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Las Cruces City Council Reviews Proposed Natural Gas Rate Increase

City of Las Cruces

The Las Cruces City Council is reviewing a recommendation from the Las Cruces Utilities Board of Commissioners to increase natural gas rates over a three-year period. Revenue from the rate increase would not go toward any new natural gas line extensions —rather funds would be used for expenses like operational needs and maintenance.

Las Cruces Utilities Director Delilah Walsh says the natural gas utility must increase revenue by $1.46 million to meet operating obligations.

“We haven't increased our rates in over 10 years,” Walsh said. “As you know, things go up in price. If you look at inflation alone over the last 11 years, it's over 25% inflation just in cost of goods for the entire United States. So, we do have to address that increased demand and expense cost.”

Walsh highlighted growing department expenses, including city-mandated salary increases and equipment needs.

“If the increase is not approved, we will still meet the salary and benefit increases mandated by the city. That's not something we'll take back,” Walsh said. “But in order to do so I will have to cut operation and maintenance expenses even more…We would continue to defer any vehicle or equipment replacements.”

Under the proposal, a monthly residential bill will increase on average from $26.87 to $28.13 over three years.

The impact on small commercial customers will be larger, with the average monthly bill increasing from $75.15 to $100.26 on average over that same three-year period. Grant Rabon, of NewGen Strategies and Solutions, told city councilors that while an approximant 30% increase is being recommended, only a portion of a customer’s bill will be impacted by the increase.

“The roughly 30% increase that we're talking about for small commercial is not a 30% increase in the bill,” Rabon said. “We're talking about a subset of the bill, that is the base rate portion...the bill that the customer receives is not going to go up by that percent.”

Many on the city council advocated for a smaller rate increase, voicing concern about increasing the financial responsibilities of small commercial customers. Councilor Becky Corran noted the pandemic is still presenting economic challenges for many local business owners.

“I would ask very strongly for a compromise position that reduces the rate increase and doesn't shift that burden to residential folks but also doesn't disproportionately or perhaps proportionately in an historical perspective, impact small businesses, especially at this time,” Corran said.

Utilities Expert Phil Simpson holds a master’s degree in electrical engineering from New Mexico State University. He spoke out against the rate increase, arguing that current financial reserves indicate it is not a financial necessity.

“The data I've looked at, which goes through the end of fiscal year 2021, did not indicate a need for a rate increase,” Simpson said. “My report showed that the utility had ample financial reserves at the end of fiscal year 2020 and that those reserves actually grew in 2021.”

When asked about current reserves, Las Cruces Utilities Director Delilah Walsh estimated the natural gas utility department had about two months in reserve funding. She noted each individual utility has different amounts of funding in reserves.

“I can tell you for gas, those reserves are pretty low right now,” Walsh said. “We're not even meeting the requirement that our board has recommended.”

Simpson says Las Cruces Utilities should implement a more gradual rate increase if new revenue is justified, proposing a maximum increase of around 20%.

“The best practice is to increase rates gradually,” Simpson said. “Commissions, including the New Mexico Public Regulation Commission, they go to extreme measures to avoid rate shock to any particular customer class.”

Mayor Ken Miyagishima ultimately tasked Las Cruces Utilities to come up with two proposals for the city council to consider, one at a 21% rate increase and one at 30%. He also indicated additional one-time funding for utility needs could be available.

Madison Staten was a Multimedia Reporter for KRWG Public Media from 2020-2022.