Las Vegas, NV-based Southwest Gas Corp., the gas-only utility distributor to 1.6 million customers in three states, reported decreased first-quarter profits, with warmer-than-normal weather and higher operating costs cited as the chief culprits. Net income was $32.8 million, or 88 cents/basic share, in the first quarter, down from $41 million, or $1.19/basic share, in the same period in 2004.

For the 12-month period ending March 31, 2005, net income was $48.6 million, or $1.35/basic share, compared with $54 million, or $1.59/basic share, for the same 12 months ending a year earlier. Southwest said “a decline in operating results from the gas utility operations was partially offset by improved results for its construction services unit.”

A key part of the decline was the lack of a rate decision in Arizona, Southwest’s largest operating area, according to CEO Jeffrey Shaw. “Rate design changes in recent rate case decisions in Nevada and California have mitigated the impact of weather on operating margins, and rate relief granted in these jurisdictions has helped compensate for increased costs,” Shaw said, adding that financial results from Arizona, however, reflect the impact of weather and the increased costs.

“The rate case on file in Arizona addresses these rate design and rate relief issues, and we are hopeful that a favorable decision will be received later this year.”

For the quarter, Southwest’s net operating expenses and financing costs both jumped up 6%, while overall customer growth continued at 5%, one of the fastest rates in the nation.

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