Decoupling and Energy Efficiency Enabling Provision (EEP)

Understanding Your Natural Gas Bill (Video)

 
 
What is EEP? (Video)

 
 
Frequently Asked Questions

Temperatures have been warm, why isn’t my bill as low as I thought it would be?

When it’s unseasonably warm and you’re using less natural gas than usual, EEP rates adjust to ensure the company is able to recover the cost of providing safe and reliable service. And if it’s an unseasonably cold winter and the heat needs to stay on longer than usual, EEP limits the amount you’re being charged on the delivery portion of your bill.


Why do I have an EEP Weather Adjustment on my bill?

The EEP Weather Adjustment and EEP Annual Adjustment used to be included in the Usage Charge line item on your bill. Southwest Gas separated these two line items to provide more transparency on your bills.


What makes up the EEP Annual Adjustment?

The total amount of delivery charges received by Southwest Gas is reviewed annually, and any difference between the authorized amount appears on your bill as the EEP Annual Adjustment.


What is the company’s authorized revenue?

The revenue authorized by the Commission is the sum of all the costs associated with providing safe and reliable natural gas service to our customers. This amount is collected through the basic service charge and the delivery charge.


Why does Southwest Gas need the EEP Annual Adjustment?

The EEP Annual Adjustment helps align the interests of Southwest Gas and its customers. The EEP enables Southwest Gas to help its customers save money by using gas more efficiently and saving on the cost of gas, while at the same time allowing the Company to recover the fixed costs of providing gas service that have been approved by the Commission. For help on lowering the amount of gas you use visit Energy Saving Tips


What makes up the EEP Weather Adjustment?

The EEP Weather Adjustment is part of the delivery charge. The rate per unit of gas sold consists of both gas costs and delivery charges. “Delivery charges” include the routine inspection, maintenance, repair, and upgrade of our infrastructure and pipeline system.
 
The EEP Weather Adjustment balances the delivery charge portion of your bill to ensure that you only pay for the service you receive. If your usage is lower because of warmer weather, you may see an increase in the EEP, but your overall bill will still be lower because you never pay for gas you do not use as a result of it being warmer. If your usage is higher because of colder weather, you will see a decrease in the EEP to ensure you do not pay more than your fair share of the delivery system.


Where can I find more information on the EEP Annual Adjustment?

The EEP Annual Adjustment is discussed on Sheets 94 through 96 of the Energy Efficiency Enabling Provision of Southwest Gas’ Arizona Gas Tariff and can be found at Download here


Where can I find more information on the EEP Weather Adjustment?

The EEP Weather Adjustment is discussed on Sheets 92 through 94 of Southwest Gas’ Arizona Gas Tariff and can be found at Download here
 
Description of Decoupling

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 (ACC or the Commission).

With decoupling, the ACC 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 ACC approved in its last rate case.

Southwest Gas’ decoupling mechanism (also referred to as the Energy Efficiency Enabling Provision or EEP) has two components:

  1. A weather component which stabilizes customer bills by providing a “real time” adjustment when actual weather during the winter months of November through April differs from the average weather used to calculate rates during this time period.
     
  2. An annual adjustment that adjusts revenues to reflect any difference between Southwest Gas’ authorized revenues and actual revenues. The annual adjustment ensures that Southwest Gas recovers no more than its ACC authorized revenue, which means if customer usage results in the company over or under-collecting its authorized revenue, the EEP rate will adjust to bring revenues back to authorized levels.
Details of the EEP Weather Adjustment Calculation

What is the Energy Efficiency Enabling Provision (EEP) Weather Adjustment?

The EEP Weather Adjustment accounts for differences between the actual temperatures and normal temperatures for each winter day in a customer’s billing cycle. The EEP Weather Adjustment applies to consumption during the winter season months of November through April.


What factors would give me a positive or negative EEP Weather Adjustment on my bill?

When the actual temperatures are colder than normal, usage is typically higher and the delivery charge portion of the customer’s bill (i.e. the cost of delivering gas) will be adjusted downward to reflect what the customer would have used under normal temperature conditions. When actual temperatures are warmer than normal, usage is typically lower and the delivery charge portion of the customer’s bill will be adjusted upward to reflect what the customer would have used under normal temperature conditions. These adjustments help provide bill stability for customers and also financial protection to both the company and its customers by ensuring no party is paying or recovering more than what was authorized by the Commission.


How do you determine when weather is either warmer or colder than normal?

Weather is quantified in Heating Degree Days (HDD), which is defined as the difference between 65 degrees Fahrenheit and the average daily temperature when the average daily temperature is below 65 degrees. When the average daily temperature is equal to or greater than 65 degrees, there are zero HDD. 10-Year Normal HDD information


How is the EEP Weather Adjustment calculated?

In order to determine the EEP Weather Adjustment and in an attempt to ensure that the adjustment is only reflective of changes in consumption due to colder or warmer weather, the Company compares the following three analyses and utilizes whichever result is closest to zero:
 
  1. Billing Cycle Analysis Volume Adjustment – The billing cycle analysis uses the customer’s current billing cycle HDD variance (defined below) and billing cycle use per HDD to determine weather-sensitive gas use and to calculate the billing cycle analysis volume adjustment. Depicted below is an illustration of the calculation.
Normal HDDs is the sum of the ten-year average HDDs for each day in the customer’s billing cycle.
Actual HDDs is the sum of the actual HDDs for each day in the customer’s billing cycle.
HDD variance is equal to Normal HDDs less the Actual HDDs.
 
(click on the image above to view a larger image size.)
  1. Multi-Season Analysis Volume Adjustment – The multi-season analysis uses winter billing data from the previous 24 months to determine weather-sensitive gas use and to calculate the multi- season analysis volume adjustment. A linear regression is used to compare the customer’s historical monthly metered use to the actual weather in each billing cycle to determine use per HDD. The multi-season analysis volume adjustment is calculated by multiplying the result of the linear regression by the billing cycle HDD variance for the customer’s current billing cycle.
 
(click on the image above to view a larger image size.)
  1. Current Monthly Metered Usage – For this example, the customer used 129 therms. This is the amount of gas used within the month.


How is the EEP Weather Adjustment applied to my bill?

The EEP weather adjustment is calculated by multiplying the applicable volume adjustment by the delivery charge component of the customer’s commodity charge (which is the charge per unit of billed usage). The applicable volume adjustment is whichever of the three components identified above is the closest to zero.
 
From the example calculation above, the EEP Weather Adjustment applied would be:
 
(click on the image above to view a larger image size.)
Illustrated in the example above, the weather was colder than normal.
 
10-Year Normal Heating Degree Days (HDD) Information

Normal HDD for the EEP Weather Adjustment

Heating Degree Days (HDD) is defined as the difference between 65 degrees Fahrenheit and the average daily temperature when the average daily temperature is below 65 degrees. When the average daily temperature is equal to or greater than 65 degrees, there are zero HDD.
For more information, 10-Year Normal HDD information
 

Learn How Gas Rates Are Set

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The rates used by Southwest Gas are set by state regulatory commissions using a process called the "rate case cycle." Because of individual state regulations, the rate case cycle differs slightly for each state. See how rates are set for your state.
 

Request Rates & Tariff Information

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Use this form to request historical Rates and Tariff information not available on this website.  This form may also be used as a request to be placed on Southwest Gas' California Advice Letter Service List.  If you have any questions regarding your bill, please contact Customer Assistance at 877-860-6020.
 

Commission Websites

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Check your state's Commission Office for more information about rates and regulations.