Higher utility costs hurt residents

Kevin Rademacher

Thursday, Jan. 26, 2006 | 10:05 a.m.

The rising cost of natural gas, electricity and gasoline continues to chew up the paychecks of Las Vegas Valley families.

"At the end of the month, there's nothing left for many residents," said Daniele Dreitzer, executive director of Henderson Allied Community Services, which provides assistance to low-income homes.

That situation might get worse. Nevada Power Co. this week asked the state Public Utilities Commission for permission to raise $435.9 million by raising rates. The electric utility said costs are soaring based on higher prices for natural gas, which fuels most power plants in the western United States.

If approved by the PUC, residential customers would see monthly bills increase by 14 percent in May and another 9 percent in August. That would push the bill of the average residential customer -- using about 1,250 kilowatt hours of electricity a month -- from $127.88 to $158.50 a month.

In 2000, Nevada Power's average residential customer paid $84.29 a month.

During that same period, Southwest Gas Corp.'s residential customers have seen bills rise from an average of $29.11 a month to $52.43 a month. Southwest Gas serves about 500,000 households in Southern Nevada.

In June 2000, regular unleaded gasoline prices in Las Vegas were $1.61 a gallon. This week the same fuel -- which peaked at nearly $3 a gallon in 2005 -- reached an average of $2.34 a gallon.

The pressure on the economy is mounting.

"Any time you talk about rising costs for certain necessities it is a cause for concern," said Brian Gordon, a principal with the Las Vegas economic research firm Applied Analysis. "It's particularly difficult for seniors who are on tight, fixed incomes."

Keith Schwer, director of UNLV's Center for Business and Economic Research, agreed.

"It's one more attack on the household budget," he said.

While Schwer said the Nevada Power request for a $30.62 monthly increase alone probably wasn't a make-or-break amount for many consumers, it comes at a time when other expenses are also rising.

"That $30 a month probably is not going to mean much for the average consumer, but we've got to look at all the things that are happening to consumers at once," he said. "A lot of things are happening simultaneously. That has to be taken into account ... When will the consumers be tapped out?"

Dreitzer said rising expenses -- especially when combined with the jump in housing costs in recent years -- are leaving budgets vulnerable.

That puts families in a bind. One illness or one car repair can push them over the brink, she said. "A few years ago we were the place to be because of the cost of living. It has all changed so fast."

Michael Yackira, chief financial officer for Nevada Power's parent company, Sierra Pacific Resources, said the situation is bad for everyone.

"None of this has a positive impact," he said. "It's not positive for the company and it's certainly not positive for the customer. This is a very difficult situation."

Rising energy costs are not isolated to Las Vegas, Yackira said.

Arizona Public Service, which provides electric service to most of Arizona, recently asked the Arizona Corporation Commission for permission to raise rates by about 20 percent. Florida Power & Light Co., which serves 4.3 million customers throughout Florida, is seeking a similar increase to pay for an additional $2 billion it must spend in fuel costs.

"It does not suggest a Nevada problem or a Western energy problem," he said.

Despite the pressure, economists insist that rising costs are not the herald of an economic downturn.

Gordon pointed out that as many as one-third of the new Las Vegas-area residents come from California and enjoy a significantly lower cost of living here.

He added, however, that as the cost of living rises, pressure will increase on employers to raise wages.

"For employers to maintain a quality workforce, they are going to be required to provide a wage level commensurate with the local environment," Gordon said.

Because of the growth in population and tourism spending, the local economy is well positioned to absorb that pressure.

"We just don't see any signs of (recession)," he said. "We have a little more room to give than some other economies."

Kevin Rademacher can be reached at 259-4069 or at kevinr@lasvegassun.com.