2014 Southwest Gas General Rate Case

Background 

In December 2012, Southwest Gas (SWG) filed its General Rate Case (GRC) Application requesting to raise its customers' rates for the period from 2014 to 2018 for its 3 jurisdictions:

  • Southern California Division: Barstow, Victorville, Big Bear, and Needles districts
  • Northern California Division: Lake Tahoe North Shore, Truckee plus Northstar Ski Resort districts
  • South Lake Tahoe District 

Southwest Gas requests to increase its revenue requirement over present levels for its gas operations in 2014:

  • Southern California:       $5.6 million (9%)
  • Northern California:        $3.2 million (21%)
  • South Lake Tahoe:         $2.8 million (45%)
  • Total Revenue Increase Requested:   $11.6 million for a total revenue request of $94.7 million.

SWG requests an increase of 2.95% for each succeeding year through 2018m as a 10.4% return-on-equity.

Evidentiary Hearings were held at the CPUC August 12-16, 2013.

On February 11, 2014, the CPUC reissued its Proposed Decision with rate impact tables, largely adopting SWG’s request to increases rates for its various jurisdictions, effective January 1, 2014:

  • Southern California: $5.5 million increase
  • Northern California: $3.3 million increase
  • South Lake Tahoe: $2.8 million increase

See the comparison Table of 2014 revenue proposals from parties vs. the CPUC Proposed Decision. 

The Proposed Decision would also adopt:

  • 10.1% return-on-equity.
  • 2.95% annual adjustment for increases for 2015-2018.
  • SWG’s requests for distribution, customer accounts, uncollectibles, injuries and damages, administrative and general, pension and benefits expenses.  

On April 14, 2014, the CPUC issued an Alternate Proposed Decision that would award SWG a 10.% return-on-equity and a 55% equity ratio on its capital structure. However, the alternate proposal will increase SWG customers' rates in a more moderate manner than the CPUC's original proposal. See Comparison Table of customer rate impacts.

On June 12, 2014, the CPUC approved the Alternate Proposed Decision.

ORA Policy Position 

ORA supports ratepayer funding for programs and projects necessary to ensure safety and reliability. The CPUC's approval of its Alternate Proposed Decision is more in line with ORA’s analysis, which showed that it was appropriate to make reductions to SWG’s request in the areas of distribution, administrative and general, executive pensions and benefits and tax expenses, along with reductions to net investment and rate of return (profit margin). The CPUC's final decision will have a more moderate impact on customers' bills compared with its  approval of SWG's request which would have resulted in double-digit bill increases for customers.  

However, ORA disagrees with the CPUC's decision to inappropriately award SWG with excessive return-on-equity of 10.1% which will cost customers an unwarranted $2.2 million annually.  Additionally, the CPUC's award of a 55% equity ratio is out of line with SWG's own 2013 Annual Report which shows only a 50.6% equity ratio.

See Comparison Table of SWG's requests vs. ORA's recommendations.

For an overview of ORA’s analyses, see the Executive Summary.

See ORA’s full analysis and potential bill impacts in its June 3, 2013 Testimony.

See ORA's July 1, 2013 Rebuttal Testimony. 

See ORA's February 8, 2013 Protest.

 

Proceeding Status  

See the Proceeding docket.