Reaction mixed on gas hike

Kevin Rademacher

Thursday, Nov. 11, 2004 | 11:20 a.m.

Customers had mixed reactions Wednesday to the news of a 9 percent increase in their natural gas bills.

The state Public Utilities Commission just an hour earlier had approved the rate increase of about $30 million for Southwest Gas Corp. of Las Vegas. The resulting increase will raise the current average residential winter rates in Southern Nevada from $68.04 to $74.16 a month, a jump of $6.12 or about 9 percent.

"Every time I see a bill come in, there's different prices," said Hilda Garcia, a Las Vegas resident leaving the Southwest Gas offices at Tropicana Avenue and Arville Street after making a payment. "We don't use that much gas, and our bills keep going up."

The new rates, which will go into effect Dec. 1, mark the fifth jump in natural gas bills in 12 months. On Dec. 1, 2003, the average Southern Nevada winter bill was $53.23 a month.

While some customers were grumbling, others took the news of the rate increase in stride.

"No problem," said Las Vegas resident Robert Brumley, pointing to his bill. "Compared with the water bill, electric bill, gasoline prices, it ain't even close."

Mike Banko agreed.

"Some things we expect. This is one of them," he said.

Larry Spitler, associate director for advocacy for the Nevada AARP, said higher utility prices are making it difficult for members to keep up with their bills.

"Particularly those on a small pension and Social Security," Spitler said. "Even though they may get some cost of living increase, often it's not enough to cover everything."

Spitler added, however, that while members have been troubled by utility prices, health care is still a greater concern. He encouraged consumers, retired or not, with difficulty meeting their utility bills to contact the companies and inquire about assistance programs.

"I think the utilities do a very good job of explaining the programs when they are asked," he said. "The problem is, a lot of times, getting people to ask."

In approving the rate increase, PUC members said the decision was difficult, but as long as consumption of natural gas continues to increase without access to new resources, volatile market prices are likely to continue. Both regulators and utility executives have clamored for Congress to pass a new federal energy policy that will balance those issues.

"Everyday I hope I will wake up and get on the Internet to see that the gridlock in Washington has broken and we can pass the energy bill," PUC Chairman Don Soderberg said in Wednesday's deliberations. "What we are faced with (in the meantime) is a wholesale cost in this state that we have zero influence on."

Southwest Gas executives emphasized that the utility makes no profit on the buying or selling of gas, pointing out that the costs are passed through to consumers on a dollar-for-dollar basis.

"The reasons for the increase are many, but they all boil down to one underlying fact -- demand for natural gas is increasing faster than gas supplies," said Gary Clark, vide president for Southwest Gas' Southern Nevada Division.

A major strain on natural gas supplies has been the increased use of natural gas to fuel electric power plants since coal fell out of favor over pollution concerns.

The turmoil in the natural gas industry was recognized well beyond utility and regulatory circles on Wednesday. Ross Moore, vice president and director of research for Colliers International Worldwide, a major commercial real estate brokerage, also noted the rapid price increases nationwide and its effect on consumer spending.

"(Prices) will be shocking," he said, speaking at the Colliers International/Restrepo Consulting Group Fall Trends event in Las Vegas. "Everyone who looks at gasoline, the really need to look at natural gas."

Regulatory controversy over the case might not be over. Nevada Consumer Advocate Tim Hay had objected to procedural issues during the case. Southwest Gas originally proposed a $16.3 million, or 4.9 percent, rate increase. That proposal used the standard method of looking at historic prices to make recommendations for new rates.

PUC staff analysts, however, proposed the 9 percent increase based on projected prices for the coming year that are expected to be substantially higher. Hay argued that the deviation by staff failed to give interested parties proper notice of the rate increases.

PUC commissioners criticized the legal arguments put forth by Hay's Bureau of Consumer Protection in hearings on the case in October.

"I was dismayed at what a weak argument was presented that we could not do this," Soderberg said.

In the hearings, Commissioner Carl Linvill, who presided over the case, dismissed a motion by the BCP to strike staff testimony advocating the increase. His order in the case also pointed out that the BCP expert providing testimony in the case agreed that the use of historical price measures in setting rates would be inadequate.

Commissioner Adriana Escobar-Chanos on Wednesday indicated that she was uncomfortable with staff making arguments that, she said, should have been defended by the utility. Still, she emphasized that the discomfort had nothing to do with any argument raised by the BCP.

Following the ruling, Hay said the BCP would review the final order and determine whether it would ask the commission to reconsider its decision or take the issue to court.

"We certainly have not foreclosed on that option," Hay said, adding that he remains confident in his argument despite criticism from the commission.

"I think the notice issue is a fairly clear cut legal issue," he said. "I would disagree with the comments made at the agenda meeting."