PUC rejects motion to strike staff testimony

Kevin Rademacher

Tuesday, Oct. 12, 2004 | 10:49 a.m.

Testimony recommending that a $16.3 million Southern Nevada natural gas rate increase request be nearly doubled will be considered by the state Public Utilities Commission.

On Monday, PUC Commissioner Carl Linvill denied a motion from the Bureau of Consumer Protection that sought to strike testimony by PUC staff seeking to increase a rate hike request for Southwest Gas Corp.

Staff witnesses based their recommendation on projections for higher gas prices over the next 12 months. That deviates from a traditional practice of basing rate increases on a historical average of past gas costs. The staff said such historical averages do not account for current volatility in the market and lead to unrecovered balances that accrue interest charges that ultimately must be paid by consumers.

The Bureau of Consumer Protection -- led by Nevada Consumer Advocate Tim Hay -- argued that the change in calculations deviate improperly from the original proposal made by Southwest Gas.

Linvill, however, ruled that intervenors in cases are allowed to deviate from the original application.

"Intervenors exist so we can hear alternatives," he said, also pointing out that even the BCP's own witness testified that under the current approach the company would undercollect from ratepayers.

The ability to consider the proposal was necessary "to protect ratepayers from unnecessary costs."

If the PUC staff recommendation is accepted Southwest Gas would receive more than $30 million in additional annual revenue to cover gas costs. The current average residential winter rates in Southern Nevada would increase from $68.04 to $74.16 a month, up $6.12 or about 9 percent.

Once Linvill ruled on the motion, formal testimony began in the rate increase request.

In testimony Ed Gieseking, Southwest Gas' director of pricing and tariffs, said that the company currently has an application filed with the PUC seeking to have projections, such as those proposed by commission staff, added to the company's tariff in order to create more accurate rates.

Prior to the PUC staff testimony, he said the company would have then sought an out-of-cycle rate case in order to reset rates heading into the most volatile winter months using projected costs.

"If the rates we proposed in this filing, based on our current tariff ... were in place throughout the winter, there would be an undercollection," Gieseking said.