June 18, 2008

Gas Bills to Go Up 2 Percent As City Passes on Rising Cost

By Steve Ramirez, Las Cruces Sun-News, N.M.

Jun. 18--LAS CRUCES -- Another of your monthly bills is going to go up because of rising fuel costs.

Las Cruces utility customers will soon see an increase in their natural gas bills. Customers will be assessed a 2 percent payment in lieu of franchise tax on the total cost of gas used.

According to the city, if the cost of gas portion on your bill is $92.49, then you will be assessed 2 percent on that amount. The increase would be $1.85.

Customers should begin seeing the increase in their July bill.

"This PILT is not a new tax," said Jorge Garcia, city utilities director. "The city of Las Cruces was previously paying the PILT, however, due to increased cost of gas in the gas market, the city is now passing that cost on to the customer."

If the PILT is not passed on, then it would deplete the city's gas utility fund balance. The PILT is similar to franchise fees charged by El Paso Electric Co. and Comcast Cable.

"I want to emphasize that this is a pass-through cost only," Garcia said.

Pat Dominguez, administrative services administrator for the city Utilities Department, said the increase would depend on the amount of natural gas used in a month by a customer.

"On average, customers typically use about 10

decatherms a month during the winter," Dominguez said. "For summer months it's either none or one decatherm. For an average bill during the summer, that would be about a 19-cent increase."

The increase does not require the approval of the Las Cruces City Council to be implemented.

Some city gas customers said they are a little antsy about the increase.

"(Gasoline) is almost four bucks a gallon now and they're already talking about it hitting $5," said Kiely Porter, a Las Cruces homemaker. "I know the difference between gas and natural gas, but one drives the other. The gas market is going crazy and a lot of us are worried because there's really no way for us to plan for this. Everything keeps going up, but we still have to pay for the essentials like this."

Earlier this month, El Paso Electric announced it was freezing its kilowatt-hour charges that New Mexico customers will pay this summer at 1-cent per kilowatt hour of electricity used. However, the company will file a request in September with the New Mexico Public Regulation Commission to begin recovering added kilowatt charges it will pay this summer -- because of increased costs in natural gas used to produced electricity -- in October.

The natural gas PILT is different from a similar term used by the federal government. Congress annually approves payments in lieu of taxes, which are made to compensate local governments for some or all of property tax revenue that is lost because the property is owned by the federal government and is not included on local government tax rolls.

Steve Ramirez can be reached at [email protected]

A closer look

-- A 2 percent payment in lieu of franchise tax is being assessed Las Cruces natural gas customers.

-- The increase is a pass-through cost because of increased costs in the gas market.

-- The PILT is similar to franchise fees charged by El Paso Electric and Comcast Cable.

-- For more information, call the city's Utilities Department at (575) 528-3511, or the city's Public Information Office at (575) 541-2200. People who are hearing impaired can call (575) 541-2182.


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