Data and information play a fundamental role in managing our daily lives. Utility customers want to believe their utilities thoroughly investigate what combination of resources is needed for their future needs. Whether those resources are new or making the old infrastructure more efficient, we expect utilities like Southwest Gas to evaluate and identify various procurement options with stakeholders to ensure their customers get the best deal possible.
Unfortunately, in its first open meeting in the new year, the Arizona Corporation Commission failed to require Southwest Gas to conduct a basic utility future infrastructure and investment planning exercise after approving the company’s second rate increase in less than three years.
As an organization dedicated to saving Arizonans energy and money on their utility bills since 2001, we were deeply concerned with the company’s latest request to charge its customers $710 million in new investments. Most of that money was spent on replacing existing mains and services, despite evidence suggesting these investments may be unnecessary due to the healthy condition of Southwest Gas’s distribution system.
That’s why in this rate case, SWEEP recommended that Southwest Gas conduct a Gas Infrastructure and Investment Plan (Gas IIP) to guide future resource acquisitions.
Utility planning removes blinders from business decisions
While industry representatives claim future gas planning is a disguised attempt to force buildings to electrify and ban gas infrastructure, it is a sensible decision-making process that considers a variety of resources to manage the gas system of the future. These planning cycles are proven and effective. Electric utilities like Arizona Public Service and Tucson Electric Power already create Integrated Resource Plans (IRPs) informed by stakeholder input to maintain system reliability. Transparent IRP processes often result in better outcomes for ratepayers and Arizona’s economy. Businesses need regulatory certainty and consistent policies that keep costs low and promote efficiency if we want them to expand their operations in Arizona.
Our proposal would have required Southwest Gas to file a plan that considers supply-side resources alongside options like non-pipeline alternatives. These are resources like energy efficiency that reduce the rate by which the gas system expands, potentially saving customers hundreds of millions of dollars while providing the same level of service.
Let’s use the analogy of purchasing a car to explain the importance of utility resource planning. Let’s say you are in the market for a new car. It would be sensible and prudent for you to research many types of vehicles to understand which option will best suit your needs. Then, after test drives and an evaluation, you make your decision. Examining alternative options is the best way to ensure you don’t buy a faulty lemon. Much like prospective car buyers don’t want to buy a lemon; utility customers don’t want to be stuck paying for more expensive services if lower-cost alternative resources were available.
Despite planning benefits, Southwest Gas is increasingly investing in costly new resources such as renewable natural gas and liquified natural gas storage facilities without engaging the public beforehand. If gas utilities invest in power and storage projects like electric utilities would, it is only fair for them to conduct the same future-looking resource plans. Electric utilities do this under the watchful eye of the public. So why shouldn’t Southwest Gas do the same? Keeping these plans behind lock and key only magnifies the need to protect consumers from future rate cases caused by excessive spending.
Saddling working families and small businesses with higher utility bills because Southwest Gas refuses to conduct any future-looking gas plan flies in the face of what Arizonans cherish most: the ability to make the best decisions for themselves.
It is time for Southwest Gas to let the public in on its infrastructure plans before the Arizona Corporation Commission allows customers to be charged hundreds of millions of dollars that may have otherwise been avoided.
Caryn Potter is the Arizona Representative with the Southwest Energy Efficiency Project, an organization that promotes greater energy efficiency programs and policies in Arizona, Colorado, Nevada, New Mexico, Utah, and Wyoming.