Title
Incorporated County of Los Alamos Code Ordinance No. 02-379; An Ordinance Amending Chapter 40, Article III, Sections 40-151, and 40-152 of the Code of the Incorporated County of Los Alamos Pertaining to Gas Service Rates
Recommended Action
I move that Council adopt Incorporated County of Los Alamos Code Ordinance No. 02-379; An Ordinance Amending Chapter 40, Article III, Sections 40-151, and 40-152 of the Code of the Incorporated County of Los Alamos Pertaining to Gas Service Rates, and ask staff to assure that it is published in summary form.
Utilities Manager's Recommendation
The Utilities Manager recommends that Council adopt the Code Ordinance as presented.
Board, Commission or Committee Recommendation
The Board of Public Utilities introduced this Code Ordinance at their work session on April 1, 2026 and recommended adoption at their work session on May 6. 2026. The Board recommends that Council adopt the Code Ordinance as presented.
Body
The ten-year forecast for the gas utility presented with the FY2027 and FY2028 budget included a series of rate increases to generate the revenues needed to sustain current operations and to build the cash reserves required for future infrastructure investments. The proposed rate increases for the Gas Fund span two consecutive years: 29% in FY2027 and 17% in FY2028 for residential, multifamily, and commercial customers, and 30% in FY2027 and 19% in FY2028 for County and Schools customers.
During the rate analysis completed for the FY2027 and FY2028 budget, projected FY2026 sales revenue was estimated at $8.36 million. Due to a warmer winter and lower usage, current projections indicate sales revenue will be approximately $5.9 million-about $2.45 million below expectations. The FY2025 audited net income for the Gas Fund reflected a loss of $489,267, and the projected net loss for FY2026 is approximately $2.36 million.
For FY2027 and FY2028, the projected sales in therms using a five-year average of 6.8 million therms. Based on the projected decrease in therm sales and the proposed rate increases for FY2027 and FY2028, the gas fund is expected to reach a positive cash flow in FY2029. It is anticipated to begin funding cash reserves in FY2030 and fully funding those reserves by FY2032.
The proposed rates are expected to restore the gas fund’s cash flow to a sustainable level within the projected time frame. This plan will provide sufficient funding for essential repairs, replacements, and ongoing operations, while also supporting progress toward our long-term cash reserve targets. Future rate increases are projected to be 3% starting in FY2029.
Alternatives
As noted above, rate increases will be necessary to support essential operations, infrastructure replacement, and the restoration of cash reserves. Without taking action, DPU would be forced to curtail maintenance and replacement activities, which would ultimately impact system reliability.
Fiscal and Staff Impact/Planned Item
The proposed increases are expected to restore our gas fund to a positive gas flow in FY2029 as well as fund our long-term cash reserves. There are no staff changes related to this rate increase.
Attachments
A - LAC Code Ordinance 02-379 - Gas Rates
B - Gas Rate Ordinance Presentation
C - Publication Notice