New Mexico Utility Regulators Investigate Pricing Allegations | Local News
Zia Natural Gas Co. alleges it had to pay 150 times the usual price for gas during a massive storm in February and wants authorities to investigate.
At least four state and federal entities are doing just that. Their main hope is to protect New Mexico customers from tariff shocks and find out why gas became so scarce and expensive during the storm.
Investigators include the New Mexico Attorney General’s Office, the New Mexico Public Regulatory Commission, the Federal Energy Regulatory Commission, and the North American Electric Reliability Corp.
“At the moment, we have launched our own investigation,” Public Regulation Commissioner Joseph Maestas of Santa Fe said this week. “I think the attorney general might have more enforcement power than we do.”
Utilities can’t absorb these costs without passing them on to customers, the companies say.
Some, like Ruidoso Downs-based Zia, intend to get loans to pay the cost rather than hitting customers with a one-time price jerk.
Leslie Graham, chief executive of Zia, this month reiterated to the Public Regulatory Commission that her company wanted the matter investigated. If another event like this were to take place in the near future, she said, “the utility industry and its customers would be in a world of suffering.”
Maestas said the PRC review was “on behalf not only of customers, but on behalf of public services”. He said that “the so-called gougers… are the people who sell energy on the open market”.
Zia said in a letter to the Attorney General that its gas suppliers during the period in question were Shell Energy North America, DCP Midstream and United Energy Trading.
Shell said Wednesday: “The extreme weather conditions in Texas have affected almost every resident and corner of the state – and some outside of it. Throughout the week we have been in close contact with our customers at Shell Energy North America and relevant regulatory agencies and this remains the case as we continue to assess the consequences of this devastating weather event.
DCP said there was “a gap between supply and demand and extreme commodity price volatility beyond DCP’s control.”
Zia said in late February that its typical gas costs were $ 10 million per year. But natural gas during “the event” in mid-February cost about $ 18.7 million, the company said.
On February 1, he paid $ 2.55 per MMBTU – a British thermal unit of one million metric meters, a measure of energy value – and on February 17, the price hit $ 381, Zia said.
Matt Baca, a spokesperson for the attorney general’s office, said this week that the office’s involvement is “to ensure that consumers are properly protected against any illegal increases in utility prices.”
Baca wrote in an email that the review is underway. When asked if the investigation involved gas suppliers as well as utility companies, he said it involved “any potential harm to consumers”.
A spokesman for the Federal Energy Regulatory Commission said only that the agency’s investigations were still ongoing.
The New Mexico utility, the state’s largest electric utility, said its preparation for such situations prevents having to take out loans or severely undermine customers. Tom Fallgren, vice president of PNM, said customers’ April invoices would show a 4% increase in adjusted fuel prices.
Fallgren said that PNM’s long-term contracts; decrease in gas consumption at the time; and the increase in the use of other resources, such as nuclear power, solar power and wind power, has cushioned the blow.
Fallgren said natural gas prices have risen significantly. Gas supplies became scarce as demand increased, he said, and equipment at oil wells in Texas froze, reducing supply.
“There is always an opportunity to defame someone,” he said. “I think the take-home message is proper resource planning.”
Other companies cited problems similar to those experienced by Zia.
Raton Natural Gas Co. said in its letter to the Attorney General that “in almost 60 years of public service, we have never experienced anything like this”.