Get Full Government Meeting Transcripts, Videos, & Alerts Forever!
Get email alerts on the Energy Policy topic
No spam. Unsubscribe anytime.
Council approves third amendment to NMEA gas supply agreement, extends financing window to 2054
Summary
The City Council adopted Resolution No. 2025-1977 approving a third amendment to the New Mexico Municipal Energy Acquisition Authority natural gas supply agreement; staff recommended keeping daily volumes at 12,500 MMBtu and extending the bond-financing duration to 2054 to seek larger discounts on the first-of-month index pricing.
The Farmington City Council voted 4-0 to adopt Resolution No. 2025-1977, approving a proposed third amendment to the natural gas supply agreement administered through the New Mexico Municipal Energy Acquisition Authority (NMEA).
Hank Adair (city utility staff) presented background, explaining the authority aggregates municipal gas demand to secure tax-exempt bond financing that can be used to obtain discounts on first-of-month index gas purchases delivered at Blanco Hub. Adair said the city’s historical participation produced a discount of roughly $0.295 per MMBtu in prior financings and staff expects the new bond issuance could increase that discount depending on market bids.
Staff recommended keeping Farmington’s daily volume allocation at 12,500 MMBtu per day while extending the overall financing duration tied to the program from the current 2039 end date to 2054. Adair told council that the agreement remains segmented and reviewed every five years; amendments add “off ramps” (short-term and long-term load-loss provisions) so the city can remarket or discontinue volumes if plant operation or law changes materially.
Councilors asked about market volatility, the impact on customers and how the savings would be reflected. City staff said any reduction in fuel and operating costs flows through the utility’s cost-of-service and power-cost adjustment processes and that earlier participation had saved the utility about $17 million over the period of the program. Staff also noted Farmington Electric is bringing new reciprocating internal combustion engine (RICE) generators online later in 2025 and has joined the SPP energy imbalance market, both factors the utility will consider when managing volumes.
The resolution authorizes the city to execute the third amendment and associated documents, including ISDA agreements for financial hedging where appropriate. The motion to adopt was moved and seconded and carried on a recorded voice vote.
Ending: The city will proceed with the amendment and participate in bond marketing; staff and the NMEA will report back at the next five-year review or sooner if market conditions prompt adjustments.
