Editorial: Electricity isn’t only shocker

Saturday, Jan. 27, 2001 | 10:43 a.m.

"Ouch" isn't the only four-letter word that Southern Nevadans said after learning last week that Southwest Gas wants to hike its rates by 28.6 percent. This proposal is on top of a 9.2 percent increase approved last year by the state Public Utilities Commission, a boost that took effect in December. A subsequent hike approved by regulators upped rates 23.8 percent on Jan 1. If the latest request is approved that would mean -- within the last four months -- the average bill in a winter month for a Southern Nevada consumer will have shot up to $66.92, a staggering $26.80 monthly increase.

The energy crisis in California -- caused in large measure by the state's debacle in implementing electric deregulation -- and higher electricity bills here in Nevada, have so far garnered most of the public's attention. But the skyrocketing increases in natural gas prices, which have contributed to the rising costs of electricity, are starting to get some added scrutiny.

Southwest Gas defends its proposal, saying that it is merely passing along to consumers its costs of purchasing fuel. The utility mentions two factors that have led to the increased costs: Nationally November and December were extremely cold months, and there has been an increase in the use of natural gas as a fuel to generate electricity. A recent USA Today story about energy costs also notes that the price of natural gas has gone up faster than other energy sources. Analysts say that the available supply of natural gas, which also is popular because it is environmentally palatable, just can't match the insatiable appetite of consumers and businesses. This offers little consolation, though, to Nevada's residential customers, who are bearing the brunt of this and other higher energy costs.

Utilities overseen by state government should be able to recover reasonable expenses, but the state Public Utilities Commission should look at Southwest Gas' application with a heavy dose of skepticism. For starters, the regulators should review whether Southwest Gas used good judgment in its fuel-purchasing contracts. As state consumer advocate Tim Hay has said, it should be determined if the company could have done a better job in negotiating decent prices for long-term contracts. Residential customers shouldn't have to bear the brunt of higher rates if a utility simply made a bad business decision.

If the Public Utilities Commission ultimately determines that some type of rate increase is warranted, at the very least it should take Hay's advice, rejecting the company's request to implement the boost starting March 1, instead taking the usual time to review such a proposal. This would effectively mean that the soonest a rate hike could go into effect would be about five months, which would allow regulators a chance to see how close the utility is to meeting its projections of total costs.

Residential customers and businesses have been battered in the past year by escalating energy costs -- don't forget that Nevada Power has increased electricity bills for residential customers by 15 percent in the past year, which works out to an average hike of $10.50 a month. The double whammy of higher bills for both natural gas and electricity will take its toll. Unfortunately it doesn't appear the trend will be reversed any time soon. The higher energy bills here in Nevada haven't yet matched those that many cities in the Golden State have experienced, nonetheless they are starting to make residents of this state jittery. In this climate, regulators -- more than ever -- need to ensure that ratepayers aren't being taken advantage of. Otherwise the pocketbooks of consumers, and the bottom lines of businesses, could be left in terrible shape.