Average January NM heating bills up 56%

New Mexico Gas Co. technician Jerome Rivera installs a new meter Thursday at an apartment complex in southeast Albuquerque. (Adolphe Pierre-Louis/Albuquerque Journal)

Copyright © 2023 Albuquerque Journal

Average residential customers were hit this month by a New Mexico Gas Co. heating bill that was 56% higher than in January 2022 thanks to a 15-year high in natural gas prices.

The average household consumer bill this January rose to $211, up from $135 in the same month last year and just $80 in January 2020 before the global pandemic hit.

It’s a winter budget buster that New Mexico Gas executives and industry experts predicted in November, when wholesale market prices hovered around $7 per 1,000 cubic feet of natural gas — the highest level since at least 2008.

A number of things are to blame, from a global recovery in energy demand in the wake of the pandemic to the outbreak of war in Ukraine last February, which crippled Europe’s fuel supplies and significantly reduced domestic gas supplies as US exports of liquefied natural gas to the Soared to unprecedented levels.

Add to that last summer’s scorching heatwaves, which ignited an inflationary spiral as electric utilities everywhere siphoned supplies for natural gas-based generation to keep air-conditioning systems running at full blast during summer peak loads.

Consumers across the country are feeling the price tightening, said Gerald Wesen, New Mexico Gas vice president of foreign affairs.

“What happens in New Mexico happens everywhere,” Weseen told the Journal. “We see people in most other places having the same impact on heating bills.”

In fact, despite the price crunch, things could have been a lot worse, barring unusually warm winter weather for most of December and since the start of the new year.

The arctic cold that engulfed most of the U.S. during the holiday season pushed up prices significantly in late December, boosted consumer demand for fuel to heat homes and buildings, and reduced domestic inventories as natural gas production in temporarily collapsed in some basins during the storm, according to global advisor Rystad Energy.

But since early January, the weather has been warmer than normal and industry has been restocking inventories, which has pushed wholesale prices significantly lower, at least temporarily, depending on future weather patterns.

New Mexico Gas customers have also fared better than elsewhere, as the company buys all of its gas from New Mexico producers in northwestern San Juan Basin and the Permian Basin of southeastern New Mexico, where prices are typically much lower than in other wholesale markets.

In addition, the utility has secured its own fuel supply for the December-February period by fixing prices at cheaper levels through upfront purchases as much as possible, rather than relying on daily wholesale markets, which are highly volatile, the utility’s vice president said for gas management and engineering services Tom Bullard.

This daily “swing gas” goes up and down constantly depending on the weather and consumer demand.

“The good news is that if we hadn’t hedged December-February gas, prices for our customers would have been much higher – about three times as much,” Bullard told the Journal. “That really helped this month. Without it, customers would have paid about $3.30 per therm for gas usage on their January bill, but we’ve managed to keep the cost of the base load (frontload) gas we buy at $1.27 per therm.”

According to the company, January bills show an average household consumption of around 124 Therm for that month.

Colder weather is forecast for the coming week. But overall, warmer-than-normal winter weather is still expected for the remainder of the season in New Mexico and the Southwest.

“The expectation is that prices will be a bit lower in February and then continue to fall in the following months,” Bullard said.

Higher fuel prices have no impact on corporate profits. By law, the utility company simply passes on fuel costs to customer bills.

For lower-income customers, billing assistance is available if needed for customers who qualify through utility programs, as well as local, state, and federal assistance.

“If customers are having trouble paying their bills, we have programs to help and they should call us,” Weseen said. “We also have programs designed to help consumers use energy more efficiently.” Energy efficiency program support is available to both residential and commercial customers, with significant discounts for installing qualifying equipment. These include energy-efficient water heaters, space heaters, smart thermostats, and attic and ceiling insulation.

A free water saving kit with low flow showerheads and aerators for kitchen sinks and bathroom fixtures is also available.