Championing Southwest Gas’ second
rate increase in as many years, mayors in some of Arizona’s
fastest-growing communities sent a letter of support to the Arizona
Corporation Commission claiming proposals from a consumer interest group
“would impose unnecessary and costly barriers for consumers” who want
to use natural gas.
“If enacted, these misguided policies
will slow our economic progress and jeopardize the safety of our
communities,” the mayors wrote.
But the letter wasn’t an organic
outpouring of community support. Rather, it was written by Southwest Gas
as part of a concerted effort by the utility to drum up outside support
of its desired 11.6% price hike.
In the end, the Corporation Commission approved a lower rate hike
on Jan. 10, in part because of misrepresentations of the intent of
consumer advocates involved in the process that public records show
Southwest Gas helped organize.
At issue with the application for the increase were proposals by the Southwest Energy Efficiency Project
(SWEEP) to require Southwest Gas to conduct an Infrastructure and
Investment Plan (IIP) to guide processes and shed light on future system
upgrades. Additionally, SWEEP wanted to eliminate “construction
allowances,” which are gas infrastructure subsidies for large
construction projects paid by all ratepayers in the system.
“As you may know, SWEEP is a Boulder,
CO based environmental NGO that has a stated organizational agenda that
includes ‘advancing state policies that would accelerate
electrification in buildings,’” Arizona state Sen. Sine Kerr and state
Rep. Gail Griffin, both Republicans, wrote in a letter to the Commission
days before the final hearing. “SWEEP’s IIP proposal would create a
government-knows-best approach to energy in Arizona where politicians,
not customers, would decide what infrastructure is right for a housing
development or business.”
The letter echoed talking points Southwest Gas provided
to at least one Arizona mayor that claimed SWEEP’s proposal was a
backdoor attempt to “prevent gas utilities from being able to replace
aging infrastructure for current customers and to stop us from extending
infrastructure to new customers in favor of mandated building
electrification.”
“There’s been some accusations or
incorrect statements that our position means we’re trying to ban gas,
which couldn’t be further from the truth,” SWEEP Arizona Representative
Caryn Potter told the Arizona Mirror. “We believe that new customers and
developers should pay the full cost for connecting to the system, or at
the very least there needs to be an investigation into the updated
economics of this, given all the changes to the market to housing, gas
prices, and all the changes in economics and resources. They need to
look at this a little bit closer, and it just hasn’t happened.”
SWEEP became involved in the process
in the wake of the gas utility’s rate increase request to the Commission
at the end of 2021, about a year after its previous increase. The
consumer advocacy group applied for and received intervenor status so the public had representation in the process, which was overseen by an administrative law judge.
“The
thing we were concerned with is that there’s a significant amount of
investment being made in the gas system right now, and there’s really no
way for the Commission to review those investments outside of a rate
case,” Potter said. “The company has been investing a lot of resources
into things like renewable natural gas and liquefied natural gas
storage.”
Potter said that SWEEP’s goal is for Southwest Gas to be treated like electric utilities that go through what’s known as an “integrated resource planning process”
that weighs projected customer needs and system capacity with
objectives such as affordability, reliability and sustainability, along
with reduction of greenhouse gas emissions, air pollutants and water
use.
SWEEP maintains that the Southwest
Gas delivery system is in good shape after the utility spent more than
$700 million on maintenance and upgrades in recent years, and the
company will use the rate increase to pay for work that may ultimately
prove to be unnecessary, redundant or “stranded assets” as the U.S. attempts to move to more sustainable forms of energy production.
The approved increase raises overall
rates by $61.7 million annually, and will result in an average increase
of 7.6% for Southwest Gas’s customers.
Under the approved rates, a
single-family residential customer can expect an average monthly
increase of $2.98, or 6.73%, from $44.28 to $47.26, according to a summary of the hearing.
This comes on top of previous increases in the cost of gas that have raised customer rates significantly
in the past year….
Read More: Southwest Gas recruited elected officials to back its rate increase, records