Southwest Gas appeals rate decision
Construction of new gas hookups for Truckee residents probably won’t happen any time soon, as Southwest Gas recently filed a motion to stay the California Public Utilities Commission decision which ordered it to proceed with its project here at the original price promised to Truckee ratepayers.
The motion to stay the decision was filed in conjunction with a request for a rehearing of the commission’s decision on July 2 holding Southwest to the terms of its original agreement with the town.
Town Manager Steve Wright said the action by Southwest indicates no further work will be done on new lines during the summer construction period.
“I called and talked to the PUC about the process,” Wright said. “They said it would be 60 to 90 days before the matter will be heard by the commission. This clearly suggests there will be no work done by Southwest Gas this season in Truckee.”
If the commission upholds its previous action, Southwest’s next step is to appeal to the California Supreme Court.
Wright said the town will analyze its strategy in the weeks before the matter is heard again by the CPUC, and he expects the Truckee delegation will be making more visits to San Francisco.
Former Truckee Mayor Kathleen Eagan, who spearheaded the residents’ effort to hold Southwest to its original deal, said she was not overly surprised by Southwest’s decision.
“It is important for our community to keep the PUC aware of how important we feel it is that Southwest uphold the original agreement,” Eagan said. “I hope the PUC remains with its original position that they deliver natural gas to this community at the price promised.”
She said Southwest should stand by its promise.
“They made a commitment and a business decision with the PUC and the community to deliver the gas at a set price,” Eagan said. “They should muster the courage to follow through with their decision.”
Attorney Jim Simon, who also represented residents at the CPUC hearings, said the group is considering civil remedies to the situation. He recently sent a letter to the CPUC indicating that Southwest was not complying with the commission’s decision.
Southwest received approval from the CPUC in 1995 to expand its service territory in Northern California beyond the Lake Tahoe area, and Truckee was included in the plan. The utility originally agreed that it would recover from ratepayers no more than $29 million, including a 10 percent contingency for cost overruns. It agreed any costs above that amount would be recovered from shareholders.
Upon proceeding with the project, Southwest experienced significant cost overruns and sought CPUC approval in 1997 to scale back the project. The changes would have eliminated Donner Lake and parts of Prosser, and Tahoe Donner from the service area, in addition to collecting an additional $17.6 million from ratepayers.
Parties to the proceeding, including the CPUC’s Office of Ratepayer Advocates, agreed upon a settlement to allow most cost overruns from ratepayers. As part of the proceeding, the CPUC conducted a public hearing in Truckee in February, and the proposed settlement was discussed with potential customers.
Truckee residents pointed out that they had modified their homes to receive the natural gas promised to them, but that 1,500 of them were now being excluded from the expansion, and they objected to the increased facilities charge from 12 cents to 18 cents per therm that would occur if the settlement were approved.
Residents and representatives of the town expressed those concerns in letters and in presentations to the CPUC in San Francisco.
According to the commission, it is not known whether the cost overruns were reasonably incurred. Because of the proposed settlement, it was not determined whether they were the result of changes in government regulations, unforeseen changes in construction practices or excusable clerical errors in excess of the 10 percent contingency.
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