Southwest Gas seeks record general rate hike request

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By Nevada Current

September 22, 2023

BY DANA GENTRY, Nevada Current

Southwest Gas Corp. is asking the Public Utilities Commission to approve a rate increase of just under $70 million, the largest in its history, according to available records.

Southwest Gas says the increase is necessary to maintain its 7.27% rate of return, and to “maintain and provide safe and reliable service to its customers.”

The company is seeking to raise rates by $61 million or 6.6% in Southern Nevada, where the average residential bill is slated to increase $8.14 a month, and $4.50 a month for apartments and condos.

In Northern Nevada, SWG is asking the PUC to approve an $8.8 million or 4% increase.

The average residential bill is projected to increase by $5.80 a month, while multi-family dwellings are expected to see bills increase by $2.53 a month.

The company says its “existing rates and charges do not provide Southwest Gas with sufficient revenue to allow it a fair and reasonable return on its investment,” according to the utility’s voluminous filing.

The utility’s “currently effective rates were established as part of the general rate case filing in 2021 which due to timing, reflect the temporary reduction in operating expenses it experienced due to the pandemic,” spokesperson Amy Washburn said via email.

In May 2022, SWG stock closed at an all-time high of just under $90. On Wednesday, the stock closed just under $63. The company reported a net profit of $153.8 million for the first half of 2023, a 40% increase over the $109.5 million reported in the first half of 2022.

RELATED: Ratepayers to NV Energy: ‘Give us a break’

The company says approval of the application will allow it to earn a return “commensurate with other similarly situated gas utilities.”

The increase is necessary, according to the application, because of the necessity to include capital costs, such as infrastructure upgrades and service expansion to Mesquite in the rate.

Southwest Gas seeks record general rate hike requestThe company also cites changes in the cost of capital, inflation, and customer growth to justify the increase.

Under a Nevada law sponsored in 2015 by former State Sen. Majority Leader Kelvin Atkinson, who served two years in prison for campaign and wire fraud, and then-Assemblywoman Marilyn Kirkpatrick, now a Clark County commissioner, SWG can charge customers for expansion to areas such as Mesquite, where it was economically unjustified to do so previously.

“We in the legislature heard back in 2012 that we needed balanced power out here,” Kirkpatrick told the Mesquite Local News in 2019. “We changed the law so we didn’t have to wait until the actual pipeline connector was built.”

The law allows the utility to ignore the principle of assessing the cost of service to those who benefit, and instead allows SWG to assess the roughly $30 million cost of the Mesquite expansion to Southern Nevada ratepayers.

The presiding officer assigned in the $70 million general rate case is Hearing Master Sam Crano, who cast the deciding vote in a contentious NV Energy rate hike case that is being appealed.

PUC Chairwoman Hayley Williamson could reassign the case if Gov. Joe Lombardo, sometime in the next 210 days, appoints a commissioner to fill a vacancy left by the Aug. 1 resignation of former Commissioner C.J. Manthe, whose seat Crano, as hearing master, has been filling.

This story was originally published by Nevada Current and has been republished under a Creative Commons license.

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