ICYM: Gas bill through the roof? Here’s why, plus another increase for Northern Nevada

This winter is different from last year in many ways. For one, Northern Nevada had a historically dry start, with the first snow not reaching the valley floor until well after Christmas. The weather has been warmer over all — with highs reaching 15 degrees over the average of 45 for January.

Last year’s winter was one for the books, with it being the second snowiest winter ever recorded in the Sierra and at Lake Tahoe, behind the 1952 winter season. In total, the Sierra received 685 inches of snowfall. By comparison, this year, we are only at 102 inches.

Despite this, residents are all seeing massive increases on their Southwest Gas bill — doubling or even quadrupling from last year’s averages.

With it being a warmer winter overall, many are asking: Why in the world are they spending more money to heat their homes now than they did during last year’s historic storms?

According to Southwest Gas spokesman Stephen Miller, there are a number of factors at play, but it comes down to 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 U.S. gas prices,” Miller said. “These increased gas costs have been the primary driver of the recent increased customer bills.”

According to Miller, Southwest Gas purchases natural gas on behalf of their customers, and passes those costs straight through with no profit to the company, meaning customers are paying what Southwest Gas pays for the gas.

However, that isn’t to say that customers are only paying for gas costs. According to the Public Utilities Commission of Nevada (PUCN), there is also the cost of the interstate pipeline service used to obtain the natural gas, which can account for around 55 percent of a Northern Nevada customer’s bill.

What Miller also did not mention is the fact that the company routinely requests base rate increases to see a return on their equity and investments — both of which are passed on to the consumer.

Southwest Gas uses a 12-month rolling average to develop its gas cost rates, Miller said. Because of this, there is a lag between the time that the company buys the gas and the time it charges customers. So in essence, despite the fact that the price of gas has been decreasing, customers are paying for what the cost of gas was at the time Southwest Gas purchased it.

The PUCN is in charge of balancing the rates customers are charged with the profits of the companies:

Consumers are interested in reliable and safe utility service at the lowest possible rates. The utility is interested in rates that are sufficient to cover the costs of providing utility service and adequate to attract and maintain investment capital. The role of the PUCN in this process is to assure the interests of the consumer and utility are balanced.

While Miller says that the PUCN is in charge of the general rates, it is actually the utility companies like Southwest Gas that apply for the rates and are then approved by the PUCN.

Essentially, a utility such as Southwest Gas will apply for a rate change to augment what they can collect from their customers. They must provide evidence that the change in cost is “reasonable and prudent” for the utility to provide. These include costs such as labor, materials, taxes, plant construction or maintenance, interest on debt incurred for plant construction, and a “reasonable profit on the equity invested by the company’s shareholders.”

“When added together, all of these costs produce the revenue requirement that needs to be collected from customers through rates,” the PUCN writes.

Recently, Southwest Gas filed a General Rate Case Application with the PUCN, which will come into effect in April 2024.

In total, this will provide a $74 million increase in revenues to cover Southwest Gas’ costs to provide gas service throughout the state.

This means that, beginning in April 2024, consumers will see another increase in their bills. According to Southwest Gas, the “average residential customer” in Northern Nevada will see an increase of approximately $7 per month in their monthly bill.

This will be the fourth increase in a five-year span. As determined by the Nevada Independent, in 2023, the company’s third quarter earnings increased by $19 million over the previous year’s third quarter; its second quarter earnings were $22 million higher than they were in 2022. However, this did not stop the company from requesting another base rate increase in September 2023.

According to Miller, the base rate changes reflect their operating expenses.

“Southwest Gas’ currently effective base rates, which reflect historic operating expenses, were established in 2021 based on historic costs as of May 2021, reflecting temporary, decreased operating expenses," Miller said. “In September 2023, the company proposed a base rate adjustment in its currently pending general rate case 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.”

How to Save

Despite incoming rate changes, the majority of a customer’s bill is going to come from the actual cost incurred by their gas usage.

Typically, your Southwest Gas bill will be broken into categories of delivery charges, gas costs, and then the basic service charge, IE rates, local taxes, universal energy charges, etc.

This will give consumers a good idea of how much they are currently spending on their gas usage.

According to the PUCN, there are a number of ways you can save on your energy and gas bills including adjusting how you use your energy, as well as making your home more energy efficient.

In general when it comes to energy usage, it’s a great idea to keep lights, appliances, computers, gaming systems etc. off when you are not actively using them. You can also subscribe to your electric utility’s time-of-use rate and avid energy usage during on-peak hours.

For heating, you can take steps to increase your energy efficiency such as replacing older models of furnace, boilers, and water heaters with newer energy efficient models.

Install a programmable thermostat that reduces energy consumption.

Regularly clean or replace air filters in your heating and cooling systems, and turn off your pilot light in your gas furnace during the summer.

Keeping your thermostat at 55 degrees while you are asleep will cut down on your bill — and may even help you sleep better.

If you’ll be gone for four hours or more, reduce your thermostat to 55 degrees during winter.

Keep the doors to closets and unused rooms shut so you aren’t wasting heating on those spaces.

Use ceiling fans on a low setting to move warm air throughout the home — remember, heat rises!

Use caulking around windows and fixed door frames, under baseboards, around dryer vents and exhaust fans, and more.

Use weather stripping in moveable window and door joints.

Add insulation between areas of the home you use and unusable spaces such as attics, crawl spaces, etc.

Replace older, single pane windows with storm windows, and use window tinting to prevent heat loss or gain. Utilize insulated shutters and shades. Use shades or drapes to cover windows tightly at night during the winter.

You can also check out the PUCN energy saving fact sheet for more information on how your can save on heat, energy, water and more.