LAS VEGAS (KTNV) — There was a time in Las Vegas when utilities like water, power and gas were affordable.
But locals are telling us that time has passed, and many are struggling to pay household bills — in particular gas, which we're all using more of right now to heat our homes.
Southwest Gas — the utility that has the monopoly on providing that basic necessity to all Nevadans — has sent skyrocketing bills that have many of you asking, "Darcy, what's the deal?" including Henderson homeowner Wayne Bernath, whose gas bill went up 330% in just one month.
Everything electric in Bernath's home is now solar-powered, including his heat. This winter, he began warming his family's home with small, inexpensive space heaters.
"That way we don't need to use the central heat. And the fireplace is completely out, because I think we're being ripped off by Southwest Gas," Bernath said.
He made the switch after his gas bills made him gasp.
"In October, I received a $44 bill from Southwest Gas, and in November it was $189, which is nearly quadruple in 30 days! It didn't make any sense," Bernath said.
He is among dozens of Las Vegas locals who've been writing to "Darcy, what's the deal?'"and tagging us on sites like Nextdoor, all sharing their shock over bills as high as $900.
"It's frustrating to everybody," said Bernath. "Just by the response on Nextdoor... I've never seen a response like that over any issue. Thousands of people complaining about it and wondering what they can do and feeling helpless."
And it doesn't look like there's any relief in sight.
The rate increase we're feeling now is just one in a series. The next one — which is already approved — is set to kick in April 1.
Another request for yet another increase after that is pending before the Public Utilities Commission, with a hearing set for Feb. 26.
"I just thought it was so wrong that they didn't care about us, and I wanted to know what the reasons for the rate hikes were," Bernath said.
We sent his questions to Southwest Gas, and they sent back a lengthy and complicated response.
In part, Southwest Gas explains, "There are two major components to a gas bill:
- Service: The authorized rates Southwest Gas charges for the safe and reliable delivery of natural gas to customers' homes and businesses.
- Natural Gas Cost: The cost of the natural gas itself, which is a commodity, and the price fluctuates based on a variety of factors, but mostly supply and demand. Southwest Gas does not markup gas costs and does not profit from gas costs. We do not set the price. The price is market-based, and we pass it straight through to customers. Customers pay what we pay.
"The higher bills customers are seeing are related to gas costs being higher. Gas costs are higher because of colder than normal weather in the western United States during the November 2022 through January 2023 time period, combined with the residual effects of winter storm Uri [the historic 2021 storm in Texas that caused widespread blackouts and flooding from burst pipes].
"The market price of gas has gone down, but due to the consumer protection-based 12-month rolling average, customers are paying for gas purchased in 2023."
"None of that made any sense," Bernath said. "It was vague. It was evasive. I don't feel like they answered my questions."
And no matter how many times we asked, they won't go on camera with 13 Investigates to answer ours.
"That says they just don't care about the consumer," said Bernath. "They care about their profits and making their stockholders make a profit."
As their statement said, the utility, "Does not profit from gas costs purchased on behalf of customers."
But they do profit.
In fact, Southwest Gas reported record third-quarter revenues of $775 million, which is a net increase of $4 million year-to-year in that quarter alone.
The company's most recent public filings show current overall revenue is $5.48 billion. That's up from $4.96 billion in 2022 and $3.68 billion in 2021.
"When they're making that kind of profit, it should go back to the people," Bernath said.
Southwest Gas says the company has to recoup its expenses. External factors have impacted their costs, as well.
They say rates reflect the current cost to provide gas service, capital investments in its own system, depreciation expense, customer growth, changes in operations and maintenance expenses.
"They're just coming up with anything they can say to try to justify, but it's not justifiable, these rate hikes, not that much," said Bernath. "They don't have a straight answer. They can't give you anything. That's why they should have somebody go on camera and answer the questions directly instead of all this gobbledygook."
We asked why Southwest Gas wouldn't put anyone on camera. They said they want to "stay consistent with responses to all media inquiries."
They also emphasized that, as a regulated public utility, all their rate hikes are approved by the Public Utilities Commission.
"Well, the PUC needs to see things like your program on the news, and maybe they'll wake up and have some mercy and not approve this," Bernath said.
The PUC says it almost never approves a utility's application to increase rates as filed — meaning what's approved is usually far less than what the utility asks for.
They say it's important to note that utilities are not allowed to recover the cost of projects until after they've happened and been proven to work. For example, the costs of building a power plant or transmission line cannot be included in rates until after the projects are in service.
The PUC also says, although wholesale natural gas prices may be decreasing right now, the price is not immediately reflected in rates as it's based on a 12-month rolling average. Rates are set based on what it costs the utility to buy and deliver the service to its customers.
"People just can't afford it," said Bernath. "Not with inflation that's going on, with the food prices, with gasoline prices, electric prices... It's just one more thing."
Nevada law allows public electric and natural gas utilities to adjust their rates every three months.
Bernath — and hundreds of others who we've heard from — say enough is enough.
"Yeah! I mean, when is it going to end?" Bernath asked.
There are things consumers can do to help with rising costs.
Southwest Gas offers several programs, including flexible payment options, a monthly equal payment plan, and a deferred payment plan that allows qualified customers to pay their bills over an extended period of time. To explore those options, click the link or call 877-860-6020.
We, like many of our viewers, also reached out to the governor's office for comment. Here's the statement we received:
"Last year, Governor Lombardo issued an Executive Order requiring Nevada to pursue a balanced approach to energy by using all types of energy, including natural gas, solar, wind, geothermal, hydropower and hydrogen power. Despite federal mismanagement of American energy resources, Governor Lombardo is working to ensure Nevadans have access to affordable and reliable energy.
Additionally, Governor Lombardo tried to provide economic relief to Nevadans by suspending the State Gas Tax for 12 months. Unfortunately, legislative Democrats refused to hear his bill last session and now Nevadans are paying the price. Governor Lombardo’s Taxpayer Inflation Relief Act would have saved consumers and businesses approximately $250 million."
A full statement and additional information from Southwest Gas is included below:
Southwest Gas is a regulated utility that seeks recovery of costs for expenditures it makes to provide customers with safe, reliable energy service. Costs are recovered through rates approved by the Public Utilities Commission Nevada. Rates for gas purchases do not include any return for the Company, while investments in the system utilized to deliver natural gas to customers' homes and businesses do include a return to providing a fair return on prudent investments made by the company.
Southwest Gas has experienced external factors that have impacted the Company’s costs, which in turn requires updates to the rates customers are charged. Southwest Gas’ currently effective base rates were established as part of its general rate case filing in 2021 based on historic costs as of May 2021, reflecting temporary, decreased operating expenses. In September 2023, the Company proposed a rate adjustment in its currently pending general rate case filing to reflect Southwest Gas’ current cost to provide safe and reliable natural gas service in Nevada, including significant capital investments in its system, along with the related depreciation expense; customer growth; and changes in operations & maintenance expenses.
Natural gas, like any commodity, is subject to price fluctuations based on a variety of factors, including supply and demand. Colder than normal weather in the western United States during the November 2022 through January 2023 time period, combined with the residual effects of winter storm Uri and the war in Ukraine, placed upward pressure on western US gas prices. These increased gas costs have been the primary driver of the recent increased customer bills. Southwest Gas purchases natural gas on our customers' behalf and passes those costs straight through with no profit to the Company—customers pay what we pay. The Company uses a 12-month rolling average of previously incurred natural gas costs to develop a portion of its gas cost rates. Consequently, there is a lag between the time in which the Company incurs the cost to procure natural gas on behalf of its customers and the time in which it charges customers for that previously incurred cost. Although Southwest Gas’ Nevada customers have experienced increased gas cost rates over the past year or so primarily as a result of those external factors, the Company’s Nevada gas cost rates, which it charges customers, have decreased in each of its past two Nevada quarterly gas cost adjustments. Consequently, gas costs for the first quarter of 2024 are lower than the last two quarters of 2023, with the average Southern Nevada single-family residential bill falling by $1.29.
Lastly, Southwest Gas’ Annual Rate Adjustment (ARA) application is an annual filing through which the Company seeks PUCN authority to adjust various rates to align previously authorized revenues and programs such as the General Revenues Adjustment and Conservation and Energy Efficiency. The rate effective date of the Company’s most recent ARA was July 1, 2023, which increased the Southern Nevada single-family residential customer bills by approximately $2.01 compared to the rates in effect before July 1, 2023. In November 2023, Southwest Gas filed its 2023 ARA, and the rates resulting from that filing will be effective July 1, 2024. The Company anticipates the average monthly bill for a single-family residential customer in Southern Nevada to decrease by approximately $0.94.
Customers’ bills may vary monthly based on thermostat settings, increased natural gas consumption to heat homes during the winter, increased water heater usage, cracks around doors and windows, or use of additional natural gas appliances such as fireplaces and outdoor fixtures.
The gas cost rate is adjusted quarterly and helps mitigate volatility and reduce customers’ bill impact due to gas cost fluctuations. The delivery charge reflects changes from the most recent rate case filing (2021) and 2022 Annual Rate Adjustment filing, a mechanism filed annually to align previously authorized revenues from programs such as the General Revenues Adjustment and Conservations and Energy Efficiency. Southwest Gas’ latest ARA filing should is anticipated to decrease the average single-family residential bill in Southern Nevada by $0.94 per month.
We understand that revenue reporting can lead to confusion as Southwest Gas Holdings, Inc. and Southwest Gas Corporation share similar names. Revenue is reported by Southwest Gas Holdings and is inclusive of revenue figures from all three of the Company’s owned by Southwest Gas Holdings:
- Southwest Gas Corporation – A regulated utility that provides natural gas service
- Great Basin Gas Transmission Company – Federally regulated natural gas pipeline
- Centuri Group, Inc. – Unregulated utility infrastructure services company
As a regulated public utility, Southwest Gas Corporation’s rates are reviewed and approved by the PUCN prior to implementation. As stated previously, Southwest Gas Corporation does not profit from gas costs purchased on behalf of its customers.
As stated before, the Company files various applications that may increase or decrease customer rates, depending upon the nature of the filing. While the Company’s general rate case filing in September 2023 does reflect a proposed increase in customer rates, those rates will not be effective before April 2024. On the contrary, the Company’s quarterly gas cost adjustment filing made in August 2023 and November 2023 reduced gas cost rates and decreased customer bills compared to those resulting from gas cost rates effective July 2023. Similarly, in November 2023, the Company filed its ARA application, which is expected to reduce overall customer rates beginning July 2024 compared to the currently effective rates.
Here, you can read the full statement and additional information from the Public Utilities Commission:
"The primary driver of recent Southwest Gas rate increases is higher fuel costs during the past few years. Fuel costs are calculated and adjusted quarterly through the utility’s Quarterly Deferred Energy Accounting Adjustment (DEAA). Fuel costs are passed on to ratepayers on a dollar-for-dollar basis, and recovered without providing any profit to utilities.
The deferred energy accounting adjustments are meant to prevent huge rate swings; however, when fuel prices spike considerably as they did the past few years, the deferred energy accounting adjustment process can take several quarters or more for the higher fuel prices to noticeably cycle through current customer rates.
Although wholesale natural gas prices may be decreasing at this time, rates must be set based upon what it costs the utility to acquire and deliver the service to the customers. The price of natural gas is not immediately reflected in rates as it is based on a 12-month rolling average for incurred costs. Natural gas prices have been higher due to several factors, including global geopolitical conflict, gas pipeline issues in the country, and natural gas import issues.
Quarterly Deferred Energy Accounting Adjustments (DEAA): Fuel costs are calculated and adjusted quarterly. Fuel costs are passed on to ratepayers on a dollar-for-dollar basis, and recovered without providing any profit to utilities. Nevada law (NRS 704.110) allows public electric and natural gas utilities to adjust their fuel and purchased power rates every three months, which results in new rates taking effect October 1, January 1, April 1, and July 1. Rates can be adjusted higher or lower depending on fuel costs.
Other factors contributing to Southwest Gas customer rates include rate increases through the normal rate case process and the onset of colder weather and higher natural gas usage.
Annual adjustments: In addition to the quarterly deferred energy accounting adjustments, the PUCN reviews fuel costs on an annual basis. Each year, Southwest Gas applies to the PUCN for a determination that its fuel costs for the previous calendar year were prudent. Gas utilities make a filing called an annual rate adjustment application. The PUCN examines the fuel costs presented in this application to determine whether the utility prudently incurred them. If the PUCN determines that any costs were not prudently incurred, the utility must credit the costs back to customers plus an additional amount to reflect the time-value of money.
For additional details about utility fuel costs regulated by the PUCN, see the attached fact sheet or click on this link.
A hearing on the GRC application is scheduled to start Feb. 26. Based on the evidence presented in the rate case, the PUCN may approve rates as proposed or decrease or increase rates as necessary to ensure rates are just and reasonable.
The Commission almost never approves a utility’s application to increase rates as filed. For example, in the most recent electric general rate case (GRC) for NV Energy in Southern Nevada, NV Energy requested additional annual revenues of approximately $93 million, and the Commission approved only $37 million in additional revenues. The effect of the PUCN’s order was a downward adjustment of 60% to the initial request.
Below are some other recent examples of NV Energy and Southwest Gas revenue requests and the amounts approved by the Commission.
Note: The utilities’ applications for revenue increases are based on historical costs (expenses that have already occurred for the purpose of providing safe, reliable utility service), and the investments made by a utility cannot be recovered through rates charged to customers until after those investments have actually benefited customers. For example, the costs of building a power plant or transmission line cannot be included in rates until after the projects are in service and operational.
Sierra Pacific Power Co. 2022 General Rate Case (GRC) Docket 22-06014
In NV Energy’s most recent GRC in Northern Nevada, the requested annual increase was $88.3 million, and the PUCN approved a revenue increase of only $57.79 million. The effect of the PUCN’s order was a downward adjustment of 35% to the initial request.
Nevada Power Co. 2020 GRC Docket 20-06003
The PUCN ordered a $120-million reduction in annual revenue, which was returned to customers through a one-time bill credit.
SWG 2020 GRC Docket 20-02023
Southwest Gas requested a statewide annual revenue increase of $38.50 million, comprised of $35.80 million in Southern Nevada and $2.70 million in Northern Nevada. The PUCN approved a statewide revenue increase of only $25.10 million, comprised of $24.40 million in Southern Nevada and $0.70 million in Northern Nevada. The effect of the PUCN’s order was a downward adjustment of 35% to the initial request.
SWG 2021 GRC Docket 21-09001
Southwest Gas requested a statewide annual revenue increase of $30.50 million, comprised of $26.10 million in Southern Nevada and $4.40 million in Northern Nevada. The PUCN approved an increase of only $14.05 million, comprised of $12.75 million in Southern Nevada and $1.30 million in Northern Nevada. The effect of the PUCN’s order was a downward adjustment of 54% to the initial request."