CPUC Approves Alternate Proposal Resulting
in Modest Rate Increases for Southwest Gas Customers

 

SAN FRANCISCO, June 12, 2014 – The Office of Ratepayer Advocates (ORA), the independent consumer advocate within the California Public Utilities Commission (CPUC), commends the CPUC’s approval today of its alternate decision, which will result in modest rate increases of 5.2% - 12.7% for Southwest Gas customers translating to monthly bill increases that range from approximately $3.00 to $9.20, starting in January 2015. ORA had opposed the CPUC’s original proposed decision, which was rejected by commissioners. The original proposed decision would have resulted in double-digit bill increases for customers.   

 

Today’s decision will increase Southwest customers’ rates in a more reasonable manner than the CPUC’s original proposed decision had suggested. The final outcome for rate increases is more in line with ORA’s analysis of what Southwest Gas needs to operate its system safely and reliably.  

 

Customer Bill Impact Comparison of CPUC Decision vs. Other Proposals 

 

SWG
Region
 

Current Average Monthly Bill 

CPUC Approved Decision 

Original CPUC Proposal  

 

Comparison of Monthly Bill Increase  

% 

ORA Recommendation 

 

 Comparison of Monthly Bill Increase  

% 

Average Monthly Bill as of
Jan 2015
 

Increase  in Average Monthly Bill 

$ 

Increase
 in Average Monthly Bill
 

% 

Southern California 

$     57.56 

$     60.56 

$        3.01 

5.2% 

23.9% 

-1% 

Northern California 

$     90.88 

$     97.80 

$        6.92 

7.6% 

12.4% 

5% 

South Lake Tahoe 

$     72.77 

$     81.97 

$        9.19 

12.6% 

21.2% 

13% 

 

 


 

 

ORA, however, is disappointed with the CPUC’s decision to award Southwest Gas an excessive 10.1% return-on-equity (ROE) which will allow Southwest Gas to collect from customers $2.2 million more annually than ORA’s recommendation of a 9.52% ROE, for the period of 2015-2018. By comparison Southwest Gas receives a significantly smaller authorized return of 9.5% in Arizona where they have significantly larger operations.   

 

 

 

Comparison of 2014 Revenue Increase Proposals vs. Final CPUC Decision 

 

 

  

SWG Request 

CPUC Original Proposed Decision 

ORA Recommendation 

CPUC Final Decision 

Return-on-Equity 

10.4% 

10.1% 

9.52% 

10.1% 

Revenue Requirement 

$11.6 million 

$7.16 million 

$1.1 million 

$7.1 million 

 

 

 

 

The decision further awards Southwest Gas an unreasonably high equity ratio of 55% in its capital structure, in contrast to ORA’s proposed 51.7%. This result is undeserved given that Southwest Gas’ own 2013 Annual Report shows only a 50.6% equity ratio.       

 

“ORA is pleased that Southwest Gas customers in California will see more modest bill increases as compared with the CPUC’s original proposal,  but there was still too much money left on the table for the utility,” said Joe Como, ORA’s acting director.  

See ORA’s webpage on the Southwest Gas Rate Case

For more information on ORA, please visit www.ora.ca.gov