Nevada residents and small businesses will bear the burden of higher utility bills unless the Public Utilities Commission of Nevada rejects the latest request by Southwest Gas to yet again increase rates. Nevada already has the fourth highest rate for residential natural gas, higher than that of any of our neighboring states. If approved, this proposed hike will be the fourth increase in five years. It is twice that of the previous request in 2021 and the largest in the utility’s history.
Nevada ratepayers, who were already overburdened with record-high Southwest Gas bills last winter, have had enough. They have testified before the utilities commission of the significant strain their gas bills have already created on household budgets and held impromptu protests.
Utility bills comprise an oversized portion of the expenses for low-income households and persons living on fixed incomes, many of whom are senior citizens and people with disabilities. Too many need to make the difficult choice between turning on the heater or buying groceries. Substantially increasing rates under these conditions places an additional strain on ratepayers who cannot go without energy and have no choice in their natural gas provider.
The frequency of the recent Southwest Gas rate increases already exceeds the industry norm. “Most utilities file for general rate increases every two to five years, though in some instances, utilities have gone more than 10 years without a general rate case,” according to Red Clay, a consulting firm that partners with investor and publicly owned utilities.
Southwest Gas maintains that it must cover the expenses of inflation along with increasing customer numbers and volumes. Yet, despite these factors, the company reported strong revenues last year, with a net profit of $153.8 million for the first half of 2023, up 40 percent from $109.5 million in the same period of 2022.
The company’s executives earned an increased base pay and their stock awards more than doubled from 2020 to 2022. In a November 2023 press release to the company’s shareholders, Southwest Gas CEO Karen Haller celebrated the “significant progress” the utility is making on its strategic priorities, and its record 12-month operating margin of $1.2 billion. Yet, Southwest Gas claims that its current charges do not provide a reasonable return on its investment and seeks to increase that rate from 9.4 to 10 percent.
Southwest Gas’ capital investments include methane gas infrastructure for new developments. The utility finalized its extended service territory to Mesquite in 2019, securing new customers and profits. However, the entire cost of the $30 million project is borne by all Southwest Gas customers in Southern Nevada, not just those in Mesquite. Now that cleaner, less expensive energy options are becoming more readily available, we feel it is unjust to require existing rate payers in Las Vegas and Northern Nevada to cover the cost of methane gas infrastructure to new developments.
Furthermore, Southwest Gas wants customers to pay $1,114,739 in trade association dues, including to the American Gas Association, which actively opposes electrification policies nationwide. If the rate increase is approved, those membership fees may be passed to customers, in effect compensating the very organizations that lobby against those customers’ interests. This practice raises concerns about fairness and transparency.
Southwest Gas customers deserve transparency from the monopoly on which they currently depend. They deserve to know how the utility’s investments contribute to actual service improvements and how the utility’s product affects the long-term sustainability of their environment.
The Public Utilities Commission of Nevada must scrutinize Southwest Gas’ rate application carefully. They’ve approved past rate increases, though not always at the amount Southwest Gas has sought. Now is the time for an outright rejection of this additional rate increase.
Given the commission’s role in overseeing Southwest Gas’ long-term Integrated Resources Plan, it must seize this opportunity to establish robust, clear and comprehensive rules. This is crucial to ensure that Southwest Gas’ long-term planning processes, including rate adjustments and service expansion decisions, align with principles of fairness, economic sensibility and environmental responsibility.
Melodee Pratt Wilcox lives in Henderson and Erika Loveland lives in Las Vegas. Both are members of the Nevada chapter of Mormon Women for Ethical Government.
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