Proposed Southwest Gas rate hike motivates Las Vegans to speak out

Potential gas rate increase could have adverse effects

Potential gas rate increase could have adverse effects

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KSNV reports that Southwest Gas is seeking a rate increase, adversely affecting businesses and consumers, July 26.

Paying an extra $3.76 each month may not seem like a burden. A drink at Starbucks can easily cost more. Yet for Angel DeFazio, an elderly Las Vegas woman, paying that much more for her natural-gas bill is a raw deal.

As she sees it, Southwest Gas Corp. needs to cut its own expenses, not raise revenue by charging customers more. DeFazio was one of a handful of valley residents who spoke Thursday night at a state Public Utilities Commission hearing, in which people were given a chance to voice their opinions on Southwest’s proposed rate hike. They were all critical.

DeFazio sat in the front row of the audience, alongside her 4-year-old Sheltie, petting him as others spoke. Local utility companies, she said after the hearing, are "trying to stick it to the public."

Las Vegas-based Southwest Gas filed a request with the PUC in April seeking to raise rates in Southern and Northern Nevada. Under the proposal, the average rate increase for a single-family residence in Southern Nevada would be 8.3 percent. This would push up the average monthly bill by $3.76 to $49.05.

In Northern Nevada, the average rate increase would be 2.16 percent. This would cause the average monthly bill there to rise by $1.67 to $79.10, according to the most recent estimates from the company.

Southwest is also seeking PUC approval to implement a "Gas Infrastructure Replacement" mechanism. This would let the company "recover the investment" of certain infrastructure costs that do not generate additional revenue, according to the commission.

As planned by Southwest, the rate hikes would take effect Nov. 1. They are expected to generate an additional $24.9 million of revenue from Southern Nevada and $2 million from the northern part of the state, says Southwest.

The company’s last general rate hike in Nevada was in 2009. According to the PUC, the company says its existing rates and charges do not generate "sufficient revenue" for a reasonable return on its investment.

The proposed rate hike would be used only to recover operating costs, not the cost of natural gas, said Southwest spokeswoman Sonya Headen.

According to Headen, the company needs a "fair rate of return" to afford projects and attract investors.

"It's important to have a healthy utility," she said.

The company's operating costs have indeed been rising. At the same time, its overall profits have also gone up.

Southwest, which has 1.9 million customers in Arizona, Nevada and California, had $1.66 billion of total operating expenses in the year ending March 31. During that period, it earned roughly $123 million of profit.

For the year ending March 31, 2011, the company had $1.55 billion of operating costs and $108 million of profit, according to a filing with the Securities and Exchange Commission.

Jonathan Friedrich, a retired general contractor, also spoke at the hearing Thursday and was critical of the proposed increase. He said afterward that he received his property tax bill on Thursday, and it was roughly $150 higher than last year’s.

When told after the hearing that the rate hike appears relatively small, he said: "Try living on fixed income."

The PUC is scheduled to hold more hearings on the proposal in September.

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