Southwest Gas Holdings Inc. outlined plans for the potential expansion of the Great Basin Gas Transmission Co. system, with an anticipated in-service date of Nov. 1, 2028.
Regional energy demand in northern Nevada is driving the proposed expansion of the interstate natural gas pipeline, which should have an incremental capacity of 1.76 Bcf/d, Southwest Gas CEO and President Karen Haller said Nov. 5 during a third-quarter earnings call.
The expansion project would likely involve capital expenditures between $1.2 billion and $1.6 billion, the company said.
Southwest Gas has begun executing precedent agreements with potential shippers. Justin Brown, the Southwest Gas Corp. president, said he anticipates receiving final decisions from all potential shippers within the next week. Brown said the company is still receiving interest in the expansion, so it may hold a supplemental open season to determine the final scale of the project.
"This will help clarify the magnitude and timing of this inbound interest so we can determine the appropriate course of action, including whether [additional] interest for capacity can fit within the 2028 expansion time frame or whether there is sufficient interest to justify an expansion in subsequent years," Brown said.
The company also said it is on track to file an application with the Federal Energy Regulatory Commission for a Natural Gas Act certificate of public convenience and necessity in the fourth quarter of 2026.
Rate case updates
Legislation passed in Nevada in 2023 allowed for alternative ratemaking opportunities for gas utilities and required them to file resource plans every three years. Southwest Gas filed its first resource plan in September of this year, which included nearly $225 million of expected investments, and it expects a decision in second-quarter 2026. The utility anticipates filing a rate case in the state as early as March 2026 and the new rate to be in effect by October 2026.
In Arizona, Southwest Gas said it will file a formula rate plan as part of its next general rate case in first-quarter 2026 and expects new rates to be in effect in the first half of 2027.
Southwest Gas reached an agreement in California to resolve issues in its pending rate case, with the exception of cost of capital and capital structure, Brown said. The agreement would allow the company to recover 90% of its adjusted ask of $43 million before adjustments for capital cost and structure.
Centuri divestment
The now pure-play gas utility achieved full deconsolidation and separation of Centuri Holdings Inc., an infrastructure construction company, in September and generated nearly $1.4 billion in net sale proceeds. A large portion of the proceeds was used to pay off debt outstanding from the Centuri investment.
Southwest Gas repaid the remaining $225 million of the term loan in full in August. Residual proceeds from the transaction will support the company's capital expenditures, including the Great Basin expansion project, and dividend payments to shareholders.
"We are excited for the future as the strategic transformation enhances transparency and aligns us squarely with long-term value creation as a fully regulated natural gas business," Haller said.
Financial results
Southwest Gas Holdings reported third-quarter net income of $270.5 million, or 6 cents per share, on Nov. 5. The adjusted net income is a spike from the $290,000 of net income reported in the same period in 2024. The S&P Capital IQ consensus estimate for the third quarter was 4 cents per share.
Executives said positive regulatory outcomes and strong economic activity in the company's service areas, along with cost optimization efforts, drove net income growth this quarter.
"Southwest Gas reported higher margins supported by rate relief to better align with Southwest Gas' cost of service and capital investment as well as customer growth," said Rob Stefani, Southwest Gas Holdings' CFO. "These benefits were partially offset by higher operating and maintenance expenses."
Stefani is exiting his position as CFO on Dec. 1. The board of directors has initiated a search for a successor.
Southwest Gas Holdings reaffirmed its full-year 2025 utility net income guidance range of $265 to $275 million, with the CEO stating that net income should be close to the top end of that guidance given progress throughout the year.
The guidance for the 2025 capex plan was reaffirmed at about $880 million in support of customer growth, system improvements and pipeline replacement programs. The net income and rate base growth for 2025 to 2029 were each listed as 6% to 8%, and the capex plan for that period was expected to be $4.3 billion. The guidance excluded the Great Basin expansion project.
