Texas Gas wants to raise El Paso bills for 10 years to pay $257M in Winter Storm Uri costs
Texas Gas Service wants to put a monthly surcharge on natural gas bills for 10 years in its five Texas regions, including the El Paso area, to pay $257 million in natural gas costs tied to last February’s Winter Storm Uri, which caused havoc for Texas energy companies.
The proposed surcharge for West Texas would be $5.18 per month, or $621.60 over the 10-year period, for residential customers with average natural gas usage, according to regional data filed with the Texas Railroad Commission. It regulates natural gas utilities, and has to approve the company's application.
That's less than the average $36.95 per month charge the company would be able to add to this area's residential bills for nine months under normal cost-recovery methods, according to the company's filing.
However, the additional $332.55 that customers with average gas usage would pay over nine months is $289.05 less than the proposed 10-year surcharge.
Commercial and industrial customers would pay much higher monthly surcharges.
The city of El Paso is challenging the proposal, arguing El Paso-area customers would be subsidizing costs for other Texas Gas Service areas hit much harder than El Paso by last February's winter storm.
The February storm paralyzed much of Texas for more than a week, with sub-freezing temperatures, snow and massive power outages. El Paso escaped the brunt of the storm, but still had snow and sub-freezing temperatures for a shorter time than Austin and other areas served by Texas Gas.
9 Texas natural gas utilities seek help
The Austin-based company is among nine Texas natural gas utilities seeking approval from the Railroad Commission to recover what Texas Gas Service, in its state filing, termed “extraordinary gas procurement and related costs” caused by the historic winter storm.
The Texas Legislature approved a bill to allow affected utilities to finance the costs with securitization bonds that would be paid off over 10 years with customer surcharges.
Texas Gas and the other utilities argue the bond financing will make it easier for customers to pay the costs over a long period rather than having to pay a large amount in a short time under regular cost-recovery methods.
Texas Gas surcharge covers five areas
The company’s proposed surcharge of $1.26 per 1,000 cubic feet, or Mcf, of natural gas would be the same for each customer classification in its five Texas regions – Central-Gulf Coast, West Texas, Rio Grande Valley, North Texas, and Borger/Skellytown, according to its application.
The monthly residential surcharge for the five regions combined would be an average $4.35, company data show. That means West Texas is above the companywide average.
The dollar amount of the surcharge will be based on each customers' average monthly natural gas usage, Christy Penders, a Texas Gas Service spokeswoman, said in an email.
The proposed $1.26 per Mcf surcharge amount may change during the Railroad Commission’s review process, she said.
El Paso fighting utility's proposal
In testimony filed with the state agency, the city of El Paso's consultant, David Garrett, an Oklahoma City-based expert in public utility regulation, said:
“It would be unreasonable to require West Texas to heavily subsidize TGS’s other service areas, especially since the per capita income in the West Texas area is notably lower than in some other service areas."
Under the company's proposal, El Paso customers "would pay more than double the costs they actually incurred (in the storm) in order to heavily subsidize the citizens of Austin, who have about twice as much income per capita," Garrett said.
Christy Penders, a spokeswoman for Texas Gas, said in an email that it would respond to the city’s arguments “within the context of the (commission) proceeding.”
She also noted that Texas Gas does not mark up the price of natural gas, but passes the gas costs on to customers.
If Texas Gas is not allowed to finance the winter storm costs through the securitization bonds, it would have to recover them through its “currently approved Cost of Gas Clause," which would bring a much higher monthly charge over nine months, according to company information.
The Texas Railroad Commission must approve each of the nine utilities' financing applications. A hearing on the applications, which have been consolidated into one case, is set to begin Nov. 2 in Austin.
El Paso city officials are urging El Pasoans to object to the Texas Gas application. That must be done through an email or mailed letter and be submitted by Monday, Nov. 1.
Comments go to: Hearings Division (Docket OS-7061); Attn: Sharon Koren; Texas Railroad Commission; 1701 N. Congress, Austin, TX 78701; or by email to Sharon.Koren@rrc.texas.gov.