SW Gas narrows loss for quarter

Kevin Rademacher

Friday, Oct. 29, 2004 | 11:12 a.m.

Record growth and favorable rate case decisions in California and Nevada cut third-quarter losses at Las Vegas-based Southwest Gas Corp.

The natural gas distribution company said its third-quarter net loss was $16.4 million, or 46 cents a share, an improvement over the $17.4 million, or 51 cents a share reported for the same 2003 quarter.

Southwest Gas, which sells less gas during the warm summer months, normally expects losses in the second and third quarters.

The results were bolstered by a one-time income tax benefit of $1.6 million, or 5 cents a share.

"Natural gas operating results, excluding the tax benefit, declined between periods as improvements in operating margin were offset by increased operating costs," Jeffrey Shaw, Southwest Gas' chief executive, said in a statement. "However, there were two notable items during the quarter -- general rate relief and record customer growth."

In August, Nevada regulators approved a general rate increase of $13.7 million that went into effect in September. Shaw also pointed out that the rate increase should help shore up results during the more profitable winter heating season.

Also, the company said that in the 12 months ending in September 79,000 new customers were added. The 5 percent increase is a record for the company. Not included in that total are 9,000 customers added in October 2003 with the acquisition of the Phoenix-area Black Mountain Gas Co.

The company said rate relief added $8 million to operating margin -- defined as operating revenue minus the cost of gas sold. Another $5 million was gained in the quarter from customer growth.

Operating expenses, however, jumped $11.1 million, or 10 percent, in the quarter, compared with the same 2003 period.

Contributing to the expenses were higher construction costs needed to serve new customers, higher insurance costs, payroll and regulatory costs.

Financing costs rose $773,000 between quarters because of an increase in outstanding debt needed to finance growth, the company said.