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News Release
Sept. 20, 2002
Winter Outlook Pushes Natural Gas Prices
Upward
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:
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