What is decoupling?
Decoupling is a rate design methodology that separates a utility’s fixed cost recovery from its sales. Decoupled utilities collect revenues according to a predetermined revenue requirement, or revenue per customer, established by the Arizona Corporation Commission (Commission).
With decoupling, the Commission establishes a fixed revenue per customer and adjusts the rate per therm to ensure that Southwest Gas never retains more or less revenue than what the Commission approved in its last rate case.
Southwest Gas’ decoupling mechanism (also referred to as the Delivery Charge Adjustment Provision or DCA) is an annual adjustment that adjusts rates to reflect any difference between Southwest Gas’ authorized revenues and actual revenues. The DCA ensures that Southwest Gas recovers no more than its Commission authorized revenue, which means if customer usage results in the company over or under-collecting its authorized revenue, the DCA rate will adjust to bring revenues back to authorized levels.