Natural gas suppliers anticipate price increases
Last updated 2/23/2021 at 3:56pm
Area suppliers of natural gas or propane said they anticipate price increases for customers in the wake of severely cold weather that strained supplies and sparked widespread power outages, but they weren’t prepared to say how much those hikes would be.
Natural gas supplies across the country are warning of spikes after frigid conditions constrained supplies and caused the spot market for gas spiral wildly upward.
In one case, the city of Grove, Oklahoma, was forced to buy natural gas Wednesday at $622 per dekatherm when its supply nearly ran out. The usual price is $3 per dekatherm. The price later in the week dropped to $100 per dekatherm. City officials won’t be sure what they’ll charge customers for gas until March or April.
Tim Korte, manager of communications of New Mexico Gas Co., stated in an email Friday he understood the concern customers might have about future gas bills.
“Because of these weather conditions, the supply of natural gas throughout the country, including to NMGC, was restricted and the demand for natural gas was increased dramatically,” he stated. “During this event, as always, NMGC’s top priority was to continue to deliver gas to our customers as they needed. Due to the unusual market conditions and even with our best efforts to minimize costs, NMGC was forced to pay higher prices for natural gas.”
Korte said New Mexico Gas doesn’t make a profit on the gas it purchases, but the costs associated with purchasing “are ultimately paid by customers, without mark-up, as part of the customer’s bills.”
“As a result, there will be an impact on those bills reflective of the temporary dramatic spike in natural gas prices,” he wrote. “At this time, it is too early to know what the monthly impact on our customer’s bills will be or when these costs will first appear in their bills.”
Although natural gas makes up a minority of its power generation, Xcel Energy does note there will be some level of increases associated with last week’s storm. Spokesman Wes Reeves said the utility company is looking at possibly spreading those costs out over 24 months instead of capturing it in one billing cycle.
“Currently, we don’t know what those costs are,” Reeves said, “but natural gas prices can go up very high during a storm and the extreme cold we had.”
“We buy natural gas and coal. Those costs are separate from your other energy costs. In New Mexico, those costs are trued up month to month. So they change based on the price for that time. Your current bill is reflecting costs as they were a couple of months back.”
Reeves said impacts from the winter storm will likely show up on April statements. Fuel costs from coal and natural gas generally make up 10% to 15% of a monthly bill, Reeves said, down from 50% thanks to increased use of renewable energy.
Four- and five-figure power bills that are grabbing the headlines in Texas, Reeves said, are the result of individual agreements between power providers and customers that are tied to wholesale fuel prices.
Korte said the company will work with the New Mexico Public Regulation Commission to “develop the most appropriate way” to recover these costs.
“Our goal will be to minimize the impact on monthly customer bills to the greatest extent possible,” he wrote. “NMGC will communicate with our customers before and as these costs are included on customers’ bills. We are committed to working with our customers, as we always do, to assist them in paying their bills. One way will be to work with them on payment plans to assist them in paying their bills.”
Korte said customers can call (888) 664-2726 if they need assistance or have questions about their payments.
Gary Harrell, chief financial officer of Cortez Gas Co. in Roswell , stated in an email Saturday “this has been one of the most challenging” times in his 43 years in the business.
Harrell said the extreme weather in Texas has caused “a major problem for propane distribution and tremendous spikes in the price of propane.”
But he said New Mexico was in better shape.
“New Mexico marketers have underground storages available which fill in the summer and are utilized in the winter. These underground storages are located in southeastern New Mexico and northeastern Arizona and are usually a contracted price for the winter,” Harrell wrote.
Harrell signaled that Texas needs to be better prepared to keep such a disaster from happening again.
“Texas and all entities need to realize you must have a lot of Plan B’s and C’s and D’s, etc., to survive and take care of customers who rely on products such as propane and electricity,” he said. “With the winter season almost over, I think we will survive a very rough year and hope everyone learns from the problems and takes action to not let them occur again.”
Editor Kevin Wilson contributed to this report.