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July 28, 2014

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Court rejects California power company’s claim in rate dispute

The Nevada Supreme Court will let stand a decision by the state Public Utilities Commission that will cost a California company $1 million.

The court rejected the appeal of Saguaro Power Co. of California that argued it may owe Southwest Gas Corp. $100,000 but not $1 million in a rate dispute.

Saguaro has a power plant in Southern Nevada and uses the pipeline of Southwest Gas but does not use its natural gas. Southwest filed an application with the PUC to raise rates in 2005.

Staff of the PUC noted that Saguaro did not pay any rate for the loss of natural gas as it travels through the pipeline. The "shrinkage" is defined as the cost paid by customers for lost and unaccounted for gas that escapes a utility pipeline system.

The rate increase application, that included the redrawn cost of the lost natural gas, was approved by the PUC and it hit Saguaro hard. An appeal was filed saying Saguaro failed to get public notice of the rate change.

And it sought to nullify the $1 million levy.

The Supreme Court said Southwest's rate application was adequately noticed and it agreed with the PUC there was no authority for retroactive rate-making for the levies imposed in 2005 and 2006.

The court said barring retroactive rate-making "reinforces the principle that customers who use the utility's service should pay for it, rather than making future or current ratepayers pay for past gas consumption."

The decision upholds the ruling of Carson City District Judge Todd Russell.

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