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| Small Credits to Appear on Southwest Gas Bills |
Small Credits to Appear on Southwest Gas Bills
tucson.com/AZ Daily Star, December 12, 2014 11:00 pm • By David Wichner -- About a million Southwest Gas customers in Arizona will see small credits on their bills starting in January, after a regulatory surcharge was reset by the Arizona Corporation Commission.
The credits, which will amount to about 55 cents a month or $6.64 annually for the average residential customer, are intended to reimburse ratepayers for $11.6 million Southwest Gas overcollected in 2013 through a so-called “decoupling” charge.
The billing mechanism — known as the “Energy Efficiency Enabling Provision” — is designed to allow Southwest Gas to recover its authorized fixed costs, regardless of its level of energy sales — essentially decoupling rates from sales, the Corporation Commission said.
Under of a state mandate that investor-owned utilities achieve energy savings of 22 percent by 2020, Southwest Gas offers residential ratepayers rebates for solar hot water systems and other rebates to businesses and builders for efficiency improvements.
The idea behind decoupling is that it gives utilities the incentive to push energy-efficiency programs that can hold down rates in the long run — even though such efforts may drive down energy sales.
The gas company’s decoupling rate is reviewed on an annual basis and can result in billing credits when a utility collects more than its state-authorized revenues, as Southwest Gas did in 2013.
Under a Corporation Commission decision on Thursday, the usage-based decoupling rate will be reset Jan. 1 to a negative 2.6 cents per therm, resulting in a credit until the rate is reset. A therm is a unit of energy equal to 100,000 British thermal units, or Btus, or about the energy equivalent of burning 100 cubic feet of gas.
Corporation Commission Chairman Bob Stump said in a news release that decoupling has been a success for the company and ratepayers.
Commissioner Gary Pierce, who is leaving office at year’s end, said future commissions should seek decoupling mechanisms for other utilities “as a way to avoid rate shock.”
According to Southwest Gas, residential gas usage dropped 1.6 percent since the decoupling provisions went into effect in 2012 through 2013, compared with usage in the prior three years (2009-2011).
But, despite spending most of its approved budget of $4.7 million for energy efficiency programs last year, Southwest Gas didn’t meet its 2013 energy-saving target and likely won’t reach its 2014 goal, according to regulatory documents.
Southwest Gas says Arizona residential customers hooked up to its system between 2011 and 2013 have the lowest per-customer gas usage of its customer base, because of the addition of new homes with energy-efficient building features and appliances.
The Las Vegas-based gas company serves just over a million customers in 10 Arizona counties, including Pima. The company had 2013 Arizona revenues of about $694 million, with net income of nearly $57 million, according to an annual report filed with the Corporation Commission.
The $11.6 million overcollected by Southwest last year amounts to about 1.7 percent of the company’s Arizona revenues in 2013. The Corporation Commission found that the utility did not exceed its state-authorized rate of return because of the overcollection.
Southwest Gas’ decoupling rate works much like to other variable billing surcharges, such as fuel and power-purchase “adjustors,” which are periodically changed to reflect actual costs of fuel.
Patrick Quinn, director of the Arizona Residential Utility Consumer Office, says it’s not uncommon for utilities to over- or under-collect revenue from such bill surcharges, noting that in some cases the watchdog agency has prompted regulators to require utilities to pay ratepayers interest on the overcollected amounts.
Before it was approved in late 2011, RUCO and AARP opposed Southwest Gas’ decoupling plan, arguing that lower-income customers and senior citizens living on fixed incomes can’t easily afford to invest in energy-efficiency measures that could trim their bills and might face higher bills as a result.
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or 573-4181.
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