Southwest Gas seeks natural gas rate hike

Sunday, June 4, 2000 | 8:37 a.m.

Natural gas rates would climb by 13.2 percent in Northern Nevada and by 10.6 percent in Southern Nevada under a request being sought by Southwest Gas Corp.

Utilify officials say soaring natural gas prices justify a $22.9 million overall rate boost.

They want the increase to take effect July 1, but the Public Utilities Commission may delay action until November or December, the Las Vegas Review-Journal reported.

"We're concerned with both the impact for gas customers as well as electric customers. So much of our electricity is generated at gas (burning power) plants," said Tim Hay, state consumer advocate and chief of the attorney general's Bureau of Consumer Protection.

Southwest Gas doesn't operate any gas wells of its own, and it wants to recover increased fuel costs from the 12 months ending in March. During that period, the cost of 1 million BTUs of gas increased from $1.94 to $2.27.

The futures markets recently indicated gas prices may hit a new high of $4.41 this month.

Because of the run-up in gas prices, Southwest Gas wants the PUC to start adjusting gas rates on a monthly basis, rather than waiting for yearly changes.

"It would minimize the impact on customers," Southwest Gas spokesman Roger Buehrer told the Review-Journal. "They don't get it all in one lump like they do now on an annual basis."

Rather than seeing a major increase at year end, customers would encounter gradual adjustments each month, he said. If natural gas costs decline, customers would enjoy the savings quickly.

Hay said he needs to research the proposal for monthly rate changes before deciding whether he will support it.

"In concept, that may make some sense," he said, adding monthly changes would reduce some of the volatility in rates.

A year ago, the PUC cut Southwest Gas rates by $24.9 million because of falling gas prices.

Buehrer attributed rising natural gas costs to a number of reasons.

Regulators no longer set the price of the fuel at the well head, he said, and a national network of gas transmission lines makes it easy for gas producers to sell the fuel around the country.

"It's a clean-burning fuel, and you don't have the problems you have with coal," Buehrer said.

Also, no new nuclear power plants are being built, and most new electric generation plants use natural gas.

Large customers have started buying directly from gas production companies, he said.

"There's a real bidding war, if you will, for natural gas supplies," he said.