(The Center Square) - Southwest Gas proposed a $230 million investment budget that the Public Utilities Commission of Nevada largely approved this week.
But experts said the commission did not scrutinize the proposal nearly enough.
Nevadans are set to pay the bill on gas utility upgrades that the utility commission signed off on this week. Experts called the gas infrastructure budget overpriced and lacking justification.
“Customers are already struggling with high energy costs,” said George Cavros, the Western Resource Advocates clean energy manager and senior attorney in Nevada.
“The company not showing its work before passing on significant costs to its customers is unacceptable and contrary to the law," Cavros told The Center Square.
The WRA was one of several groups that expressed opposition to Southwest Gas’ proposal, including the Bureau of Consumer Protections, part of the state Attorney General’s Office.
The WRA estimated that a Southwest Gas request to raise revenue by $70 million annually would cost single-family houses an extra $7.11 per month on their utility bill. Southwest Gas has roughly 800,000 Nevadan customers.
“Nevada continues to grow, and our responsibility as a regulated utility is to ensure the infrastructure is in place to support that growth safely and reliably,” a Southwest Gas representative said, answering The Center Square's questions by email. “Southwest Gas invests in its infrastructure through pipe replacements, system improvements and reinforcements, and facility extensions required to provide customers with natural gas service.”
Gas utilities in most states do not make forward-looking investment plans for state approval. In Nevada, a law passed in 2023 requires the utilities to plan for future demand and then explain how they will meet it with new investments, called an Integrated Resource Plan.
The purpose of the IRP is to find the cheapest option to meet new utility demands with more transparency. On Tuesday, the three-person PUCN agreed to largely approve Southwest Gas’ investment plan in a draft order, with some “very minor changes,” according to Cavros. The approval is currently in a 10-day waiting period for reconsideration.
But opponents of Southwest Gas’ proposal have argued certain investments are unnecessary and left unexplained in the plan. The most scrutinized is a $124 million replacement program for faulty gas pipes from the 1980s, which did not include a proposal for repairs.
“Which option would provide the lowest reasonable cost while maintaining reliability and safety?” said Cavros. “We don't know, because the Southwest Gas application and testimony didn’t provide that evaluation of alternative options.”
While the replacement project would cost $54 million over the next three years, the rough five-year cost of repairs would be less than $1.2 million. That’s according to gas and pipelines expert Rick Brown, who testified for the Clean Energy Advocates, which included the WRA, against the Southwest Gas proposal.
“These investments are based on system and engineering assessments, safety requirements, and documented growth projections to ensure the safe and reliable expansion of service to customers,” said Southwest Gas.
Brown also said in his testimony that the problem with those old pipes appeared to be because of Southwest Gas’ poor installation of a specific part.
“Why should customers have to shoulder the cost for Southwest Gas mistakes?” said Cavros, who added later, “I wish [the PUCN] had provided more scrutiny to the application because we don't think it's in the best interest of customers … It could be unnecessarily raising its gas customers’ bills at a time when many Nevadans are already struggling with high energy costs.”
Southwest Gas did not respond to a question by The Center Square about who was at blame for the dysfunctional pipes, but noted that the company “does not automatically recover project costs.”
The PUCN also did not respond to questions by The Center Square, but Communications Director Peter Kostes said in an email, “PUCN orders stand on their own and explain the PUCN’s basis for making its decisions.”
The PUCN draft order, which Kostes noted was currently in a 10-day approval pending window, did not mention the $124 million pipe replacement program.
Cavros called the three-person governor-appointed PUCN public utilities commission, “One of the most important agencies that nobody's heard of.”
“The PUCN maintains full regulatory authority and oversight of rates, just as they do today, for any projects and programs approved in this application,” said Southwest Gas.
The PUCN recently delayed the start of the unpopular electricity demand-based charge by NV Energy, which it had approved to start this month.
“They approve projects and set rates for monopoly utilities, and that ultimately shows up on customer bills,” said Cavros. “So granted, these regulatory proceedings may not be sexy, but they're critically important to everyday Nevadans and affect the bills they get every month.”
