New Energy Economy Moves Dismissal of NM Gas Company Rate Increase After Discovering Company Misled Public and the PRC

Organization Press Release – From New Energy Economy

February 20th, 2024

Upon receipt of discovery responses on February 16th, 2023 New Energy Economy’s expert witness, Christopher Sandberg, found that the Notice of the proceedings published November 12th, 2023 and subsequently disseminated to customers and relied upon by the PRC, the press, and intervenors in the case was inadequate and misleading. Consequently, today New Energy Economy filed a Motion to Dismiss New Mexico Gas Company (NMGC)’s rate increase application at the Public Regulation Commission (PRC) in Case No. 23-00255-UT.

The Notice and the Executive Summary of the rate increase application state that “NMGC is requesting a total base rate revenue increase of $48.97 million.

Under this proposal, the monthly bill for delivering natural gas service to the average residential customer using 53 therms of gas per month would increase $6.71,” an 11.2% increase over current residential rates.

This average increase was also repeated in sworn testimony by the NMGC company president during the hearing and repeated widely in the press.

However, the data obtained reveals that NMGC’s stated “average” 53 therms usage in a month is not representative of what 96% of NMGC’s residential customers consume in a particular month, and is seriously misleading.

In fact, rather than the 11.2% average increase customers could face up to a 25% increase. And the expected dollar increase is not a mere $6.71 per month, but will be between $9.61 and $21.96 (depending on usage) in the highest gas-consuming months.

As Mr. Sandberg plainly states: “the Notice not only does not explain the impact of NMGC’s proposed rate increase, it misinforms customers about the bill increases they will experience as a result of NMGC’s request.”

From NMGC’s data on 2023 residential usage, only 4% of customers, or fewer use 53 therms. The most-often issued bills were in the range of 11-25 therms, which would face a 14% increase, followed closely by bills for 0-10 therms, which would face an 18% increase.

The weighted average increase for 48% of 2023 bills is 16%. Further, the proposed increase in the monthly fixed fee would disproportionately impact these low-therm users the most.

The data further reveals that during the peak winter months customers using 90-200 therms could be paying 2-4 times the average increase reported in NMGC’s Notice.

Our Motion contends that NMGC is well aware that the majority of its customers will face significantly greater increases if the Company’s rate request is approved. NMGC deliberately used the wrong measure of “average” in order to mislead about the actual percentage increase to be expected on residential bills.

It used a computation of the mean average, which is just the arithmetic average of all residential customer bills. The correct form of analysis is to use the mode average; that is, the most commonly occurring bill.

As the law requires, the Company should have provided sufficient information to allow all its customers to understand the magnitude of the increase for them.

New Energy Economy’s Motion advocates that NMGC’s rate case application should be dismissed for failure to properly notify ratepayers of the likely estimated bill increase and percentage increase, or alternatively, that the PRC Commission should suspend the case and toll all dates, including testimony, hearing, and any rate effectiveness, until NMGC, following consultation with the parties, has issued a meaningful disclosure that accurately illustrates rate impacts on a representative set of residential customer usage levels.

Mariel Nanasi, Executive Director of New Energy Economy, said, “The public notice presented by NMGC in the present case was inadequate and misleading, in violation of ratepayers’ right to due process of law. More than 540,000 New Mexican households are dependent on New Mexico Gas Company and have no choice in their gas provider.

“NMGC has the burden of proof as the regulated monopoly utility, and must demonstrate that its proposed new rate is just, fair and reasonable. The public Notice, Executive Summary and the sworn testimony of its President do not comply with the spirit or letter of the law to demonstrate transparency, completeness and honesty in presentation of evidence to the Commission and public.”