Friday, Dec. 5, 2003 | 11:35 a.m.
Southwest Gas Corp., the dominant provider of natural gas in Southern Nevada, has asked the Public Utilities Commission of Nevada for a $59.8 million rate increase that would raise the average customer's bill by $4.21 a month in the summer and $9.90 a month in the winter.
The Las Vegas-based utility said the 25.5 percent increase is a purchased-gas adjustment that would pass on the cost of fuel it is receiving from suppliers and would not profit the company.
The request comes on the heels of Monday's implementation of a similar purchased gas adjustment that raised rates for Southwest customers by 11 percent.
Tim Hay of the state's Bureau of Consumer Protection said today that he had not yet seen the filing but that his office would thoroughly review the request to determine if the company had missed opportunities to purchase gas from suppliers at cheaper rates.
"We certainly intend to scrutinize it carefully because of the magnitude of the request and the fact that it is coming right on top of another large increase," Hay said. "We'll be checking to see if the company did everything it could to mitigate the volatility of the increase."
Southwest officials said gas prices have been dramatically higher in recent months with prices driven primarily by cold weather.
Roger Buehrer, a spokesman for Southwest, said gas prices in general have been about 35 percent higher nationwide than they were a few months ago. Cold weather and projections of a harsh winter have driven demand on the East Coast and suppliers nationwide have reacted with higher prices.
"We're a victim just like our customers," Buehrer said today. "We often have to borrow money to pay our suppliers and that becomes more expensive because of things like interest costs."
Hay concurred that weather-related forces have driven the price of gas up around the country, but that he and attorneys general from Western states may look closer at gas pricing to determine if wholesale companies have been playing fair with consumers.
Hay said funds are in escrow and the state is on the verge of collecting $50 million from El Paso Corp. as part of the settlement of the state's antitrust lawsuit against several utility companies late last year. Hay said some of those funds would be disbursed to consumers to mitigate some of the effects of skyrocketing utility rate increases.
"This is obviously a hefty increase," Hay said. "With an $800 million electric rate increase on top of that (approved earlier this year), rates have become burdensome to Southern Nevada consumers," Hay said.
But the head of the Nevada Development Authority said higher utility rates haven't yet damaged his efforts to recruit business to the state.
Somer Hollingsworth, president and chief executive of the NDA, said higher utility costs are a relative thing -- and many companies being recruited to Nevada have seen their rates climb at a higher pace than those within the state.
"The rise in electricity prices are usually more a concern to businesses than gas prices, even though it's true that gas prices affect electricity prices," Hollingsworth said. "The key is, can we stay ahead of competitors for these businesses in California, Texas and Arizona?"
Hollingsworth said for recruitment purposes, rising utility costs are a matter of perception.
"It's like traffic," he said. "When we go out drafting companies from Southern California and tell them we have a traffic problem in Las Vegas, they think it's ridiculous that we're complaining at all. It's all in how you look at it."
Southwest says Southern Nevada is in no danger of facing gas shortages, but that the company is falling behind in being compensated for rates demanded by suppliers.
"While customers can be assured of adequate supplies this winter, natural gas costs continue to be significantly above last year's costs," said Roger Montgomery, Southwest's vice president of pricing, in a statement issued Thursday announcing the rate request.
"Without this increase," Montgomery said, "the company will fall further and further behind in recovery of gas costs it pays to its suppliers, and customers would be faced with an even larger increase in the future."
Southwest has proposed splitting the effective dates of the increase, with half occurring March 1 and the other half occurring June 1 when gas bills normally are at their lowest.
But Hay has some concerns about the fast-track schedule Southwest is proposing for the rate increase. By statute, the PUC has six months to act on a rate request. But the company wants the first increase to take effect in less than four months.
"An increase of this magnitude," Hay said, "should require a full review to allow all parties an opportunity to comment."
A spokesman for the PUC said in addition to the Southwest request filed Thursday, regulators have a busy slate of requests on the calendar.
David Chairez said action is pending on a general rate request and a deferred energy filing from Nevada Power Co., a general rate case from Sierra Pacific Power Co., Reno, and an expected deferred energy filing from Sierra Pacific in January.
Southwest Gas, which has about 475,000 customers in Southern Nevada and 102,000 customers in Northern Nevada, also would increase rates in the north. Those residents would see their bills climb an average $4.74 a month for the $16.7 million increase there, higher by 22.1 percent.
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