Experiencing a decade-long annual growth of 5% again last year, Las Vegas, NV-based Southwest Gas Corp. reported decreased consolidated earnings, compared to the previous year, for its growing distribution natural gas utility operations in Nevada, Arizona and the eastern fringe areas of California. Southwest is the major natural gas utility in both Nevada and Arizona, two of the fastest growing areas in the nation .

Consolidated operating net income in 2005 was $43.8 million, or $1.15/share, compared with $56.8 million, or $1.61/share, for the previous year, Southwest announced Thursday; similarly fourth-quarter net income dropped, compared with the same period in 2004 (77 cents/share the last quarter of 2005, compared to $1.12/share for the same period a year earlier).

Warmer-than-normal weather in both the fourth quarter and all year contributed to the lower earnings despite the continuing addition of more than 81,000 new customers again last year, according to Southwest CEO Jeffrey Shaw, who said the company will not change its “principal core strategies in 2006.” He said Southwest Gas has added 684,000 customers over the past 10 years, bringing the current customer total to 1.67 million, the vast majority in Nevada and Arizona.

“Weather fluctuations still are a risk to earnings — particularly in Arizona,” said Shaw, who noted that a recent rate case decision by the Arizona Corporation Commission should assure strong earnings in that state this year and beyond. The warmer-than-normal weather continued the first two months this year, so the utility has not “gotten the heating season it was hoping for” this winter, Shaw said.

To keep up with the unrelenting customer growth, Southwest is projecting more than $250 million annually for the next three years for its capital expenditures, said CFO George Biehl. Last year, capital investments totaled $259 million, with about 75% of that total going to handle customer growth, Biehl said. For the next three years, cap-ex spending is expected to total $778 million, with $284 million of that slated for this year, he said.

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