PUC approves SW Gas rate hike

Kevin Rademacher

Wednesday, Nov. 10, 2004 | 11 a.m.

The state Public Utilities Commission this morning approved a $30.6 million rate increase for Southwest Gas Corp. which will push monthly bills up by about 9 percent beginning Dec. 1.

With a 3-0 vote, the commission raised the current average residential winter rates in Southern Nevada from $68.04 to $74.16 a month, an increase of $6.12. It is the fifth jump in natural gas bills in 12 months.

PUC Commissioner Carl Linvill, who presided over the Southwest Gas case, said the rate increase is a product of an increasingly volatile market.

"It reflects the difficult reality we have to deal with in this order, in this state and in this country that natural gas prices are moving higher," he said this morning.

In approving the rate increase, the PUC accepted a controversial proposal presented by its own staff analysts to nearly double Southwest Gas' original request for a rate increase of $16.3 million, or 4.9 percent.

Commissioner Adriana Escobar-Chanos agreed with the need for the rates proposed by staff, but criticized the process.

"I believe it is the party's responsibility to come in closer with their request," she said.

Escobar-Chanos, while voting for the order, dissented on the process that had PUC staff presenting the higher rate change.

The move has drawn sharp criticism from Nevada Consumer Advocate Tim Hay. In assessing a draft order that recommended the rate increase on Tuesday, he characterized the looming rate hike as "quite disappointing."

Hay's Bureau of Consumer Protection had moved to strike testimony advocating the higher rate increase from hearings held in October. The motion was rejected by Linvill.

At this morning's hearing, Escobar-Chanos and PUC Chairman Don Soderberg also voiced their disagreement with Hay's arguments.

Southwest Gas said it needed the $16.3 million "purchased-gas adjustment" rate increase because of persistently higher natural gas costs.

PUC staff, however, said the standard method of basing rate adjustments on past prices for gas fail to account for expected higher future gas prices. The result, staff said, leads to large unrecovered balances consumers must eventually make up, plus heavy interest costs.

With that, the staff proposal looked at future projections for gas prices in making the higher recommendation.

The so-called purchase gas adjustment case is designed to allow the company to recoup unrecovered gas costs or make refunds for overcharges. Southwest Gas is 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.