Soften the Impact of Natural Gas Costs
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Soften the Impact of Natural Gas Costs
Posted on 03/07/2023

The final public hearing is scheduled for proposed changes to the natural gas rate ordinance by the Department of Public Utilities (DPU). The proposed changes aren’t typical rate adjustments and they don’t increase the fixed rates adopted last fall. Instead, they include an increase to the variable rate cap, an additional recovery rate component and a compensatory minimum value for the variable portion of the gas rate.

The public hearing will take place at the March 28 County Council meeting at 6:00 p.m. The public may attend in person in Council Chambers or online via Zoom using the link Attendees can give public comment whether they attend in person or online. If adopted by Council, the ordinance changes will take effect on April 8.

While the proposed changes are in response to rapidly escalating commodity costs paid by the utility, DPU management recognizes the potential impact they may have on customers and suggests three ways to soften it.

  1. To ease the burden of seasonally high bills, utility customers are encouraged to sign up for Budget Billing if they have 12 months of utility history in Los Alamos. Under Budget Billing, a customer pays the same amount each month for a year with a settling adjustment on the 12th month. Information on Budget Billing can be found at .
  2. DPU has a Utility Assistance Program (UAP) for qualified low-income customers. Funded by donations from utility customers, UAP assists with bills from October 1 through March 31 for most recipients. Year-round assistance may be granted for customers over the age of 65 or those who are qualified through the Social Security Administration for Supplemental Security Income (SSI). UAP also provides one-time assistance to account holders who demonstrate need due to unforeseen or unusual circumstances. Information on UAP can be found at .
  3. Customers can lower their bills by reducing utility usage, even through simple methods that don’t require appliance replacements or large financial investments. For instance, a resident with a gas-powered hot water heater can reduce natural gas consumption by using less hot water. They can run the dishwasher only when it is full and take fewer, shorter showers. They can also adjust laundry habits by washing and/or rinsing with cold water instead of hot and only running the washer for full loads. These types of habits will also save money on water. A couple of sites with low-or-no-cost utility reduction tips can be reached through and .

Natural gas market prices are volatile and when they are high, it is noticeable to DPU’s customer on their bills because of the natural gas rate structure. This structure includes a pass-through gas rate, meaning customers pay a variable rate that changes monthly based on the actual costs paid by DPU to receive the commodity that is provided to customers. The variable rate has been in place since 2013 and did not reach the do-not-exceed variable rate cap of $0.99/therm until two years ago. It has now been reached five times.

Cap increase

Each time the cap is enacted, a portion of the commodity expense recovery is shifted to a later date. When the cap is not enacted, over and under collections are calculated as part of the variable rate through a prior month adjustment calculation. Currently, rising gas prices that exceed the cap cause prior month under-collection amounts to spread over several months. The proposed ordinance increases the cap from $0.99/therm to $4.00/therm. The variable cost of gas that DPU has paid over the past two years, based on San Juan Index pricing, has ranged between $0.24/therm and $3.30/therm.

Recovery rate component

Escalating costs that are not being fully recovered under the current ordinance’s not-to-exceed cap of $0.99/therm have caused a $7.5 million shortfall in DPU’s natural gas fund. To address this shortfall, the proposed ordinance includes a $0.44/therm sunsetting recovery rate mechanism. If approved, this rate will be applied to gas billings until expenses are fully recuperated or until two years from adoption—whichever occurs first.

Compensatory minimum

When gas prices are especially volatile, the current pass-through rate can drop to $0.00/therm. The proposed ordinance sets a minimum value of $0.11/therm for the variable portion of the gas rate to soften month-to-month rate swings caused by volatile commodity costs.

More information about the proposed rates, including a detailed FAQ document, can be found online at: under the folder “Proposed & Pending Rate Changes.”

gas rate proposed changes for 75 therms

CURRENT: Service fee + ((fixed commodity rate + variable rate) x total therms) = total charge

PROPOSED: Service fee + ((fixed commodity rate + variable rate* + sunset recovery) x total therms) = total charge

* Lowest allowable variable rate = $0.11/therm