PUCNV grants limited regulatory accounting for Southwest Gas line-locate costs, declines damage-prevention charge

The Public Utilities Commission of Nevada voted to grant in part and deny in part Southwest Gas Corporation's application to establish regulatory accounting treatment for line-locate activity expenses (Docket No. 25-01017), and to require recovery to be addressed in the company's next general rate case with an effective date of Jan. 1, 2025. The commission also declined Southwest Gas's request to implement a separate damage-prevention cost mechanism.

The commission's draft order, adopted as modified, approves regulatory accounting treatment for line-locate expenses but recommends the company use a line-locate quality metric developed by regulatory operations staff; the order directs recovery details to be specified in the next general rate case. The commission's vote carried unanimously.

Why it matters: The decision allows Southwest Gas to defer certain line-locate costs for later recovery rather than recovering them immediately through a separate surcharge mechanism. Commissioners said the approved approach ties accounting treatment to quality metrics, while the damage-prevention cost mechanism was not adopted at this time.

During the meeting, a public commenter identified in the record as Mr. Charest criticized the draft order and warned of costs to ratepayers if the accounting treatment were approved. "The record clearly shows in multiple exhibits that the estimated annual cost of [the] regulatory asset will be $3,500,000 per year for Southern Nevada ratepayers beginning in calendar year 2025," he said. He added that if the utility does not seek a general rate case until 2029, "the deferred charges will total at least an estimated $14,000,000 for Southern Nevada ratepayers." Mr. Charest asked the commission to table the item so the record could be fully reviewed; the chair responded that the remainder of his comments would be entered as written comments.

Mr. Charest also argued the accounting request was unnecessary for safety, noting that Southwest Gas is subject to Nevada Revised Statutes (NRS) Chapter 455 requirements to mark subsurface installations within a statutorily prescribed time. He told the commission he did not believe the draft order's finding that deferred-cost recovery would remove a disincentive for timely line locates.

The commission's approved draft order includes the following key points: regulatory accounting for eligible line-locate incremental costs, use of a line-locate quality metric in conjunction with the accounting treatment, and deferral of any damage-prevention cost mechanism. The order calls for recovery details to be addressed in the next general rate case; it sets the accounting effective date at Jan. 1, 2025.

The motion to "grant in part and deny in part the application as modified by the draft order and issue the appropriate order" was made by Commissioner Brown, seconded, and carried by voice vote.

The record shows public comment and written submissions will be part of the docket record for subsequent filings; the commission accepted the draft order as modified and closed the item for decision.

A copy of the adopted order and instructions for the company's next filing will be posted in Docket No. 25-01017 on the commission's docket system.