Southwest Gas defends proposal for adjustment

Kevin Rademacher

Tuesday, Sept. 23, 2003 | 11:02 a.m.

Southwest Gas defended its request for the authority to make monthly adjustments to natural gas rates in a filing Monday with the state Public Utilities Commission.

The Las Vegas-based utility has requested a $22.6 million rate increase to cover higher costs for natural gas over the past year, a so-called "purchased gas adjustment." That would amount to an increase of $3.72 per month on the average customer's winter bill.

The amount was originally estimated at about $26 million, but that number was based on estimated gas costs between April and July. Lower actual prices during those months have reduced the request.

While critics have not questioned the total rate increase amount, earlier this month the state Bureau of Consumer protection criticized the request to make monthly adjustments as a possible effort to limit regulatory oversight.

In testimony filed Monday, Southwest Gas pointed out that in its 2002 purchased gas adjustment filing, the Bureau of Consumer Protection listed a series of advantages to making more frequent rate adjustment filings. Those advantages included the minimization of large swings in gas prices that can currently build up over the course of a year, the stated foundation of the current Southwest Gas case.

Southwest Gas said that in direct testimony in 2002 experts said, "The BCP believes that the advantages far outweigh the disadvantages."

Southwest Gas also said the structure of the monthly adjustments would preserve regulatory control.

"There will not be any reduction in the regulatory scrutiny from what exists today," said Southwest Gas' testimony, authored by Edward Gieseking, the company's senior manager for pricing and tariffs. "Southwest Gas will continue to bear the burden of showing that its gas supply acquisition activities are performed in a prudent manner, or be subject to regulatory disallowances."

Filings for monthly adjustments, under Southwest Gas' proposal, would be made two months ahead of the adjustment and be authorization of the state Public Utilities Commission. The company would also continue to file an annual Gas Supply Report, allowing regulators and other parties the opportunity to assess the prudency of the purchases.