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Southwest Gas to file Ariz., Calif. rate cases in 2019 as Nev. rates take effect

Southwest Gas Holdings Inc. plans to file its next rate cases in California and Arizona in 2019 and expects its new rates in Nevada to become effective in January 2019.

"The rate adjustment proposal is premised upon a proposed increase to rate base of $309 million and a proposed return on common equity capital of 10.3% relative to an equity ratio of 49.3%," Justin Brown, senior vice president and general counsel for Southwest Gas, said during the company's Aug. 9 earnings call. Approximately $187 million of the increased rate base growth is associated with previously approved Nevada Gas Infrastructure Replacement projects, Brown said.

The company requested a revenue increase of $32.5 million as part of its general rate case for Nevada operations filed in May, which included $18.1 million associated with the infrastructure replacement project, known as GIR. The company also adjusted rates associated with GIR by $6.6 million as part of its rate case filing in the state. The GIR surcharge would become effective at the same time as the new rates from the rate case. Southwest Gas also proposed a three-year plan for new projects for accelerated replacement, which would total roughly $228 million, Brown said.

Since Southwest Gas' five-year rate case cycle in California was extended, it now plans to file a new rate case by September 2019. The extension sets up the new California rate case filing to be right around the company's next rate case in Arizona, which it plans to file in May 2019 due to an agreed-upon stay-out provision.

Southwest Gas said it is evaluating the option of filing the Arizona rate case sooner due to recent tax reform. "In addition to the stay-out provision in the settlement, there's actually also a force majeure provision in there that I think is questionable that we want to work with staff on kind-of the intent of that force majeure provision and whether that, in light of tax reform, if that's something that would qualify then permit us to make a filing earlier," Brown said when asked about an earlier filing.

The company on Aug. 7 posted second-quarter consolidated net income of $21.6 million, or 44 cents per share, up from $17.9 million, or 37 cents per share, a year ago. Consolidated operating revenue for the quarter was $670.9 million, an increase from $560.5 million in the year-ago quarter.