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Las Cruces Approves Natural Gas Rate Hike With Most New Business Costs

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LAS CRUCES — The Las Cruces City Council approved a natural gas utility rate hike at its Monday meeting, significantly increasing rates for small commercial customers over the next three years.

City-owned Las Cruces Utilities said it needs additional revenue to cover employee salaries and benefits, operating and maintenance expenses, regulatory expenses, system maintenance costs and the cost of replacement of aging vehicles and equipment. The utility must contribute an additional $1.46 million per year to cover natural gas utility costs.

As part of the rate increase, approved 7-0 at the April 18 council meeting, the rate per unit of energy for small commercial gas customers – the majority of businesses in the city – will be more than double by the end of a three-year transition period. . At the same time, these tariffs for residential customers will not change.

Access fees for small businesses will increase from $16.41 to $17.50 per month over three years, and volumetric rates will increase from $1.07 to $2.38 per dekatherm. For residential customers, access charges will increase from $13.75 to $14.50 per month over three years, and volumetric charges will remain at $1.34 per dekatherm.

The rates will take effect in the next fiscal year, which begins July 1, after full recovery of a surcharge imposed to cover the cost of gas during a 2021 winter storm.

Las Cruces Utilities last raised the base gas rate in 2011. LCU Director Delilah Walsh said the new rate split is meant to more accurately reflect the true cost of providing gas service. natural in all paying classes. Currently, Walsh said business customers are subsidized by other categories such as residential customers because it costs more to provide business services.

The resolution also calls on utilities to review their rates more frequently.

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“To mitigate future impacts on customers, LCU staff will conduct and recommend more periodic rate reviews as necessary,” the resolution reads.

The board also agreed to direct the Las Cruces Utilities Board to immediately implement a decarbonization rider of 15 cents per dekathem on all customers, instead of rolling it out over three years as proposed.

The 15-cent endorsement, a surcharge on gas usage imposed uniformly across all pay classes, would be used to assess and implement energy efficiency measures in homes, Walsh said.

A Las Cruces Utilities worker installs a natural gas mainline.

The rate hike will not cover any cost of Las Cruces Utilities’ mandatory transition out of natural gas. The city has committed to a transition to renewable energy in its 2020 climate action plan and in a separate resolution passed by council last year, which calls for a natural gas transition plan.

Concessions, such as the three-year phase-in, had already been made in response to public comments on the proposed rate increase. In addition to recommending the three-year phase-in, the utility board recommended in December that the utility eliminate new debt service funding for gas line extensions, reducing the amount of new revenue needed and waits for the LCU to complete its winter storm emergency recovery. supplement this summer to apply the new rates.

Walsh said that if the cost of gas doesn’t change — something LCU has no control over — customers’ bills won’t change much from what they’re currently paying under the storm surcharge. emergency.

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“The risk of not fully funding the gas utility looks big, looks very risky,” said District 4 Councilwoman Johana Bencomo, who also sits on the utility board. “I think there’s certainly been a lot of utility trade-offs already.”

Bencomo also said it does not support residential customers subsidizing businesses, which would likely have to continue to happen to fully fund the utility, according to City Manager Ifo Pili, if the rate increase is not approved. .

District 3 Councilman Becki Graham said it was a difficult decision, but she supported the increase to support the LCU’s ability to maintain system security and support staff growth and retention. .

Michael McDevitt is a city and county government reporter for the Sun-News. He can be reached at 575-202-3205, [email protected] or @MikeMcDTweets on Twitter.