PUC delays SW Gas action
The California Public Utilities Commission voted June 4 to delay action for two more weeks on a proposal which would make energy giant Southwest Gas stick to its original bargain with the Town of Truckee, instead of modifying the agreement to pass on expected cost overruns to local ratepayers.
Town representatives who attended the CPUC meeting included Mayor Ron Florian, Councilmember Don McCormack and Town Manager Steve Wright.
Although no action was taken at the meeting, they reported the CPUC did not appear to be negative about Truckee’s desire – to see Southwest Gas held to its commitment to provide service to all of Truckee, for the agreed-upon price of $29 million.
“Most seemed to lean toward the town,” Wright said. “One commissioner insists he wants to draft a compromise.” He said the CPUC also made an ex-parte motion, barring further contact from parties involved in the issue – Truckee ratepayers and Southwest Gas.
The Town of Truckee is not a direct party to the agreement between Southwest Gas and Truckee ratepayers, and Wright said he will consult with a CPUC attorney to find whether it is affected by the ex parte ban.
The CPUC has been deluged with letters from Truckee residents concerned about the impact Southwest Gas’ proposed surcharge increase and smaller coverage area would have on their lives.
“The committee acknowledged the fact that they appreciated the citizens of Truckee taking the time to write to them,” Florian said.
Southwest Gas initially estimated the cost of installing natural gas to all parts of Truckee at a maximum of $29 million. Now, after finishing the second phase of construction, the company estimates it would require more than $56 million to complete the project as initially proposed, and $20 million to bring natural gas to Donner Lake.
Company officials say the increased costs are due to the unexpected rockiness of the soil in the area, short work seasons and unexpected regulations. They seek to pass on some of those costs through an agreement negotiated in January with the CPUC’s Office of Ratepayer Advocates, which would increase the construction surcharge on each therm of natural gas from 12 cents to 18 cents, and extend its duration. The agreement would also allow the company to back out of its earlier commitment to provide gas to the Donner Lake area. Instead, Southwest Gas would be required to conduct a more complete study of how to provide gas to Donner Lake, with results presented to the CPUC.
It is estimated that over the duration of the increased surcharge, residents would pay approximately twice as much as agreed-upon in the original agreement, with the cost of installing gas jumping from $2,000 per customer to around $4,000 per customer (Assumes 100 therms monthly usage).
The CPUC will again consider the ruling by Administrative Law Judge Orville Wright to hold Southwest to its original agreement in a meeting June 18 at 10 a.m. in San Francisco.
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