Title
Incorporated County of Los Alamos Code Ordinance No. 02-359; An Ordinance Amending Chapter 40, Article III, Sections 40-151 and 40-152 of the Code of the Incorporated County of Los Alamos Relating to Gas Rate Schedules
Recommended Action
I move that Council adopt Incorporated County of Los Alamos Code Ordinance No. 02-359; An Ordinance Amending Chapter 40, Article III, Sections 40-151 and 40-152 of the Code of the Incorporated County of Los Alamos Relating to Gas Rate Schedules; and ask staff to ensure that it is published in summary form.
Utility Manager's Recommendation
The Utilities Manager recommends that Council adopt Incorporated County of Los Alamos Code Ordinance No. 02-359.
Board, Commission or Committee Recommendation
The Board of Public Utilities approved Code Ordinance No. 02-359 at their regular session on June 26, 2024 and recommends that Council adopt as presented.
Body
The FY2025 adopted budget and FY2026 projection each included a 5.5% blended rate increase for gas. The Board and Council previously approved a 3% increase for FY2025 (effective Sept 2024) and a 2% increase for FY2026 (effective Sept 2025). In determining projected rate increases, the ten-year projection takes into consideration expenditures and fulfilling the reserve target requirements within the required ten-year horizon. Since DPU's budget preparation, New Mexico Gas Company (NMGC) and Conoco Phillips have notified the County of increases in their transportation rates on both a per meter and variable basis. Additionally, The New Mexico Public Regulation Commission, Pipeline Safety Bureau performed the Operation and Maintenance Procedures & Emergency Plan audit in 2023. The audit included review of records and procedures for the period from 2018 to 2022 and field inspection of the gas system. The audit resulted in a list of notice of probable violations (NOPVs) that required a timely response to avoid these findings elevating to violations. DPU has responded to each of the NOPVs which addressed updating procedures, new procedures, addressing items noted during field inspection and action plans to mitigate deficient records.
NMGC has also applied for a rate increase for their retail customers that would take effect in October if approved by the Public Regulation Commission (PRC). According to NMGC’s website “for customers who are not signed up for budget billing, the summer bill average impact would be an increase of 6.3% while the winter bill average impact would be an increase of 7.3%.”
The increase in gas rates is necessary because the total therms sold in FY2024 were significantly lower than in FY2023 and lower than the projected therms for FY2025. Los Alamos County customers are conserving and weather proofing their homes and therefore purchasing less natural gas as trending over the last five years, except for when Los Alamos County experienced the polar vortex. The proposed rates were developed using an average of the last five years of usage.
Alternatives
If the proposed rate increase is not selected, the previously authorized rate increases for October 2024 and October 2025 will go into effect and it will result in diminished DPU cash reserve balances.
Fiscal and Staff Impact/Planned Item
The proposed rates result in DPU achieving the budgeted revenue for FY2025.
Attachments
A - Incorporated County of Los Alamos Code Ordinance No.02-359 Gas Rates
B - Frequently Asked Questions
C - Publication Notice