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SW Gas ruling on PUC agenda

John A. Bayless

Today at 10 a.m., the California Public Utilities Commission will again consider a ruling by Administrative Law Judge Orville Wright which orders Southwest Gas to proceed with natural gas line installation in all of Truckee at the $29 million price quoted by the company in its 1995 agreement with residents.

The CPUC has delayed action three times on Wright’s ruling, and Commissioner P. Gregory Conlon had expressed interest in drafting a compromise different from Wright’s decision at the last meeting June 4. No notice of another alternative ruling to be considered June 18 had been posted on the CPUC agenda by Wednesday.

On May 26, Conlon had a meeting with several high ranking executives from Southwest Gas, who outlined the company’s concerns, which were then detailed in the CPUC’s daily calendar released June 10.

Those who attended included Southwest Gas executives Roger Montgomery, director of rates and state regulatory affairs; Edward Zub, senior vice president of regulation and product pricing; James Kane, senior vice president of operations; Thomas Sheets, vice president and general counsel; Robert Johnson, assistant general counsel, and Stanley Hulett. Also attending were Terry Mowrey and Patrick Gileau of the Office of Ratepayer Advocates.

“Untenable legal position”

In a presentation to Conlon, Sheet described the “untenable legal position Southwest finds itself in maintaining its position regarding the settlement agreement it entered into with the CPUC Office of Ratepayer Advocates, while at the same time being requested to respond to unsupported assertions that are outside the record in this proceeding.”

According to the CPUC daily calendar, Sheet also alleged that, contrary to information provided by the Town of Truckee, the town and its citizens had been “kept in the loop” regarding the application and the settlement agreement.

Sheet told Conlon the town had an opportunity to formally participate in the proceeding, but elected not to do so.

The town contends that it was not informed of important issues related to Southwest Gas’ expansion – most importantly the fact that Southwest had agreed to absorb any cost overruns in return for relaxed oversight by the CPUC.

Also, the town was not initially on the service list for the Southwest Gas project, and town staff were unaware of some of the proceedings.

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 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 Wright to hold Southwest to its original agreement in the meeting today at 10 a.m. in San Francisco.

Sierra Sun E-mail: sun@tahoe.com

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