Page 54 - SWGas Annual Report 2015

Percent of customers by state December 31, 2015
Arizona
Nevada 53%
California 37%
10%

Although the Company seeks to minimize its credit risk related to utility operations by requiring security deposits
from new customers, imposing late fees, and actively pursuing collection on overdue accounts, some accounts are
ultimately not collected. Customer accounts are subject to collection procedures that vary by jurisdiction (late fee
assessment, noticing requirements for disconnection of service, and procedures for actual disconnection and/or
reestablishment of service). After disconnection of service, accounts are generally written off approximately one
month after inactivation. Dependent upon the jurisdiction, reestablishment of service requires both payment of
previously unpaid balances and additional deposit requirements. Provisions for uncollectible accounts are recorded
monthly based on experience, customer and rate composition, and write-off processes. They are included in the
ratemaking process as a cost of service. The Nevada jurisdictions have a regulatory mechanism associated with the
gas cost-related portion of uncollectible accounts. Such amounts are deferred and collected through a surcharge in
the ratemaking process. Activity in the allowance account for uncollectibles is summarized as follows (thousands of
dollars):

Balance, December 31, 2012 Allowance for
Additions charged to expense Uncollectibles
Accounts written off, less recoveries
$ 2,504
Balance, December 31, 2013 3,583
Additions charged to expense (4,362)
Accounts written off, less recoveries
1,725
Balance, December 31, 2014 4,146
Additions charged to expense (3,616)
Accounts written off, less recoveries
2,255
Balance, December 31, 2015 4,113
(4,098)

$ 2,270

At December 31, 2015, the construction services segment (Centuri) had $162 million in customer accounts
receivable. Both the allowance for uncollectibles and write-offs have been insignificant and are not reflected in the
table above.

Note 4 – Regulatory Assets and Liabilities
Natural gas operations are subject to the regulation of the Arizona Corporation Commission (“ACC”), the Public
Utilities Commission of Nevada (“PUCN”), the California Public Utilities Commission (“CPUC”), and the Federal
Energy Regulatory Commission (“FERC”). Accounting policies of Southwest conform to U.S. GAAP applicable to
rate-regulated entities and reflect the effects of the ratemaking process. Accounting treatment for rate-regulated
entities allows for deferral as regulatory assets, costs that otherwise would be expensed, if it is probable that
future recovery from customers will occur. If rate recovery is no longer probable, due to competition or the
actions of regulators, Southwest is required to write-off the related regulatory asset. Regulatory liabilities are
recorded if it is probable that revenues will be reduced for amounts that will be credited to customers through
the ratemaking process.

Southwest Gas Corporation