Las Vegas-based Southwest Gas Corp. customers in the high desert and mountains northeast of Los Angeles were granted some interim rate relief retroactively back to Jan. 16 by California regulators Thursday, although it does not deter the regulators’ ongoing investigation of how Southwest handled last year’s extreme run-up in wholesale natural gas prices at the California-Arizona border. Normal ratemaking processes were waived because of retail customers’ “extraordinary” circumstances this winter in the relatively colder mountain and desert climate zones.

Southwest responded to last year’s price run-up by signing some long-term supply contracts which were good deals at $1.10/therm last year when the California border price was still $1.57, but it is now not so good compared to the 60-70 cents/therm paid by Southern California Gas Co. customers this winter.

The long-term deals expire at the end of March so the California Public Utilities Commission Thursday approved a proposal from the utility to lower current rates to market levels and book the difference between those prices and the contract price for further regulatory consideration. In the meantime, the CPUC will finish its ongoing investigation of how Southwest has handled its supply purchases over the past year.

By special resolution citing the “extraordinary pain and suffering” endured by Southwest’s retail California customers, the CPUC on an expedited basis lowered the Southwest rates with a special balancing account being established to track the amounts of unrecovered contract costs.

“I strongly support this effort to bring rate relief to the Southwest customers,” said Commissioner Carl Wood, who said that for many customers there was a “sense of desperation” related to their winter gas bills because these relatively remote areas of Southern California are generally populated by low- and fixed-income senior citizens.

“Southwest Gas has taken emergency action and at its own risk lowered its rates, and has asked for permission to apply a modest surcharge for the next 24 months [without interest] to make up for the shortfall. Costs to Southwest should fall sharply on April 1 when the contracts expire.”

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