News Release

Sept. 20, 2002

Winter Outlook Pushes Natural Gas Prices Upward

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NEWS MEDIA CONTACT Susan Sponar Telephone: (505) 241-2768

Albuquerque: While it may cost consumers more to heat their homes this winter because of higher wholesale natural gas prices, customers can do plenty to help control their winter bills and still stay warm.

PNM officials said today wholesale prices for natural gas are expected to be higher this winter than during the winter of 2001-2002, meaning potentially higher bills for consumers.

Like other natural gas utilities, PNM does not make a profit from the sale of natural gas to retail customers and passes the wholesale costs through to consumers. If wholesale prices are high, those costs are passed on to customers. Similarly, when wholesale prices dip, customers’ bills also decrease.

Weather is an important factor affecting gas bills that’s hard to predict. Colder temperatures nationwide can affect the price of natural gas in New Mexico, leading to shorter supplies and higher prices.

Last year, the cost of gas in New Mexico never exceeded 28 cents per therm. This winter, industry experts are predicting that gas costs in the state could reach as high as 35 cents to 50 cents per therm. A therm equals 100,000 British Thermal Units (BTUs). A customer’s monthly bill also will include other factors such as the access fee, a fee for transportation, storage fees and other costs.

Even with an unpredictable and volatile wholesale market, PNM has taken steps to help protect customers from severe price spikes this winter. PNM has the option to purchase the majority of its expected gas supply at capped prices, reducing the potential for customers paying extreme price spikes.

In the winter of 2000-01, when prices on the wholesale market rose over 85 cents per therm, the company was able to use its gas contracts to lower gas bills by $27 million for PNM customers. Called “hedging,” this type of contract acts as an insurance policy against high prices. Hedging contracts give PNM the option to purchase gas at capped prices.

To help reduce high winter bills, customers can:

• Sign up for Budget Billing: Budget Billing allows customers to pay the same amount on their PNM bill each month, removing the month-to-month fluctuations caused by changing weather, changing usage and other factors.
• Make their homes more energy efficient. From October through January, PNM’s electric and gas bills will include money-saving coupons for products to help customers weatherize homes and make them more efficient.

Other winter savings tips include:

• Adding insulation to walls, ceilings and crawl spaces are the best way to save energy. Many PNM customers occupy poorly insulated homes that are harder to affordably heat.
• Installing weather stripping to keep your home “buttoned up” as much as possible.
• Installing programmable thermostats.
• Replacing or repairing broken window glass and worn weather-stripping.
• Find little cracks and gaps outside your home where warm air can leak out. Use caulking or weather stripping to close the gaps.
• Setting thermostats as low as comfort permits. Each degree over 68 degrees can add up to three percent to the amount of energy needed to heat your home.
• Installing an insulation blanket on your water heater if it is in the garage.

  
  Learn more about Budget Billing
  Learn more about the Good Neighbor Fund