PUCNV approves limited regulatory accounting for Southwest Gas line-locate costs, denies proposed damage-prevention charge

The Public Utilities Commission of Nevada on a unanimous vote approved partial relief to Southwest Gas Corporation in docket 25-01017, granting regulatory-accounting treatment for line-locate expenses effective Jan. 1, 2025, but denied the company’s proposed damage prevention cost mechanism.

The action allows Southwest Gas to record certain line-locate expenses as a regulatory asset and include an amount for recovery in its next general rate-case filing. The commission’s order also recommends the company use a line-locate quality metric described by regulatory operations staff to encourage timely locates; Southwest Gas agreed in rebuttal testimony to forgo the damage prevention cost mechanism at this time.

The decision follows a presentation by staff summarizing the draft order and a public comment from a member of the public who opposed broad regulatory-asset accounting in the docket. The comment referenced testimony by “BCP” that, according to the speaker, distinguishes permissible incremental costs from increased costs that should not be treated through single-issue rate making. The commenter said the record estimates the regulatory asset would cost Southern Nevada ratepayers about $3,500,000 per year beginning in 2025 and, if Southwest Gas does not file a general rate case until 2029, could total at least an estimated $14,000,000; he asked the commission to table the item so the record could be reviewed.

Commissioner Brown moved to grant in part and deny in part the application as modified by the draft order; the motion was seconded and carried by voice vote. The draft order declines implementation of the damage prevention cost mechanism while allowing regulatory accounting for certain line-locate activity and directing reporting of the line-locate quality metric to the commission and staff as specified in the order.

The record and the draft order cited in the hearing included references to prior dockets and testimony distinguishing incremental costs that were not contemplated in the last general rate case from increased costs that were normalized into the revenue requirement, a legal distinction parties argued bears on whether single-issue rate making is appropriate. The public commenter also cited Nevada Revised Statutes in noting that line locates are statutorily required within two working days or a mutually agreed-upon time.

The commission did not adopt a damage prevention cost mechanism and instead folded the approved regulatory-accounting treatment into the framework for recovery in the next general rate case, with the regulatory-accounting treatment’s effective date listed as 01/01/2025 in the draft order. No amendments to the draft order were recorded during the vote.

Chair Haley Williamson, Commissioner Brown and Commissioner Cordova voted in favor; no recorded dissents were entered.