GCA Notice – Durango Mountain Utilities Propane Customer

Oct 18, 2022

Dear Durango Mountain Utilities Propane customer:

Enclosed you will find the customer notice for Durango Mountain Utilities (DMU) annual gas cost adjustment (GCA) requested for approval by the Colorado Public Utilities Commission. The GCA utilizes the forecasted price per gallon from our vendors for the propane commodity for the next year and the actual commodity charge from last year, inventory, and costs collected from ratepayers to set the commodity rate for the forthcoming November 2022 – November 2023 period.

Propane inventory in the country plays a significant role affecting the commodity rate charged by our vendors. The volatility of the United States propane inventory is subject to many unforeseen factors, including weather and export demands. DMU monitors propane prices from different suppliers while managing inventory to ensure a cost-effective supply is in place for our customers.

Below is some information on why propane prices are continuing to fluctuate:

  • Propane is a byproduct of domestic natural gas processing and sometimes crude oil refining. DMU wholesale cost of propane fluctuates along with the cost of those commodities.
  • This increased cost of natural gas has led to higher wholesale and retail prices for propane this year.
  • Increased exports to Europe and Asia have impacted inventories, which are at a 5-year low. o The trucking industry is facing unprecedented labor shortages. Driver wages across the country have increased, thus adding to the overall expense of delivering propane to your
    home.
  • The cost of diesel fuel has increased by more than a dollar from last year, which has also increased delivery costs. 

DMU is always looking at ways to supply the best service/rates to our customers. Last fall, DMU installed a 30K propane tank and connections to allow for increased redundant and efficient service to our customers. DMU partnered with Ferrell gas to upgrade our system, and worked hard to get everything completed. This upgrade will allow for more storage. The spring of 2022 DMU, did remove the 18K tank on Sheol St near the Purgatory Lodge front desk and clean up that area providing an improved appearance in our community. DMU will continue to upgrade our system as needed to serve our customers more efficiently.

As a result, for the next GCA period our PUC approved rates beginning for usage in November 2022 will be set at $1.72 per gallon, based on the market forecasts. The base rate of $1.39 per gallon will not change. The combined propane rate (Commodity + Base) per gallon will be $3.11. This cost is flat compared to last year so no increase to our customers.

If you have any questions regarding our annual GCA filing or any related items, please contact our office.

Thank you,

Tim Ward
DMU Business Manager