NM Gas Co. says San Juan Basin gas helped avoid service disruptions during winter storm

• Several utilities and corporations presented information to the New Mexico Public Regulation Commission about the winter storm that knocked out power to millions of people in Texas.
• Utility companies told the PRC that some customers may see some impacts to their bills as a result of increased cost of electricity or natural gas purchased during the winter storm.
• Switching to San Juan Basin natural gas, coal generation at the San Juan Generating Station and fuel oil at some stations were strategies companies used to avoid blackouts.

AZTEC — As the winter storm approached leading up to Valentine's Day, New Mexico utilities turned to lessons they had learned a decade earlier. Among those the New Mexico Gas Company learned was not to rely heavily on Permian Basin gas, according to Tom Domme, the vice president of external affairs and general counsel.

Domme said by the time the storm reached New Mexico, the gas utility had shifted to predominantly San Juan Basin gas. He said this was one of the actions taken that prevented customers from losing service. 

New Mexico Gas Company was one of the utilities and corporations that presented information about the winter storm that knocked out power to millions of people in Texas. These utilities spoke during the New Mexico Public Regulation Commission meeting on Feb. 24.

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The commission also heard from PNM, which utilized coal-generated electricity from the San Juan Generating Station, and El Paso Electric, which leaned heavily on nuclear power and fuel oil units during the storm.

Utility customers may see some impacts to their bills as a result of increased cost of electricity or natural gas purchased from the market during the winter storm. 

Commissioner Cynthia Hall said that in the future, when extreme weather events are expected, utilities may want to provide advance warning to customers and encourage them to reduce consumption. She said the price spikes come back to haunt the ratepayers in a way that is very hurtful and very unsuspected.

Natural gas prices spiked during storm

Domme said NM Gas Company learned in 2011 that when Texas implements rolling brownouts it can lead to wells freezing over. 

"Once they're shut down for 20 minutes, their frozen," Domme said.

The Permian Basin, which is in Texas and southern New Mexico, is more vulnerable to that than the San Juan Basin is, he said.

"The problem in Texas is that the gas is not as well winterized as it is in the northern areas," Domme said.

He also said that in both 2011 and 2021 the temperatures in New Mexico were warmer than the temperatures in Texas.

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Domme said the biggest impact the storm had on the utility was financial. The gas company had to buy gas off the market as it experienced some of the largest demands it has ever seen. The price of gas significantly increased due to the storm. Prior to the storm, the gas was $2.70 per mmbtu. That increased to $250 per mmbtu during the storm. The utility had to buy off the market because it was not able to access all of the reserves it expected to get from storage in west Texas.

He said New Mexico Gas Company is drafting a pleading that will be filed with the PRC to address the impacts of that large increase in price of natural gas and the impacts on customers. This may mean increased bills for customers.

PNM postponed San Juan outage to ensure there was enough power

"The positive news is that PNM's system did remain reliable and stable and we had no rolling blackouts," said Public Service Company of New Mexico Vice President of Generation Tom Fallgren.

He said there were some limited distribution outages, but that is not what happened in Texas or in California during the summer when there were rolling blackouts.

Fallgren said PNM also did infrastructure improvements after 2011 to prepare for extreme winter storms.

"All generation facilities can operate in cold weather as long as you plan and you maintain for those," Fallgren said after telling the PRC that he had spent much of his life in Minnesota.

Fallgren said PNM minimized the use of its gas units in an effort to reduce the cost impacts. He said the utility used oil in the dual-fuel units and postponed a planned outage at the San Juan Generating Station for two weeks so that the coal-fired power would be available. 

In the future after the power plant closes, Fallgren said PNM is looking at options like hydrogen, pumped hydro storage and batteries as it moves to a carbon free future. PNM also has nuclear energy from Palo Verde Generating Station.

The electricity PNM purchased from the western grid did have some increased prices related to the storm, but not like New Mexico Gas Company experienced when it had to purchase natural gas from the market.

He said the renewable energy is not responsible for the rolling blackouts this winter in Texas or the rolling blackouts during the heatwave last summer in California.

In resource planning, Fallgren said utilities like PNM should take into account the extreme weather events that are associated with the changing climate.

PNM has a fuel clause on customer's bills, Mark Fenton said. Fenton is the executive director for regulatory policy. He said there cannot be more than a 5% increase in the average customer's bill. 

"There was an impact, there's no question. We had to go to the market and power is expensive," Fenton said.

El Paso Electric experienced high load, but had enough generation capacity

Vice President of Generation, System Planning and Dispatch Dave Hawkins said El Paso Electric also chose to delay maintenance outages on one unit at a generating station and used fuel-oil at some of its generation facilities. 

Using fuel oil saved customers an estimated $19 million in both New Mexico and Texas, Hawkins said, and the nuclear power from Palo Verde Generating Station provided 65% of the electricity during the storm.

While loads were higher than forecasted, Hawkins said there was enough generating capability to meet the loads experienced.

Hannah Grover covers government for The Daily Times. She can be reached at 505-564-4652 or via email at hgrover@daily-times.com.

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