News Release

June 9, 2004

PNM Natural Gas Customers Likely To See Quarterly
Gas Price, Friendlier Budget Billing Program This Fall

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

Albuquerque: PNM can ease some of the impact of spiking natural gas prices on customers by adjusting gas prices quarterly rather than monthly, according to a report filed with state regulators today.

The recommendation is one of three put forth by a task force charged with creating new tools to help combat volatile gas market prices this coming winter. PNM plans to implement the recommendations by this fall. Under the proposals, PNM will:

• Set the customer natural gas price on a quarterly rather than monthly basis, to increase overall price predictability;
• Make several significant changes to the company's Budget Billing program, including relaxing current credit requirements to make the program available to more customers, giving customers more advance notice of new Budget Billing amounts and allowing customers who default on payments to make up the payments rather than be removed from the program; and
• Supplement PNM's 1 billion cubic feet (Bcf) of gas storage with between .25 and .50 Bcf in additional storage or storage-like services.

"We believe these short-term changes should offer customers some added predictability against high gas prices, though prices and bills may still remain high due to forces beyond our control," said PNM Vice President Joanne Reuter.

Under state regulation, PNM purchases gas on behalf of customers at market prices and passes the cost along to customers without markup.

The task force, formed by PNM with the authorization of the state Public Regulation Commission (PRC), includes company employees, PRC staff and representatives for New Mexico Attorney General Patricia Madrid, U.S. Sen. Pete Domenici, U.S. Sen. Jeff Bingaman, the New Mexico Energy, Minerals and Natural Resources Department, the Coalition for Clean, Affordable Energy, the County of Los Alamos, and the American Association of Retired Persons.

"This was an important task force to address the increasingly high natural gas prices that affect citizens' winter heating bills," said Craig O'Hare, special assistant with the New Mexico Energy, Minerals and Natural Resources Department. "I was pleased to see the task force recognize the important role energy efficiency and simple home ‘weatherization' measures can play in reducing New Mexicans' heating bills. The Richardson Administration is dedicated to promoting energy efficiency as a cost-effective and easy way to both safeguard our environment and reduce energy-related utility costs."

"The Coalition for Clean Affordable Energy commends PNM and the PRC for addressing this very serious issue for New Mexico's consumers and energy providers," said Amy Welch, of the Coalition for Clean, Affordable Energy. "We believe that this report encapsulates some appropriate and necessary first steps, though we strongly believe that any serious price stabilization and mitigation efforts must include energy efficiency as its primary objective."

The task force has agreed to resume its work this winter to look at a number of longer-term proposals. O'Hare said the state also plans to form a task force to look specifically at issues related to energy efficiency.