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As Southwest Gas seeks another rate hike, some consumers and advocacy groups cry foul

Southwest Gas is asking state utility regulators to approve a $70 million rate increase, with most of the burden placed on Southern Nevadans.
Amy Alonzo
Amy Alonzo
Energy
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A Las Vegas mom who shares a bedroom with her daughter so that they can run a space heater in the one room rather than paying to heat their entire apartment. 

A Southern Nevada woman who says she relies on a food pantry because she pays nearly as much for natural gas as she does for housing.

A high school student who worries how he will be able to afford utilities when he moves out of his parents’ house. 

These stories of financial hardship and concerns related to energy costs piled up during last week’s consumer listening session before the Public Utilities Commission of Nevada (PUCN) as dozens of impassioned residents pleaded for the commission to say no to proposed rate increases by Southwest Gas. 

These consumer sessions — which are required by law — mark a break from the typical business of dense regulatory filings and debate that often dominate meetings of the three-member commission charged with regulating utility companies in the state.

Southwest Gas filed an application in September asking regulators to approve nearly $70 million in rate increases to customers statewide, citing higher expenses due to capital improvements, increased costs for operations, maintenance and inflation, and changes in the number of customers.

Under the proposed higher rates, Southern Nevada residential customers would pay roughly $8.14 more per month — about a 10.2 percent increase — while Northern Nevada customers would pay $5.80 more per month, about a 4.3 percent increase.

Those numbers are based on a proposed 10 percent return on equity. The company is also seeking a 10 percent return on investment — a way of showing profitability by comparing amounts paid to amounts earned. In its filing with the PUCN, Southwest Gas said that its existing charges do not provide reasonable return on its investment at its current rate of 9.4 percent.

But speakers from groups ranging from the Nevada Conservation League to the AARP at the Thursday consumer sessions warned that if approved by the PUCN, the increases could financially cripple Nevadans, especially seniors, lower income residents and those in underserved communities.

“Something as simple as heat is what’s at stake right now,” said Audrey Peral, director of Chispa, an offshoot of the League of Conservation Voters.

It’s the fourth increase the company has sought in five years, well above the industry standard, government affairs officer for Western Resource Advocates Jermareon Williams said during the listening session. 

Including the current request, the company has sought roughly $135 million in rate increases since 2020. State regulators  approved all of the increases, although not at the full levels requested by Southwest Gas.

The “endless chain of increases” is harming entire communities, Giovanny Sanchez, a volunteer with Chispa, added through an interpreter.

Southwest Gas provides service to 2.2 million customers across Nevada, California and Arizona, including 103,000 customers in Northern Nevada and nearly 717,000 in Southern Nevada. Almost all the utilities’ customers are residential users or small businesses. 

The proposed rate increases would raise costs by $61 million in Southern Nevada and $8.8 million in Northern Nevada to recover annual revenue deficiencies, according to the company. 

The company’s filing noted it is also looking to generate revenue to cover costs associated with its expansion into Mesquite and for investments in replacement infrastructure.

In 2018, the PUCN authorized Southwest Gas’ expansion into Mesquite, including 47 miles of pipeline, totaling $28 million. Under SB151, passed in 2015, Southwest Gas can recover 98.5 percent of the costs from Southern Nevada customers and 1.5 percent from Mesquite customers.

This year, the company’s third quarter earnings increased by $19 million over last year’s third quarter; its second quarter earnings were $22 million higher than they were in 2022.

“They are here telling us they don’t have enough money … where is the money going?” Marcella Brown asked during the listening sessions. “Perhaps instead of putting that burden on the consumer, they should look at auditing where they are spending their money.”

Southwest Gas replied to questions from The Indy via email but did not make anyone available for a phone interview. 

The proposed increase comes on the heels of the PUCN approving a general rate increase request by NV Energy for its Southern Nevada customers. The utility had proposed a 3.3 percent general rate increase; the PUCN approved the increase but not at the full amount. The utility is still calculating what the average rate increase will be. 

The PUCN will hold a hearing on Southwest Gas’ application Feb. 26, 2024. The company is requesting the increases go into effect in April.

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