Southwest Gas looks for extra $31.5 million from customers

Thursday, Oct. 16, 1997 | 11:22 a.m.

CARSON CITY -- An executive of Southwest Gas Corp. told the state Public Utilities Commission the utility needs an additional $31.5 million from its customers to offset the higher cost of fuel last winter.

Jaime Ramirez, senior manager of rates for the Las Vegas based company, testified Wednesday the firm wants to collect the extra money over a 24-month period, rather than 12 months to soften the blow on consumers.

If approved that would mean an 18.1 percent increase, or $23.1 million, to the 300,000 customers in Clark County. That breaks down to an extra $5.11 per month for a residential customer who uses an average of 45 therms of natural gas.

In Northern Nevada, the 83,000 customers in the rural counties would pay 16.9 percent more to bring in $8.3 million. That translates to an increase $7.72 for a homeowner who uses 70 therms.

Southwest says the extra money is to pay off higher charges from its suppliers El Paso Natural Gas Co., the Kern River Gas Transmission Co., for Southern Nevada and the Paiute Pipeline Co., and Northwest Pipeline Co., in Northern Nevada. It does not mean any extra profit for Southwest.

The staff of the utility commission has recommended the rate increase for Southern Nevada be trimmed by $4.2 million and by $2.4 million in Northern Nevada. Chris Van Dyck, senior deputy attorney general with the Bureau of Consumer Protection, said his agency is joining with the PUC staff in asking for many of the reductions and his office is proposing $500,000 in adjustments to the rate request.

Ramirez was the opening witness for Southwest in a hearing that is expected to last 2-3 days before PUC Chairman Judy Sheldrew. A decision by the commission is due before the end of December.

Ramirez said the $31.5 million is about $1 million lower than originally requested because Southwest has received some refunds from some of its suppliers.

This request comes after the PUC authorized Southwest Gas to boost rates by 9.2 percent or $10.1 million in Clark County in September. And the utility was authorized to boost rates by 14.2 percent to northern Nevada customers.

A key argument in this new application is whether Southwest Gas used "prudent" practices in trying to buy the lowest priced gas available. The staff of the utility commission contended in the first hearing the utility should have followed a different gas purchasing strategy to offset the rate shock to customers.

Dante Pistone, public relations executive for Southwest Gas, said before Wednesday's hearing there was a "dramatic spike in gas costs last winter" across the country. He said it affected the gas market nationwide.

The staff of the PUC believes Southwest should have negotiated some long term contracts rather than following a short term strategy in buying natural gas. Southwest says its policy has benefited ratepayers in the long run.

Pistone said the first rate case covered the last three months of 1996 and the present one is for the fuel used in the first three months of 1997.