Las Vegas-based Southwest Gas Corp. (SWGas) continues to see its business units expand and expects that trend to continue, CEO John Hester said earlier this month.
Covid-19 “is our No. 1 concern,” Hester said during the second quarter conference call. “We’re closely monitoring the impact on SWGas operations.” Demand to date is strong for services at the North American nonutility company, Centuri.
The company has added 36,000 meter sets over the past year, and “we expect to realize a similar number at the end of 2020,” he said. “We believe the desert Southwest continues to be a desirable place for businesses and people to relocate to.”
Residential developments and multiple large business expansions are underway or planned, by defense contractors, technology providers, transportation companies and entertainment firms. “This is expected to drive continued prosperous growth in our service territory for years to come,” Hester said. “New home permits so far this year have exceeded last year.”
Annual capital expenditures are set at about $700 million a year through 2022 as the company continues to invest in the natural gas distribution system. “Half of these investments will be financed from internal cash flows,” Hester said. The rate base is expected to grow to $6.2 billion by the end of 2024 from $4.1 billion at the end of 2019, an 8.6% compounded annual growth rate.
SWGas also is partnering with stakeholders on compressed natural gas (CNG) and renewable natural gas (RNG) projects. It has two proposals in Arizona, a dairy farm and wastewater treatment plant, to build interconnects with RNG suppliers to connect to the utility pipeline network.
“In California and Nevada, we now have the ability to purchase RNG for our portfolio in both states, and we have begun the process of working with both customers and our gas supply team to purchase RNG resources,” said general counsel Justin Brown.
While planning to decarbonize supplies and expand efficiencies, Hester painted a bullish picture for the future, including continued investments in rate base growth, customer growth and cost controls.
In 2Q2020, net income was $37.9 million (68 cents/share), compared with $22.05 million (41 cents) for the same period last year.
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