GH Scott
As we continue to enjoy the fading days of summer, Winter Storm Uri is still making news for Las Cruces Utilities and customers. Recently, the Federal Energy Regulatory Commission cleared the LCU to contest all Winter Storm Uri penalties and interest levied by the El Paso Natural Gas Company. LCU also successfully negotiated a February 2021 bill of $ 1.76 million from its natural gas supplier. The decision of FERC and the adjustment of the invoice with the supplier benefit the LCU customers, as the municipal supplier will shorten the collection period from 30 months to 20 months for the “emergency goods recovery surcharge”, which began with the monthly invoices in June.
“The LCU appreciates that EPNG is working with our team to seek a $ 4.9 million waiver of due penalties and interest from Uri. This development is an asset for customers, as the contract will be reduced by ten months, ”said Mario Puentes, Business Analyst at LCU Gas. The LCU surcharge reflects the coverage of the costs related to the rise in the market price and the penalties for natural gas caused by the February storm.
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Attorney John Gregg, an expert on the pricing, transportation and regulation of natural gas, says Uri created gas shortages on a scale and duration never seen before in the Southwest. “Demand for natural gas in other states was also high, competing for supplies that might otherwise have flowed through EPNG’s pipeline,” said Gregg.
Interstate natural gas pipelines such as EPNG transport natural gas volumes under high pressure across the country. If more gas is withdrawn than fed in, the pressure drops, natural gas ceases to flow and customers get stuck. To prevent this from happening, FERC allows transport providers like EPNG to impose penalties on utilities who do not deliver enough natural gas to the pipeline.
Prior to Uri, LCU ordered additional gas in anticipation of the cold weather, but the supplier was unable to meet the additional requests citing “force majeure”. There was a scramble over President’s Day weekend to find gas wherever possible, as the price of natural gas is unregulated, sellers demanded exceptional prices. “The records show that the LCU has ordered enough gas to serve its customers and meet the pipeline tariff, and has agreed to pay unimaginable prices,” said Gregg.
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It is not common for penalties to be given or waived, and FERC rarely intervenes. FERC agreed that EPNG should waive all of its fines – $ 192 million – as it had agreed for other Uri-affected pipelines. “However, EPNG only filed a waiver after LCU and several other utilities filed complaints with FERC to request a waiver, so there have been several months of uncertainty for LCU,” Gregg said.
“As a utility company, LCU did everything possible to provide uninterrupted gas service during the storm and will examine alternatives to reduce the impact of any future delivery or price disruptions,” said Jose Provencio, deputy director of LCU Business Services.
The LCU Customer Central can be reached Monday to Friday from 8:00 a.m. to 6:00 p.m. at 575-541-2111. LCU provides clean, safe, and reliable services to Las Cruces residents and businesses. Learn more at: las-cruces.org/180/Utilities. In an emergency, call Dispatch at 575-526-0500.
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