Southwest Gas wins approval for rate increase
August 27, 2004
LAS VEGAS – Southwest Gas rates will go up about 2.5 percent next week in Southern Nevada and about 7 percent in Northern Nevada, following recent approval by state utility regulators.
Company analysts said they were unable to immediately calculate the effect on a typical residential customer’s bill following Thursday’s decision by the state Public Utilities Commission. The rate increase will take effect Sept. 1.
The company had sought a 6.2 percent rate increase to recover $18.9 million in construction and maintenance costs, plus administrative costs and a rate of return for shareholders.
The state Consumer Protection Bureau had asked the commission to limit the request to $41,000.
The three-member commission approved an increase of about $7.3 million, or $1.1 million more than recommended by Commissioner Adriana Escobar Chanos, the hearing officer in the case.
The commission also raised the service charge for gas hookups by 50 cents, to $8.50. The basic service charge is paid by every customer regardless of gas usage.
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The commission ruling lets customers buy gas at lower prices per unit as they increase their consumption through so-called “declining block rates.”
Commissioners expressed concern about the company’s bond ratings, which are in the lowest “investment grade” category but could slip to high-interest junk bond levels. Analysts said that could result in higher rates for consumers.
“The evidence in this case indicates the company is in a somewhat delicate situation, and I think it is appropriate that we be sensitive to that,” Commissioner Carl Linvill said before voting for the rate increase.
The PUC also directed the gas company to prepare a plan within six months to encourage conservation while letting customers use more natural gas in the summer.