Higher gas amd electric rates hit northern Nevada

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Higher gas amd electric rates hit northern Nevada By John Stearns Reno Gazette-Journal December 29th, 2000

Higher gas and electric bills will show up in mailboxes this winter throughout northern Nevada with rate hikes approved Thursday by the Public Utilities Commission of Nevada.

The largest increases will come in natural gas, with average monthly bills rising from 30 percent to 46 percent, depending on residential or commercial classifications and usage.

An electricity hike for Sierra Pacific Power Co. was granted to help cover the company’s rising costs of buying wholesale power that it can’t generate and its rising cost of buying natural gas to fuel its electricity-generating plants, said Karl Walquist, spokesman for Sierra Pacific.

There has not been much natural gas drilling in recent years when prices were low, Walquist said. As a strong economy has increased gas demand, supply has been strained.

“The supply is not available,” he said. “Plus new (electric) power plants that have come on line . . . they almost all are natural gas-fired power plants,” which increases the cost of producing electricity as gas prices increase.

LoreLei Reid, fuel manager for Sierra Pacific, said customers shouldn’t be surprised if more increases are needed based on current market conditions. The company has been able to protect customers from large price spikes by carefully managing its fuel purchases, she said. The company’s fuel costs are passed on to customers dollar for dollar.

Jim Polito, an economist with the state’s Bureau of Consumer Protection, said rate increases approved were:

* For Sierra Pacific residential customers, natural gas prices will increase an average of $11.52 per month, or 34.7 percent, for a customer using 53 therms of natural gas per month. That will take the average bill from $33.16 per month to $44.68. The rate hike will take effect Feb. 1.

* For Sierra Pacific commercial customers, natural gas prices will increase an average of $64.47 per month, or 38.9 percent, for customers in the “small” commercial class. That will take the average bill from $165.69 to $230.16. The rate hike will take effect Feb. 1.

* For the “large” commercial class customers, gas prices will increase an average of $4,492.39 per month, or 46.2 percent. That will take the average bill from $9,727.59 to $14,219.98. The rate hike will take effect Feb. 1.

Southwest Gas -- whose territory includes Carson City, Minden, Gardnerville, the Nevada side of the Lake Tahoe Basin, Fallon, Fernley, Winnemucca, Lovelock and Battle Mountain -- said residential customers using an average of 104 therms per month will see their bills increase from $73.47 to $95.68, or 30.2 percent. The hike will take effect Jan. 1. It is the second increase in three months.

On the electric side, Sierra Pacific’s rate hike will be the third one since Nov. 1, Walquist said. For a typical residential customer using 650 kilowatt hours per month, the latest hike that takes effect Jan. 1 will raise the bill by about 62 cents, he said. The three hikes combined would raise the average bill about $3.32, he said.

Commercial figures were not available, but increases are expected to range from 1.03 percent to 2.08 percent, Walquist said.

At the PUC’s meeting in Carson City, Commissioner Richard McIntire said it’s easier to approve rate decreases, but Nevada has managed to avoid the kind of skyrocketing rates seen in California. The increases are better than not knowing if one’s heat or lights will come on, he said of doing the “responsible thing” in trying times.

“Some of it needs to be addressed in terms of national energy policy,” McIntire said of the energy issues sweeping the nation.

According to Sierra Pacific, the American Gas Association reported that natural gas prices have risen during the last year because of growing demand coupled with tight domestic supplies resulting from the high, volatile prices for oil, which is a competing fuel.

Charles Fletcher, a spokesman for Sierra Pacific, said the company’s gas hike is the first since 1993.

“The price of natural gas right now is approximately what it was 18 years ago,” Fletcher said.

While natural gas supplies are strained, they’re adequate for this winter, he said.

Exacerbating the problem was the rising price of oil, which drove a lot of power producers from petroleum to natural gas at the same time that the strong economy was driving increased natural gas use, he said.

“There’s supply in the ground, it’s just a matter of . . . bringing on new wells,” Fletcher said. “It’s really a short-term problem.”

But price moderation might not occur for two to three years until supplies outpace demand, the company’s Reid said. Currently, supply and demand are “so, so tight” that even the threat of cold weather affects market prices, she said.

In a written statement, Roger Montgomery, vice president of pricing for Southwest Gas, said: “In an effort to mitigate price volatility and provide customers with accurate price signals, Southwest has filed a request to change the (Purchased Gas Adjustment) process from an annual to monthly basis, using a 12-month rolling average.

“If the monthly PGA procedure is approved, Southwest’s rates would change more frequently, but the changes would be much smaller than what customers are experiencing today,” he said.

© 2000 Reno Gazette-Journal

http://www.rgj.com/news2/stories/news/978150516.html

-- Martin Thompson (mthom1927@aol.com), December 29, 2000


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