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Southwest Gas asks for rate hike

by Susie Vasquez

Southwest Gas Co. is seeking two rate increases next year that would raise its revenues for gas about 22 percent in Northern Nevada.

The company filed for the rate increase request Thursday with Nevada’s Public Utilities Commission.

For its 102,000 Northern Nevada customers, Southwest is asking for the increases to be applied in two increments, in March and again in June. If the increase is approved, Northern Nevadans using 24 therms a month would see their bills rise $2.37 in March and another $2.37 in June for a total of $4.74, Southwest Gas spokesman Roger Buehrer said.

Using a 12-month average, PUC staff calculated that the rate increases would raise the average monthly bill for a typical residential gas customer from $33.94 to $41.77, Public Utilities Commission spokesman David Chairez said Friday.

Buehrer cited a dramatic increase in natural-gas prices as the reason for the request.

“Normally, we file for a rate adjustment with the Public Utilities Commission once a year, but gas prices have risen so rapidly over the past six to eight months we filed out of cycle,” Buehrer said.

An increase in demand, brought on in large part by power plants fueled by natural gas throughout the West, are responsible for the rise in prices. Nationwide, forecasts of below-normal temperatures in the coming months took that demand a step further, Buehrer said.

“Sierra Pacific (Power) recently filed for a rate increase. The reason cited was the increase in the cost of natural gas,” he said. “In the last 10 years, the only power plants built are fired with natural gas. An average-sized plant uses as much gas as all residential customers combined in Northern Nevada.”

Tim Hay of Nevada’s Bureau of Consumer Protection said the request comes on the heels of the Southwest’s most recent increase on Dec. 1.

“Southwest is asking the commission to expedite the rate increase, but we feel since we just completed one case, we should have the full statutory time, six months,” he said. “We want to make sure their purchasing practices are such that they’re trying to mitigate prices, rather than having the consumers pick up all the risk.”

He said Nevada recently settled an antitrust lawsuit with El Paso Natural Gas and will soon be collecting $50 million from price spikes in 1999 and 2000. Part of a $1.6 billion settlement, the money will be refunded to Nevada consumers.

“There are a number of suppliers involved, but El Paso is in the bag at the moment,” he said.

Southwest’s base gas cost rate is 60 cents in Northern Nevada effective Dec. 1, but the company will be paying about 70 cents per therm, company officials said.

“Without this increase, the company will fall further behind in recovery of gas costs its pays to suppliers,” said Roger Montgomery, vice president of pricing for Southwest.

“Because of this rise in natural gas costs, it’s in the best interest of our customers to recover higher gas prices now, rather than realize a 30 to 40 percent increase in June,” Buehrer said.

Southwest has suggested a more responsive system that doesn’t include Nevada’s six-month review, but Hay said the mechanism Southwest suggested artificially contrived the figures and would not have sent accurate signals to consumers.

“The method guaranteed rate increases over 24 months,” Hay said. “The commission rejected the proposal.”

Contact Susie Vasquez at svasquez@nevadaappeal.com or at 881-1212.