Southwest Gas seeks 5.9 percent rate increase

The local natural-gas utility wants to increase the rates it charges for service.

Southwest Gas Corp. on Friday filed a general rate case with the Nevada Public Utilities Commission, asking to bump up residential rates 5.9 percent beginning Nov. 1.

The move would boost the average household natural-gas bill in Las Vegas $3.78 a month, from $53.97 to $57.75. Business rates vary, but the average store in a strip mall, for example, would see monthly rates go from $51.54 to $56.53.

Add the Southwest Gas rate request to prior increase applications that electric utility NV Energy filed with the utilities commission, and the typical local household could see its utility bills jump nearly $36 a month by the end of 2009, though the commission will have the final say in any actual rate gains.

The commission has scheduled public hearings at the Las Vegas Convention Center on Monday at 1 p.m. and 6 p.m. to let consumers weigh in on the NV Energy rate case.

The commission didn’t make a statement Friday on the Southwest Gas filing, but a spokesman said the agency will hold a pre-hearing conference soon to draw up deadlines and hearing dates for the case. General rate cases last six months.

Nevada’s consumer advocate, Eric Witkoski, was traveling Friday afternoon and unavailable for comment.

This is the first general rate case since 2004 for Southwest Gas.

Company spokeswoman Cynthia Messina said Southwest Gas officials will ask the utilities commission to consider three factors in its general rate case.

First, the cost of capital has changed since 2004.

Second, the commission will weigh gains in expenses for Southwest Gas in the last half a decade, including costs such as wages, benefits, inflation and capital investment.

Finally, the commission will mull changes in customer counts and natural-gas use, Messina said.

The utility’s customer counts have grown, even as the average amount of natural gas used per household has dropped. Southwest Gas had 443,754 customers in Southern Nevada in 2004; that number has expanded to 560,697 clients today. But average use dropped 3.6 percent per household in the same five years because modern appliances and homes are more efficient.

In a statement announcing the rate case, Southwest Gas officials said it’s possible a separate component of residential rates could fall later this year.

A May rate case will evaluate changes in the cost of natural gas the company buys to deliver to consumers. That case involves actual fuel costs of natural gas, unlike the general rate case that looks at operating expenses, and such fuel costs are passed directly through to consumers with no opportunity for Southwest Gas to profit. That means any increase or decrease in the cost of natural gas makes it way straight into consumers’ pocketbooks.

With natural-gas prices down substantially in the last year, Southwest Gas executives expect to submit a future request to lower the gas-cost part of its rates.

“At current commodity price levels, those anticipated future requests are likely to offset some of the increase requested in (Friday’s) filing, particularly in Southern Nevada,” said Roger Montgomery, the utility’s vice president of pricing, in a statement.

In its most recent earnings report, Southwest Gas revealed that 6,000 new customers connected to service in 2008, down from 29,000 hookups in 2007. It’s the slowest growth rate in more than two decades for the utility. Company executives blamed the dip in customer expansion on a virtual halt in new-home construction and a spike in foreclosures.

Annual revenue for Southwest Gas fell 0.34 percent in 2008, from $2.15 billion to $2.14 billion. Its operating margin, or the difference between operating revenue and the cost of gas it sold, grew 1 percent, or $7 million, from 2007 to 2008.

The company has 658,000 customers statewide.

Southwest Gas announced its filing after the markets closed Friday. The company’s shares fell 12 cents, or 0.57 percent, to close at $21.04 on the New York Stock Exchange.

Contact reporter Jennifer Robison at jrobison@reviewjournal.com or 702-380-4512.

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