Nevada regulators approve big hike in gas price

David Strow

Thursday, June 28, 2001 | 11:15 a.m.

The Nevada Public Utilities Commission this morning approved a $75 million rate hike for Southwest Gas Corp., a move that will raise the average Southern Nevada natural gas bill by more than 21 percent.

The rate hike will take effect in July. The average residential consumer will see monthly summer bills escalate from $35.83 to $43.75.

Roger Buehrer, Southwest Gas spokesman, said the huge increase is the result of massive increases in the price of wholesale natural gas that peaked last December. Southwest Gas, in effect, is playing catch up, Buehrer said.

"This helps us recover the cost incurred as a result of those (price increases)," Buehrer said. "This brings us into line with current market rates. We don't anticipate additional increases in the cost of natural gas (for the foreseeable future)."

It is Southwest Gas' third rate increase since December 2000. The first increase was a 9.2 percent hike that took effect December 1, and was followed by a 23.8 percent increase one month later.

Southwest gas then requested an even larger increase, an $87.2 million, 28.6 percent hike that was to have taken effect March 1. But Southwest Gas lowered that request in response to an easing in natural gas rates in the wholesale market. That lowered request was approved today.

Natural gas rates have been declining since their peak in December, but still remain twice as high as they were last year, making this rate hike necessary, Southwest Gas said.

Commercial customers will face a 22.4 percent increase, while large commercial rates will increase 28.3 percent.

Don Soderberg, chairman of the public utilities commission, said the commission had no choice under the law but to approve Southwest Gas's request if it found the company's purchases of wholesale natural gas were made prudently.

"The good news is wholesale prices are going down, so we should see some rate relief in the next few months," Soderberg said. Because many of Nevada's power plants run on natural gas, that could also result in rate relief for electricity customers, Soderberg said.

Nevada Power Co. purchases most of its natural gas from sources other than Southwest Gas, so today's ruling shouldn't have a ripple effect on electricity rates, Buehrer said.

Southern Nevada gas customers, however, may still face yet one more rate increase. Buehrer said Southwest Gas will file for a "general rate" increase within 30 days, to take effect Jan. 1. Buehrer said it is still undecided how much of an increase Southwest Gas will ask for.

Today's increase is designed to allow Southwest Gas to simply pass through its natural gas purchase cost. A general rate increase is for an adjustment in the non-fuel costs paid by the utility.

"This would recover the increase in our operating expenses," Buehrer said, such as additional employees, customer service operations, and additional infrastructure. "We're serving a customer base that's doubled in the last five years," Buehrer said.

Southwest Gas' last general rate case was six years ago.

Soderberg said he couldn't comment on whether he would support such a proposal until he had seen an application and a staff analysis.