PUC approves increase in Las Vegas natural gas rates

Kevin Rademacher

Thursday, May 27, 2004 | 10:39 a.m.

The Public Utilities Commission on Wednesday voted to allow Southwest Gas Corp. to raise its Southern Nevada rates by 17.1 percent.

The increase -- part of a so-called purchased gas adjustment case -- will raise rates by about $43 million annually to accommodate higher costs the company is incurring for the purchase of natural gas needed to serve its customers. The new rates will go into effect Tuesday.

The increase received unanimous approval from the three-member commission.

Included in the rate increase was a provision allowing the Las Vegas-based utility to make projections for future increases in gas prices in its rate case filings. Historically, the utility has had to base its rate requests only on the costs incurred in past months.

Company spokesman Roger Buehrer said that amid increasingly volatile natural gas markets, the old method for setting rates has led to larger swings for customers to to under recovery of costs.

"This should help stabilize rates somewhat," he said.

The most recent rate increase is the latest in a series of rapid-fire jumps in gas prices.

In December, Southwest Gas raised rates 11 percent. The company also received permission to end a previously approved monthly customer refund based on the results of an old rate case. That move pushed rates higher by 5.5 percent.

In addition, Southwest Gas and the PUC will hold a public hearing for consumer comment on Wednesday in an $18.9 million general rate case. That case is designed to allow the company to recover construction and maintenance costs for its distribution system as well as set a rate of return for shareholders. If approved, the case would raise rates 6.2 percent beginning Sept. 1.

And it won't end there. The case approved Wednesday was an out-of-cycle rate increase that, Buehrer said, was designed to begin recovery of sharp increases in gas costs before the imbalance began incurring large interest charges that would ultimately be passed on to customers.

On Tuesday, however, the company is expected to file another in-cycle purchased gas case. Those rates would go into effect late in 2004, and Buehrer said another increase is possible.

The price of natural gas, the utility said, is currently running about 2.5 times higher than year-ago prices.

In other PUC business, the commission lowered its so-called mill assessment from 2 mills to 1.9 mills. A mill -- one-tenth of a cent -- is levied on the gross operating revenue of the intrastate operations of all regulated utilities. The revenue from the mill tax fund the operations of the PUC.

The current 1.9 mill assessment -- which generates about $6.6 million annually -- is the lowest rate levied on Nevada utilities in more than 19 years.

Also on Wednesday, the PUC approved a state operating certificate for CommPartners LLC, a Las Vegas-based, voice-over Internet protocol telephone service provider.

The company has said it plans to begin providing telephone service through a national network of broadband service providers this summer. CommPartners is backed in part by Las Vegas businessman Maurice Gallagher, who helped launch the telephone company that would eventually become Mpower Communications.