Gas Utility Gets Burned on the Spot Market

Fortnightly Magazine - May 1 1997
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Motivated by numerous consumer complaints regarding substantial, unexpected increases in bills for natural gas service, the New Mexico Public Utility Commission has fined Public Service Company of New Mexico, finding that the utility knowingly understated gas cost data in prior adjustment clause filings to avoid commission review of an ongoing gas price crisis.

The commission suspended the $2.2-million fine, however, in light of its decision to prevent PSNM from collecting more than $1.5 million in purchased gas revenues associated with the understated gas cost projection. The commission found that the utility had relied much too heavily on spot market purchases in planning for its supply needs.

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The PUC also: 1) opened a separate inquiry into the utility's gas procurement practices to see whether customers are due a refund for management imprudence; 2) directed the utility to develop plans to exit the merchant segment of the natural gas business; and 3) directed the utility to make a general rate case filing for both electric and gas services.

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