Nevada Supreme Court rules Southwest Gas must prove expenses are justified

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The Nevada Supreme Court has ruled that Southwest Gas must prove that its expenses are justified if it wants to recover the costs for them.

Southwest Gas asked the court to review the Public Utilities Commission’s rate-setting process, arguing that the utility “enjoys a presumption of prudence” with the expenses it incurs.

In an order filed Thursday, the seven justices of the Nevada Supreme Court rejected the utility argument, upholding a lower court ruling and a Public Utilities Commission ruling that utilities are in charge of prove that their charges are appropriate.

The case stemmed from Southwest Gas’ 2018 application to raise customer gas rates by about $3 on average. The company said the increase would help recover the costs of five software upgrade projects, adjust pension expenses and increase return on equity.

However, an audit of the claim revealed “several apparently inappropriate charges”, the court wrote.

“The PUC’s skepticism of SWG’s expenses was justified in light of SWG’s earlier attempt to obtain reimbursement for a number of questionable expenses, including twice-weekly massages and a home theater system. , and the utility’s lack of justification for its other expenses in its head case,” Judge Lidia Stiglich wrote in the court notice.

Among other things, the utility initially sought reimbursement for a Casio electric piano, tens of thousands of dollars in consulting fees, $41,000 for non-travel meals and $3,000 for non-travel entertainment, a house $307,000 Winnemucca for a Winnemucca district manager and golf course. course membership. The company would have passed those costs on to customers if the Public Utilities Commission had approved the plan.

Southwest Gas told regulators that those expenses were inadvertently included in the application and then removed from it. However, the Public Utilities Commission determined that Southwest Gas had failed to substantiate its charges and denied the utility its recovery request.

Southwest Gas appealed in court for the Eighth Judicial District, saying it had a “presumption of prudence” and that the commission violated due process. The appeals court upheld the commission’s decision against Southwest Gas, and the state high court upheld the decision.

In a written statement Monday, Southwest Gas spokesman Sean Corbett said the utility appreciates “the court’s decision and clarification of the issues raised as a result of the 2018 rate case decision. society”.

“The company has worked constructively with the (commission) to ensure it meets their expectations with respect to its regulatory filings,” the statement said. “Some of these expectations were clarified by the legislator during the last legislative session. We look forward to continuing to work with our regulators and all stakeholders to ensure Southwest Gas continues to meet customer and regulator expectations for the provision of affordable, safe, reliable and sustainable energy services.

Corbett added that “the majority of the expenses in question and excluded in 2018 were then allowed to be recovered in the company’s very next rate filing.”

Southwest Gas included similar expenses in a May 2020 utility board rate increase application. The utility said the increase of about $4 per home on average was necessary because of the changes. in the cost of capital and capital investments, as well as additional costs. for a software update.

Regulators discovered that the company also included fees for Vegas Golden Knights tickets for board members, a dinner tab of more than $4,700, including more than $1,500 of alcohol, a rental of $604 luxury vehicle in New York and several stays at the Four Seasons in Las Vegas, which included a manicure and pedicure for a member of the hotel’s spa board.

The company told the Review-Journal in August 2020 that those charges had been removed from the app.

On August 31, Southwest Gas submitted a new General Rate Case Application to the Public Utilities Commission, seeking to raise rates by an average of $3.39 for a single-family home in southern Nevada. The commission’s review process is ongoing.

Contact Mike Shoro at [email protected] To follow @mike_shoro on Twitter. Review-Journal editor Colton Lochhead contributed to this report.

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