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News ReleaseSept. 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 thats 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 customers 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:
Other winter savings tips include:
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