Southwest Gas wants a green light to increase natural gas bills for the 180,000 customers in its South Lake Tahoe and Northern and Southern California service areas.
Southwest Gas filed its pending rate case with California regulators in December 2012. The company calls its proposed revenue increases a cost of doing business. Consumer advocates say they are “far in excess of what is needed to operate a safe gas system” and trigger monthly bill increases ranging from $10.50 to $13.80.
California Public Utilities Commission members were set to vote on the matter last Thursday. They opted to hold off on a decision until May 1.
A proposed decision before the CPUC would let Southwest Gas collect $7.5 million more from its customers each year. That’s less than the $11.6 million increase the company asked for, but significantly more than the $1.1 million increase the Office of Ratepayer Advocates at CPUC says the company needs.
The ORA argues the proposed decision would give Southwest Gas “an excessive” 10.1 percent return on equity. That’s the same return allowed to Southern California Gas Company, one of the nation’s largest natural gas distributors with 5.3 million customers, more than 4,000 miles of transmission lines and four storage facilities to maintain.
By comparison, Southwest Gas has 15 miles of transmission lines in California and no storage facilities, according to the ORA.
“Commissioners should consider the burden that unwarranted increases have on struggling communities,” Joe Como, the acting director of the ORA, said in a formal statement. “Money needs to be spent to make our gas systems safe, but this increase goes far beyond what is needed.”
According to an ORA analysis, the revenue would mean average residential rate increases of 21 percent for customers in the South Lake Tahoe area. Customers in the Northern and Southern California service areas — which include Truckee and Lake Tahoe’s North Shore — would see 12 and 24 percent increases.
If the CPUC approves the proposed decision, Southwest Gas could collect $2.7 million more each year from its 18,000 customers in the South Lake Tahoe area. That represents a 45 percent increase in revenues and the largest increase among the three service areas.
“Our thinking is 45 percent is a lot to swallow. We even proposed to do 20 percent one year and 20 percent another, but that notion of spreading it out was rejected,” said Truman Burns, program and project supervisor at the ORA.
The ORA is the only group that has actively opposed Southwest Gas in the general rate case, Burns said.
Sonya Headen, spokeswoman for Southwest Gas, said a typical residence in the South Lake Tahoe area would see winter gas bills go up by about $12.10 per month, a 12.7 percent increase. Summer gas bills for a typical residence would go up by $3.55 per month, an 11.1 percent increase, she said.
“Operating costs and maintaining our system, that’s the reason for the proposed rate increase,” Headen said.
Customers of Southwest Gas can share their opinions about the proposal by email to firstname.lastname@example.org, by calling 800-649-7570 or by mail to CPUC Public Advisor, 505 Van Ness Avenue, Room 2103, San Francisco, CA 94102.