Reflecting estimates for higher than estimated wholesale natural gas costs, the Nevada Public Utilities Commission Wednesday approved a 9.2% retail rate hike for Las Vegas-based Southwest Gas Corp., and the utility immediately issued an announcement warning customers they face higher heating bills this winter. Southwest Gas had asked for a 5% hike, but the regulatory commission on further estimating wholesale prices bumped it up to $30 million.

The Nevada PUC approval was based on an average $5.14/Dth wholesale gas cost, which is nearly double the approved prices in the $2.50-$2.80/Dth range two years ago, a utility spokesperson said.

In its warning to customers Wednesday, Southwest Gas said the average residential customer using 68 therms monthly faces a $74.16 bill this December, compared with $53.25 in the same month last year.

“Southwest Gas is alerting southern Nevada customers that natural gas bills will be significantly higher this winter primarily due to rising prices in the natural gas marketplace,” said Gary Clark, vice president for the utility’s southern Nevada division.

Clark said Southwest’s gas buyers started “seeing more volatility” in wholesale prices several years ago. “To minimize these price fluctuations, the company purchased about half of its supplies for this winter with fixed-price contracts,” he said. “This will help protect customers from price spikes in the marketplace this winter.”

Southwest said the rest of its supplies will be determined on a monthly or daily basis, depending on the marketplace. The utility’s gas buyers “search for and negotiate daily with dozens of producers for the best-priced gas possible,” Clark said.

“The reasons for the increase are many, but they all boil down to one underlying fact — demand for natural gas is increasing faster than gas supplies. While the costs have increase substantially, we want to reassure our customers that the company does not foresee any shortage of natural gas this winter.”

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