New Mexico Gas Company Settlement

New Mexico – New Mexico Gas Company announced today that it has reached a settlement in the rate case which it filed in March 2011. The settlement now goes before The New Mexico Public Regulation Commission for approval. If approved, the new rates would result in a 6.4% increase in the average monthly residential customer bill.

"It has been nearly 5 years since the last gas utility rate increase and our current rates are based on 2005 costs of providing services. Since then, we've made significant investments in our system and our operating costs have gone up. The new rates better reflect current costs," stated Annette Gardiner, President.

Since the last rate increase, over $215 million has been invested to maintain and improve New Mexico Gas Company's natural gas distribution system in order to better serve their customers. Some of these investments include:

New pipe installations to meet customers' needs;

Automated meter reading which will result in improved billing accuracy for customers; and

Replacement of pipelines to improve safety by preventing corrosion and gas leaks.

The new rates will increase the average monthly residential bill by approximately $3.19, or 6.4%, assuming that the cost of gas portion of the bill does not change. The residential rate increase will be reflected in part in the fixed access charge a residential customer pays which will increase from $9.59 to $11.50 a month. The remainder of the increase will be in the transmission and distribution charges which are variable and based on each customer's natural gas consumption.

If approved, the new rates will go into effect on January 31, 2012. The parties to the settlement agreed to an 18-month moratorium on implementing subsequent increases to these base rates after the increase goes into effect.

In total, the settlement provides for a $21.5 million annual revenue increase to New Mexico Gas Company in base rates and an increase of approximately $850,000 in direct charges to customers for specific services provided.