Natural gas price hikes will hit state in wallet

Wednesday, Jan. 3, 2001 | 11:10 a.m.

CARSON CITY -- The big increases in natural gas that became effective Monday will cost the state millions of extra dollars, and officials are now revamping Gov. Kenny Guinn's $3.74 billion budget.

Of immediate concern is how agencies will cope with the 30 percent increases during the next six months when they are on a fixed budget.

"I hope we can limp through the rest of the (fiscal) year," said state Budget Director Perry Comeaux, who is building Guinn's next two-year spending program.

But he said the administration may have to ask the Legislature for a supplemental appropriation to tide the departments over.

"This will really hit the university, the prisons and the mental health facilities," Comeaux said.

He doesn't have a total figure on how much state government spends on natural gas or power. But he said the increase will mean millions of dollars in added cost. And that may have to come out of some other programs.

"It certainly isn't doing it any good," said Comeaux in referring to the budget.

Roger Buehrer of Southwest Gas Corp. said prisons are considered medium-sized commercial customers. In Northern Nevada, the rates rose 33.9 percent for such customers. In Southern Nevada the rate went up 29.7 percent for the women's prison in North Las Vegas, which is operated by a private firm.

Buehrer said the state prisons at Jean and Indian Springs in Clark County do not use natural gas. Neither does the prison in Ely.

Darrel Rexwinkel, who works in the fiscal staff for the state prison system, said the prison at Lovelock is budgeted for $316,797 this fiscal year for natural gas and $658,359 for electricity. The Northern Nevada Correctional Center in Carson City has a natural gas budget this year of $352,710 and an electricity budget of $401,252. Power rates are going up every month and these two prisons would be hit with the 33.9 percent natural gas increase.

Comeaux said advisers have told Guinn, who at one time headed Southwest Gas, that the natural gas rates may rise by 50 percent. Buehrer said Southwest does not intend to file another pass-through rate increase until early June. He said he did not know how much the utility will need to offset the higher cost of fuel it must pay.

Southwest, Buehrer said, is asking the state Public Utilities Commission to be able to boost rates every month, as do Nevada Power and Sierra Pacific Power Co. But he said he doesn't expect approval of that application until the summer.

Comeaux said the budget office last summer got some estimates from the state Consumer Affairs Office on what the average increases would be in the coming two years and built those into the budget. But he said this big hit by Southwest wasn't anticipated.

Electric rates are going up by 1 percent to 2 percent a month both in Southern and Northern Nevada. Buehrer said Southwest has petitioned the Public Utilities Commission for permission to adjust its rates every month instead of every six months.

The rate increases are to recover the higher fuel costs paid by the utilities and do not represent added profit.

The finishing touches are being put on Guinn's budget for presentation to the Legislature Jan. 22. Comeaux believes it's too late to start tearing apart agency budgets and recalculating their energy costs.

"We're going to look for other ways to protect ourselves," he said. The administration, he said, may put more money in a contingency fund that agencies can access when they fall short in paying their utility bills.