Southwest Gas Corporation - 2010 Rate Case

Docket Number
Assigned Staff
J. Jerich
D. Pozefsky
W. Rigsby
Ben Johnson Ph.D. (Ben Johnson Associates)


On Friday, November 12, 2010, Southwest Gas Corporation ("SWG" or "Company") filed an application(link is external) ("Application") with the Arizona Corporation Commission ("ACC" or "Commission") requesting  a permanent increase in rates.

Las Vegas-based SWG is the largest natural gas local distribution company in the state of Arizona, and provides service to customers in Cochise, Gila, Graham, Greenlee, La Paz, Maricopa, Mohave, Pima, Pinal and Yuma counties.

The Company is seeking a revenue increase of $73.2 million, or 17.8 percent, over adjusted test year revenues of $410.9 million which will result in a 7.50 percent return on SWG's fair value rate base of $1.5 billion.

According to SWG's application, the proposed increase would raise the current average monthly winter residential bill of $58.10 by $9.01 to $67.11 or a 15.5 percent increase.  The present average monthly summer residential bill of $24.07 would increase by $2.54 to $26.61 or 10.55 percent.

SWG is also requesting approval of an Energy Efficiency Enabling Provision ("EEP"), which is a general decoupling methodology that will allow SWG to collect, from the Company's ratepayers, lost revenues attributable to declining sales due to conservation and energy efficiency programs.

On Monday, December 13, 2010, ACC Staff issued a letter of sufficiency(link is external) informing SWG that its application for a permanent rate increase meets the requirements of A.A.C. R14-2-103.

On Monday, December 20, 2010, RUCO filed a motion to intervene(link is external) in the case.

On Friday, January 7, 2011, the Administrative Law Judge ("ALJ") assigned to hear SWG's request for a permanent rate increase issued a Procedural Order(link is external) that established the dates for evidentiary hearings under two different scenarios - one in which a settlement agreement is reached and another in which no settlement agreement is reached.

Direct testimony on required revenue from ACC Staff, RUCO and other intervenors in the case was  filed on Friday, June 10, 2011.

RUCO recommended a revenue increase of approximately $29.2 million as opposed to SWG's proposed revenue increase of $73.2 million.

On Friday, June 24, 2011, RUCO filed its direct testimony on rate design as scheduled.  RUCO recommended that the ACC reject SWG's request for a decoupling mechanism.

Settlement talks between SWG and the parties to the case, including RUCO began on Tuesday, June 28, 2011 at the ACC's Phoenix offices, 1200 W. Washington.

An agreement was eventually reached by SWG, the ACC's Utility Division and a number of other intervenors to the case.  A proposed settlement agreement(link is external) ("Agreement") was filed with the Commission on Friday, July 15, 2011.  RUCO elected not to sign on to the Agreement.

The Agreement is now the focus of the proceeding.

Written testimony in support of, or in opposition to, the Agreement was filed on Friday, July 29, 2011.  RUCO filed testimony in opposition to the Agreement.

The evidentiary hearing on the Agreement began as scheduled at 10:00 a.m. on Wednesday, August 10, 2011 and concluded on Monday, August 15, 2011.

Opening legal briefs were filed on Friday, September 2, 2011. A second round of reply briefs were filed on Friday, September 23, 2011.

On Friday, October 7, 2011, approximately 900 individuals attended the first of three scheduled public comment meetings at the Sundial Auditorium, 14801 N. 103rd Avenue, Sun City, AZ 85351.  Subsequent public comment meetings were held on Wednesday, October 12, 2011 at the Arizona Corporation Commission's offices at 1200 W. Washington in Phoenix and on Monday, October 24, 2011, at the Buena High School Lecture Hall, 5225 Buena School Boulevard, Sierra Vista, AZ 85636.

Based on questions posed by ratepayers at the Sierra Vista public comment meeting, ACC Commissioner Sandra D. Kennedy filed a letter(link is external) on Wednesday, October 26, 2011, asking the parties to docket to provide a clear and understandable description of the proposed settlement, and to include in layperson’s terms, information regarding the potential impact of the proposed settlement on the Company’s ratepayers.  Commissioner Kennedy also asked SWG to post this description on its website by November 4, 2011 in a manner that would best provide its customers access to this information.

On Friday, November 4, 2011, RUCO filed its response(link is external) to Commissioner Kennedy's letter.

On Monday, November 28, 2011, the ALJ assigned to the case issued his Recommended Opinion and Order(link is external) ("ROO") recommending that the ACC adopt the full decoupling option presented in the Agreement. 

On Wednesday, December 7, 2011, RUCO filed exceptions (link is external)to the ROO.  RUCO's exceptions ask the Commission to (1) reject decoupling, (2) increase the fixed monthly charge from $10.70 to $11.85, (3) provide the same revenue requirement, cost of capital and fair value methodology as recommended in the ROO, and (4) adopt a final decision which results in rates that provide approximately the same $3.33 increase for the average residential customer as proposed by Option B of the proposed settlement agreement.

On Monday, December 12, 2011, RUCO filed comments(link is external) in reference to ACC Staff's Report and Proposed Order on SWG's Energy Efficiency Implementation Plan.

During the ACC's Regular Open Meeting held on December 13, 2011, ACC Commissioners adopted the ROO by a vote of 3 to 2.

On Friday January 6, 2012, the Commission issued Decision No. 72723(link is external) establishing SWG's new rates and charges.

On Wednesday, January 25, 2012, RUCO filed an Application for Rehearing(link is external) asking the Commission to reconsider its decision to adopt a full decoupling mechanism for SWG.  The Commission has not acted on RUCO's request to date.

On Monday, April 23, 2012, RUCO filed comments(link is external) on SWG's energy efficiency budget opposing the $16.7 million  level recommended by ACC Staff.

During the Regular Open Meeting conducted on Tuesday, May 22, 2012, the five sitting ACC Commissioners voted against SWG's demand side management energy efficiency budget of $16.5 million and instead approved a budget of $4.7 million.