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City of El Paso, Texas Gas Service reach settlement to reduce freeze fee

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UPDATE, 4:05 p.m. Nov. 2: Under the settlement between Texas Gas Service and the City of El Paso approved by an administrative law judge Tuesday, El Paso residents will pay a monthly fee of $5.22 for the next three years to recover costs from Winter Storm Uri. That totals $188 over three years, rather than the original proposed fee, which asked for $4.33 over 10 years, or $520 total from each household.

The settlement agreement was approved by an administrative law judge Tuesday, but still requires the OK from the Railroad Commission, which oversees oil and gas in Texas. The three-member commission will consider the settlement at a public meeting later this month.

Original story

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El Pasoans will see lower fees on their natural gas bills than other Texans after the city’s utility provider reached a settlement with the state over surcharges related to February’s winter storm.

At least seven cities, regional coalitions and 12 gas companies reached a settlement over fees related to Winter Storm Uri ahead of the scheduled hearing Tuesday before the Texas Railroad Commission, which regulates the oil and gas industry, according to filings with the commission. The settlement agreement will be proposed at Tuesday’s hearing for approval from the three-person board.

Earlier this year, Texas Gas Service, which supplies natural gas to El Paso, applied for a $4.33 monthly rate increase for El Pasoans to pay over a decade — an additional $52 a year. The request was the same as other gas utilities, which all required approval from the commission.

The City of El Paso filed as an intervenor, opposing the fee, saying the city would be subsidizing the company’s costs in areas outside of El Paso, which were hit harder by the storm.

City spokesperson Laura Cruz Acosta said the settlement with Texas Gas Service reached Monday will reduce the $4.33 per month proposed fee and shorten the time West Texas customers have to pay.

The new, lower surcharge for El Paso’s share of the storm’s costs would be determined after the settlement’s approval by the commission, she said.

“If the settlement is approved by the administrative law judge at the state level, the proposed surcharge will go into effect in late December and continue for the next three years,” Cruz Acosta said.

In May, the Texas Legislature approved $10 billion in bonds for utility company and electric co-op costs during the storm. Lawmakers passed a measure, House Bill 1520, allowing gas utilities to recoup costs from the storm by charging fees.

The bill offers the bonds as an alternative to expensive one-time gas bills and to “reduce the cost that customers would otherwise experience,” according to the language of the bill.

Texas Gas Service, part of Oklahoma-based ONE Gas, asked the commission’s permission to recover more than $257 million in costs from the winter storm through the bonds — in this case backed by the state’s money — to pay off short term debts, which is called securitization.

News site Utility Dive found more utility companies are seeking securitization to ask customers to pay for costs from climate events, such as wildfires and hurricanes, as well as unpaid bills accrued during the coronavirus pandemic.

During Winter Storm Uri, a system of failures compounded one another. Over five days, Texas saw extreme temperature lows, strong winds and snow. Amid the dangerous conditions, millions of people lost power, Texas’ largest power grid Electric Reliability Council of Texas was minutes from a complete grid failure, and more than 200 people died.

Just before the storm, gas production dwindled as companies were concerned fracking, which uses water to operate, would freeze. Gas processing facilities shut themselves down. The prices skyrocketed — up to 400 times the usual amount — with increased demand as people tried to heat their homes. While power companies lost money, gas sellers reported record-breaking profits of more than $11 billion during the blackouts.

El Paso was mainly spared from power outages because the electrical grid was weatherized after a historic storm in 2011. The city is also tied into the Western Interconnection, not ERCOT. Ciudad Juárez, on the other hand, went dark as natural gas deliveries from Texas dropped.

Cover photo: Snow covered the border region on Feb. 14, 2021. (Corrie Boudreaux/El Paso Matters)

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Danielle Prokop

Danielle Prokop is a climate change and environment reporter with El Paso Matters. She’s covered climate, local government and community at the Scottsbluff Star-Herald in Nebraska and the Santa Fe New Mexican. She can be reached at dprokop@elpasomatters.org.

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