News Release

Sept. 15, 2005

PNM Forecasts Substantially Higher Winter Heating
Bills, Encourages Immediate Customer Action

PNM NEWS News releases Financial news Contact PNM

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

Albuquerque: With market forces driving natural gas prices to record highs, PNM is warning customers to prepare now for what is likely to be the most expensive heating season in history.

"If there has ever been a time for customers to really examine how they use natural gas and take steps to control their bills, it is now," said Cindy McGill, PNM vice president of customer and market services.

PNM is projecting the average residential natural gas bill for the coming heating season, which runs from November through March, will be $152 per month. This is an increase of 54 percent from last year's average winter bill of $99 per month. PNM's price per therm, which is a heating unit equivalent to 100 cubic feet of natural gas, is expected to average $1.09 during the winter. The October price is expected to exceed $1 per therm for the first time ever.

As required by state law, PNM purchases natural gas on the wholesale market and passes the cost along to customers without a markup. This winter, the pass-through cost of gas is expected to be 71 percent of the average PNM natural gas bill, PNM delivery fees 20 percent, and taxes and franchise fees 9 percent. PNM delivery fees are a shrinking portion of each customer's monthly bill.

Components of this winter's PNM natural gas bill

Cost of natural gas (71%)

PNM delivery cost (20%)

Tax & fees (9%)

"These are the highest prices we've ever had to pass on to our customers, and we understand the difficulty this will cause for a substantial number of people, including many of our own employees," McGill said. "Our primary focus today is to get the word out so customers can begin to prepare for the winter."

McGill said natural gas prices are expected to stay high for at least several years, which means that customers who spend a few dollars to weatherize their homes now will continue to save money for the foreseeable future.

What customers can do

McGill urged customers to take action before cold weather sets in and heating bills begin to climb significantly. Recommended actions include:

Focus on weatherization: Customers who thoroughly weatherize their homes can reduce their heating bills by as much as 20 percent. Simple steps such as installing a programmable thermostat, insulating water heaters and installing weather stripping around doors and windows can make a significant difference.

Sign up for Budget Billing: Budget Billing stabilizes volatile heating bills by spreading the payment totals throughout the year. Customers still pay for the energy they use, but avoid the vast price swings between seasons.

Donate to the PNM Good Neighbor Fund: Each winter, thousands of low-income PNM customers receive assistance from the PNM Good Neighbor Fund. PNM matches customer and employee contributions dollar-for-dollar to help low-income customers pay their winter heating bills. PNM expects demand on the fund to rise this winter as natural gas bills increase and is encouraging customers to help grow the fund in advance of winter demand.

For more information on these programs, visit PNM.com or call 246-5700 from the Albuquerque metropolitan area or (800) 687-7854 from outside of Albuquerque.

What PNM is doing

McGill said there are a number of efforts under way at PNM to help customers control their bills. These are:

Increase grant amount from PNM Good Neighbor Fund: PNM has increased the maximum assistance from the PNM Good Neighbor Fund to $180 from $130 for this heating season.

Free DVD: PNM is making a home weatherization DVD available to any customer who requests it. The video includes eight weatherization "how to" videos in both English and Spanish. Customers can request the DVD online at PNM.com/dvd or by calling PNM.

Advance warning and information: PNM is reaching out to customers about heating costs and the need for customer action earlier than ever before.

Innovate gas purchasing efforts: PNM uses a variety of natural gas purchasing strategies, including advanced fixed-price purchases and contracts that provide an opportunity to buy natural gas at a guaranteed price. The cost of natural gas for customers this winter would be higher than the projected average of $1.09 per therm if PNM did not pursue these purchasing strategies.

New weatherization efforts: PNM this fall will offer a program to assist customers with home weatherization. The program is currently under development; a public announcement will be made when the program is launched.

Retailer discounts: PNM is in discussions with hardware stores in New Mexico to offer discounts on basic weatherization items. Information on these discounts will be included in the PNM bill insert, EnergyWorks, in the next few months.

Energy efficiency program: The state Public Regulation Commission is considering a PNM request to offer rebates to customers on certain home weatherization products and services. PNM is requesting speedy approval of the program so it can be in place this fall.

Collaboration with elected officials: PNM will actively lobby the U.S. Congress to ensure that new funds authorized for the Low Income Home Energy Assistance Program (LIHEAP) are fully appropriated. This program brings millions of dollars to low-income New Mexico citizens every year. In addition, PNM is meeting with state officials to see if the state can increase its efforts for weatherization and energy bill assistance.