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New Mexico State University

New Mexico State University

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Utility cost shortfall projected to be less than expected, but concerns remain

"The hole is not as big as we were afraid it might be, but it's still a hole and New Mexico State University will have to come up with the money from somewhere."

how Rich MacRorie, executive director for facilities operations at NMSU, described the university's projected utility cost shortfall. The current projection is $1.5 million; earlier projections were as high as $2.5 million.

Gas pricing hit record highs after recent hurricanes Katrina and Rita, MacRorie said. NMSU was able to "lock in" for about 75 percent of its natural gas supply over the winter months of December through March at $9.50 per decatherm.

"This is significant because we use more gas during the cold weather months and the demand typically drives up the cost during the period," MacRorie said. "Current spot market futures for this time period are in the $11.50 to $12 range and those prices were over $14 just a few weeks ago. Our actual costs at the burner are about $1.25 or so more than the contract price because of transportation and cost of service charges so we will actually pay between $10.50 and $11 per decatherm. By comparison, our average cost for the last fiscal year of July 2004 through June 2005 was about $6.50."

MacRorie said more good news came from the recent special session of the state Legislature. House Bill 8 allocated $3.5 million for heating costs for higher education statewide. A subsequent amendment increased the appropriation by $1 million. NMSU's share is unknown at this point.

MacRorie cautioned that NMSU will still be short on its utilities budget this fiscal year. Also, in the future, the university will have to either find solutions to the problem from its normal funding or will have to get more permanent increases in the budget utility lines. MacRorie adds the energy market is not likely to return to the pricing structure of even last year.

"This is not a short-term problem and it has not yet been 'solved,'" MacRorie said.