Inflated rate hike request

Wednesday, Sept. 16, 2009 | 2:07 a.m.

As a publicly traded company, Southwest Gas is in business to make money for its investors. As a regulated utility that provides natural gas to residential and business customers in Southern Nevada, the Las Vegas company also has the right to recoup certain costs from ratepayers.

But Southwest Gas clearly crossed the line last week in a general rate hike it sought from the state Public Utilities Commission. The company is seeking the rate hike to recoup from ratepayers costs associated with company operations and maintenance of the state’s natural gas delivery system.

As reported Monday by Stephanie Tavares in the Las Vegas Sun, the costs for which the company is seeking reimbursement include those associated with supplemental executive retirement compensation and losses of equity in homes Southwest Gas purchased from employees it relocated.

We agree with the state attorney general office’s Consumer Protection Bureau, which says Southwest Gas is wrong to attempt to recover those costs from ratepayers — an amount that exceeds $2.75 million. Instead, those losses should be absorbed by the utility’s shareholders.

It is certainly within the company’s right to properly compensate executives and incur certain housing expenses. Those are business decisions, though, that shouldn’t have any bearing on what ratepayers spend for natural gas service.

Southwest Gas should have known better.

We would hate to think that the utility simply tried to slip these costs past the commission, hoping to catch it asleep. After all, as Tavares reported, these are expenses that ratepayers have never had to cover in the past. Why should ratepayers be on the hook for these costs now?

The utility, at a minimum, should immediately withdraw the retirement and home equity reimbursement requests from its rate hike proposal. If not, they should be rejected by the commission.

With consumers hurting financially from the reeling economy, the last thing they need is to be gouged by a utility.