Consumers question Southwest Gas request

Kevin Rademacher

Thursday, Aug. 26, 2004 | 10:46 a.m.

Between November 2002 and June of this year, the average Southwest Gas Corp. customer has seen four rate increases that have pushed bills higher.

At that rate, winter bills will jump from $41.60 in 2002 to $57.09 this year. And they could go higher.

Blaming volatile U.S. natural gas prices, Southwest Gas has asked the state Public Utilities Commission for permission for yet another increase that would boost its annual revenue by $16.3 million, or 5 percent.

Despite the run of rate increases at the gas company, just three consumers spoke at a consumer session Wednesday night designed to gather comment on the utility's proposal.

Marlene Drozd was clearly unhappy with the utility's request. She said utility costs have soared since moving to Las Vegas seven years ago.

"It's very difficult to pay utility bills," Drozd said. "I use less gas and my bill has doubled."

The so-called purchase gas adjustment cases are designed to allow the company to recoup unrecovered gas costs or make refunds for overcharges. Utilities are not allowed to earn a profit on gas costs. Every dollar spent on gas is passed on to customers at a one-to-one ratio.

Leonard Rutkin, who appeared prepared to complain about the $8 service charge that he said makes up about one-third of his bill, was satisfied once PUC and utility executives explained that the utility makes no profit on gas costs. He also asked what happens if the market costs for gas goes down after a rate increase is allowed.

Ed Gieseking, Southwest Gas' director of pricing and tariffs, said if the utility over-collects for gas costs it will refund that amount to consumers in its next rate case.

"It works in both directions," he said to Rutkin.

"Now that you explained it, it makes sense," Rutkin responded.

Customer Eileen Kaplan was frustrated with the rate case process, asking commissioners what access consumers had to records produced in the rate case investigations.

PUC staff responded that the public record of the case is available for review at commission offices in Las Vegas and Carson City. PUC Commissioner Carl Linvill added that the commission approved a $1.3 million expenditure in its new budget request for an electronic document management system that would make those records available to the public over the Internet.

Drozd also complained that the utility should be buying gas at lower prices during the summer for delivery in the winter. Gieseking said the utility does just that for about 50 percent of its winter usage. He said more can't be purchased because there is no place to store it and that excessive advanced buys could eventually be deemed imprudent by the commission if market conditions change.

Southwest Gas also has a"general" rate case pending with the PUC that is expected to be decided today. The company asked to raise rates by 6.2 percent and generate an additional $18.9 million in annual revenue for the company.

In general rate cases, utilities are allowed to recover construction and maintenance costs for distribution systems as well as general administrative costs. Rates of return for shareholders are also set in these cases.