Monthly adjustments focus in Southwest Gas rate hearing

Kevin Rademacher

Thursday, Oct. 2, 2003 | 11:09 a.m.

The Public Utilities Commission's Wednesday hearing on a $22.6 million rate-hike request from Southwest Gas Corp. lasted less than a day, and as expected the controversy surrounded the utility's request to make monthly rate increases.

The increase is being sought to cover the higher cost of the natural gas purchased by the Las Vegas company. If approved, the average customer's winter bill could rise by $3.72 per month.

Currently, the gas company -- as well as the state's electric companies -- are only allowed to make annual rate adjustments, typically after extensive regulatory scrutiny.

Southwest Gas executives argued that the monthly adjustments would mean more, but smaller, swings in rates. It also would provide consumers more immediate feedback on the going cost of natural gas, allowing for reactionary conservation.

Edward Gieseking, director of pricing and tariffs for Southwest Gas, argues that the current regulatory structure leaves customer either paying artificially high or artificially low prices when the market price for gas swings because a year goes by between adjustments.

The monthly plan would allow rates to be adjusted 60 days after a filing.

The state Bureau of Consumer Protection, however, argued that the new system of rapid adjustments would limit regulatory control.

Monthly rate adjustments, argued James Williamson, technical staff manager for the BCP, would come months before an annual rate case was filed, allowing for reviews of gas purchasing practices.

"A full regulatory review should be employed before rates are adjusted," he said, adding that the frequency of filings would make a thorough review impossible. "There's just no time, and the company is not filing all of the information it would file in an annual filing."

Southwest Gas questioned Williamson as to why the BCP had changed its stance since making a similar filing in 2002 supporting monthly rate adjustments.

Williamson said increased evidence of market manipulation and the withholding of pipeline capacity make the reduction of scrutiny more dangerous.

"The BCP position on policy has changed since 2002," he said.

Ron Knecht, a PUC economist, refuted claims that the monthly adjustments would limit commission control over the process.

"I have the opinion that it would not cause the deterrence of regulatory review," he said. "Nothing in this mechanism will reduce the commission's ability to uphold those (prudency) standards."

Attorneys in the case have been ordered to file post-hearing briefs by Oct. 17, and Southwest Gas has requested a final ruling on the request in time to implement new rates by Dec. 1.