
“The expectation is for prices to be a little lower in February and then continue to drop in the following months,” Bullard said.
Higher fuel prices have no impact on company profits. By law, the utility simply passes through the cost of fuel on customer bills.
For lower-income customers, bill assistance is available if needed for customers that qualify through utility programs, and local, state and federal assistance.
“If customers are struggling to pay their bills, we have programs to help and they should call us,” Weseen said. “We also have programs to help consumers use energy more efficiently.” Energy-efficiency program assistance is available for both residential and commercial customers, with significant rebates for installing qualified devices. That includes energy-efficient water heaters, space heaters, smart thermostats, and attic and ceiling insulation.
A free water-savings kit with low-flow showerheads and aerators for kitchen sinks and bathroom faucets is also available.
