PUC defends proposed increase in gas rates

Kevin Rademacher

Friday, Oct. 1, 2004 | 10:47 a.m.

The staff of the Public Utilities Commission on Thursday defended a proposal to nearly double a rate increase request for Southwest Gas Corp.

Last week PUC financial analyst Kellie J. Pister filed testimony proposing that Southwest Gas' request for a $16.3 million, or 4.9 percent, rate hike be increased by $14 million, an overall increase of 9.25 percent.

Nevada Consumer Advocate Tim Hay earlier this week filed a motion seeking to have that portion Pister's testimony stricken. He argued that the dramatic change in the request comes after the PUC has held its consumer sessions on the case, limiting their participation in discussing higher rates. The new rate proposal also would vary dramatically from the proposal noticed in bill inserts sent to customers.

In Thursday's motion, PUC attorney William Stanley said that Hay's Bureau of Consumer Protection based its motion to strike the testimony on "flawed logic."

His opposition to Hay's motion points out that Southwest Gas accurately noticed the public of its proposal. The notice requirement, however, does not apply to staff testimony, Stanley argued.

"None of this logically leads to BCP's conclusion that the commission cannot ... set rates higher than those noticed," the filing said. "Unfortunately, BCP's argument simply assumes, as an unstated premise, the conclusion that BCP set out to prove."

Stanley also argues that Southwest Gas' tariff "provides for deviations from it for good cause ... The need to set accurate rates is sufficiently good cause."

Moving away from a traditional formula that uses information from a 12-month historical test year to set rates, Pister made the higher calculations using projections looking at future gas prices.

If Pister's recommendation is accepted, current average residential winter rates in Southern Nevada would increase from $68.04 to $74.16, an increase of $6.12 or about 9 percent.

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.

Stanley's motion also argued that the higher rates better protect consumers by preventing uncollected balances from piling up and accruing high interest charges. He also pointed out that BCP's own witness in the case -- utility consultant Jerome Mierzwa -- testified that Southwest Gas' original proposal would be insufficient.

"My review of SWG's filing indicates that the proposed rates are likely to result in a significant undercollection of gas costs," Mierzwa's testimony said.

The PUC is scheduled to begin hearings on the rate case on Oct. 11. The motion to strike testimony will be addressed by PUC Commissioner Carl Linvill, who will preside over the case, at the outset of the hearings.

If approved, the new rates would go into effect Dec. 1.