Investing in Arizona
On February 2, 2024, Southwest Gas Corporation filed an application with the Arizona Corporation Commission for a revenue increase of $125.6 million or 11.9 percent over current revenues. Under the Company’s proposal, the average residential customer would see an increase of $7.15 per month.
There are three key reasons for the Company’s base rate adjustment filing:
- Customer rates today reflect costs that the Company incurred over three years ago, before a period of extraordinary inflation. Customer rates need to be refreshed to reflect the current level of operating expenses necessary to provide safe and reliable natural gas service in Arizona.
- The Company continues to make significant investments in the State for pipe replacement, system improvement and reinforcement, and meeting the continued strong demand for natural gas in Arizona. The proposal reflects $647 million in rate base investments the Company has made, or will make, since 2021 to ensure the continued provision of safe and reliable natural gas service in Arizona.
- The Company is proposing a new program to enhance natural gas pipeline safety in Arizona by more timely recovering costs with dedicated funding for safety-related infrastructure investment in the State.
Current rates reflect costs incurred over three years ago. During the latter half of 2021 and throughout 2022, extraordinarily high inflation placed upward pressure on the Company’s operating expenses, and those costs are not currently reflected in customer rates. Over the five-year period from the Company’s 2019 rate case through its proposal in this case, the Consumer Price Index (CPI) Compound Annual Growth Rate (CAGR) was 5.65%, compared with the Company’s operating expense CAGR of 3.8%.
- Under the Company’s proposal, the average residential customer would see an increase of $7.15 per month.
- The Company is proposing to continue its Commission-authorized rate design and basic service charge of $10.70 a month for residential customers.
The largest component of your natural gas bill pays for Southwest Gas operating expenses. This includes the costs to provide safe and reliable service, as well as the recovery of the investment in the Company's natural gas infrastructure in the State.
The second major component of your gas bill is related to the cost for Southwest Gas to purchase natural gas on behalf of its Arizona customers. Southwest Gas does not earn a profit on the cost of gas. Rather, the cost of Southwest Gas to purchase natural gas is passed directly to customers without any markup or profit added.
Finally, Southwest Gas has to access the capital markets to provide financing for its natural gas operations, and the cost of issuing equity or borrowing debt is the third major component of your gas bill.
Helpful Links
Low Income Ratepayer Assistance (LIRA)
Customer-Owned Yard Line (COYL) Program
You may be eligible to participate in our COYL leak inspection and replacement program. The COYL program is another way we can help keep your family, property and neighborhood safe. Call 800-654-2765 to see if your property qualities for a free line leak inspection.
Under the Company’s proposal, the average residential bill will increase by approximately $7.15 a month to $63.16.
When compared with other residential utilities, Arizona customers will continue to enjoy affordable natural gas bills, ensuring that natural gas remains a reasonable energy option for Arizona customers.
Frequently Asked Questions
How will this proposal affect my bill?
Under the proposed increase, we estimate that the average residential customer that uses 23 therms per month will experience an increase of approximately $7.15 a month.
When will I see this change on my bill?
The Company’s proposal will be thoroughly reviewed by the Arizona Corporation Commission, Commission Staff, and other stakeholders. New rates are expected to be in place by April 2025.
Why does Southwest Gas need to adjust my rates?
The Company needs to refresh customer rates to reflect its current level of operating expense. Customer rates today reflect costs the Company incurred more than three years ago. Additionally, rates need to be adjusted to reflect the Company’s investment of $647 million in Arizona since 2021.
When was the last time Southwest Gas requested a base rate adjustment in Arizona?
In December 2021.
How much has Southwest Gas invested in its Arizona distribution system since the last rate case?
We have invested, or plan to invest, approximately $647 million in rate base in the Arizona gas distribution system since the last rate case.
Is Southwest Gas proposing changes to the components on my bill?
No, our proposal maintains the current rate design that’s been in place since January 2012. The proposed rate design will continue to include a monthly basic service charge and a volumetric rate — that captures both the delivery charge and gas cost component on your bill.
Is Southwest Gas proposing to change the basic service charge?
No, our proposal will not change the current basic service charge on your bill.
Where can I get more information?
You can download a copy of our filing by clicking
here
1Southwest Gas: Estimated Average Arizona Residential Bill
*Move.org Utility Bills 101: Utilities Tips, Average Costs, Fees, and More: https://www.move.org/utility-bills-101/#Average_Utility_Costs_by_State
