Natural gas prices are expected to escalate this winter, the increase due in part to an increase in demand, said J.R. Cruz, sales manager for Southwest Gas Corp. in Northern Nevada.
"The difficulty, is trying to balance the supply between residential and commercial demands," Cruz said. "Prices are going up in part because of an increase in natural gas use by commercial interests."
Aside from external factors, the cost of natural gas is defined by environmental factors like altitude and temperature. The quality of natural gas can also vary, affecting its ability to heat.
"The billing factor reflects the heating content of natural gas," said Cindy Christian, customer assistance manager at Southwest Gas. "Because the quality of the gas coming down the pipeline differs, the value changes. The Btu content is determined daily and the average is calculated over the course of the month."u
Southwest Gas uses this billing factor to accurately reflect the number of total therms a customer uses during any given billing period. The actual therms charged to the customer are a reflection of that factor and the amount of gas distributed through the line, Christian said.
Heat is measured in therms. One therm is equal to 100,000 British Thermal Units, or Btu's, the amount of heat needed to raise the temperature of one pound of water one degree.
Gas from Canada and Colorado is transported to Northern Nevada through three major pipelines: the Northwest, Tuscarora and Paiute. The gas is in a vaporous state, propelled by compression stations spaced about 100 miles apart, Cruz said.
Natural gas is plentiful in the United States but as a safeguard, a liquefied plant in Lovelock stores natural gas until it is needed.
"The gas enters communities through a small regulator before it is transmitted to the main lines," Cruz said. "It travels through the lines to a meter that reduces the pressure, just before it enters a residence."
Gas usage is the final determination of heat used by the customer, that figure multiplied by the cost per therm, which is regulated by the Public Utilities Commission.
Purchase Gas Adjustment includes a surcharge that recovers (or returns to customers) the difference between what the company paid for natural gas and the charge to customers in recent months.
In Nevada, the cost of gas to the customer is adjusted by the Public Utilities Commission every 12 months, a practice that can lead to wide rate swings, Cruz said.
"We could be forced to sell gas for $1.50 per gallon when it costs us $2 per gallon," Cruz said. "After the cost is reviewed by the PUC, we'll make up the difference by charging $2.50 for the next 12 months."
In California, the rate is adjusted monthly so the cost more accurately reflects variations in price. Southwest Gas appealed to the utilities commission, but monthly adjustments have not been approved at this time, Christian said.
"It's a philosophical difference," he said. "But the cost of gas went up recently, another reason why we're alerting customers to expect an increase in natural gas prices this winter."
The Basic Service Charge recovers a number of fixed costs, including meter reading and billing, plus a return on the investment in facilities on customers' premises.
Local taxes are made up of four components, including franchise fees collected by the city, business license fees and most recently, the modified business tax, an increase of .00033 per therm on the total bill to pay the extra business tax passed by Nevada's 2003 Legislature.
The taxes also cover regulatory mill assessments, or .275 percent of the gas usage bill, the money used for audits and meetings conducted by the Public Utilities Commission.
The Universal Energy Charge, a State-mandated fee used to assist eligible households in paying for natural gas and electricity in addition to programs about energy conservation, weatherization and energy efficiency.
Administered by the Salvation Army, Energy Share offers short-term emergency assistance to households in financial need.
Southwest Gas is converting to an automated meter reading system using a special encoder receiver transmitter, or ERT meter.
The device fits over the existing meter and is activated for a few seconds each month for the reading, then downloaded into a computer for billing.
"The system is significantly reducing errors," Christian said.
About one-third of the Southwest Gas meters in Northern Nevada have converted to this system, primarily those in Lake Tahoe, where the snow makes reading meters in the winter a challenge.
Southwest started converting to the new system in 1995 and the ERT meters are expected to last 20 years, Christian said.
Southwest Gas offers numerous ways to pay beyond the traditional, including home banking through the Internet, E-bill, an automated payment plan, equal payment plan and Speedpay, a system that allows the customer to pay on the Web site using a credit card, debit card or electronic check.
Southwest also has pay stations at Smith's Food & Drug Centers Inc., Cash Plus and Scolari's Food & Drug in Carson City.
For information, visit the Web site at www.swgas.com