Max Jarman
The Arizona Republic
Nov. 13, 2004

Many Arizona consumers may pay more to heat their homes this winter.

Southwest Gas Corp. has proposed temporarily raising rates by 3.5 percent for residential and commercial customers to offset the higher costs of purchasing the natural gas it sells.

The increase would add $1.91 to the average monthly residential winter gas bill of $55, the company said. Southwest has 872,000 customers in central and southern Arizona. Southwest has asked the Arizona Corporation Commission for clearance to collect a $22.4 million revenue shortfall due to the increase in natural gas prices.

Las Vegas-based Southwest owns no gas wells of its own and must purchase gas on the open market to resell to customers. Since September the wholesale price of natural gas has risen from $4.50 to more than $8 per million British thermal units.

Southwest spokeswoman Linda Taylor said the rate hike would take effect as soon as the request is approved by the commission. It would remain in effect until the $22.4 million deficit is made up, about a year.

Southwest's basic rates are set based on estimated wholesale natural gas prices. If the price goes above the estimate, the company is allowed to recover the difference through a temporary rate increase. Conversely, if the price drops below the target price, consumers receive a credit.

In 2002, Southwest residential customers saw their monthly bills drop an average $7.44, or 11.5 percent, after natural gas prices plummeted. In 2000, however, rates rose about $5.50 per month when volatile natural gas prices soared.

While the proposed hike in gas prices is relatively small, it would further add to Arizona households' energy costs. Gasoline prices remain high, at an average $2.12 a gallon for regular in Phoenix this week. And the state's electrical utilities have either raised rates or proposed to raise them.