Investing in Arizona
On March 27, 2025, the Arizona Corporation Commission approved a revenue increase for Southwest Gas Corporation of $80.2 million over current revenues. Under the Company’s new rates, the average residential customer will see an increase of $3.75 per month.
Southwest Gas needed to adjust its rates for two key reasons:
- The last base rate adjustment was effective in February 2023 and reflected costs from 2020, before a period of extraordinary inflation. This rate adjustment was needed to more accurately reflect the current level of operating expenses necessary to provide safe and reliable natural gas service in Arizona.
- The Company continues to make significant investments in the State for pipe replacement, system improvement and reinforcement, and meeting the continued strong demand for natural gas in Arizona. Rates now reflect $647 million in rate base investments the Company has made since 2021 to ensure the continued provision of safe and reliable natural gas service in Arizona
Under the new rates, the bill for an average residential customer will increase from around $42 per month to $46 per month. Even with new rates in place, customer bills are lower when compared to bills at the same time last year, due to a decrease in the cost of natural gas.
In addition to approving new rates, the Arizona Corporation Commission approved an increase to a bill credit to customers that resulted from lower natural gas costs.
- With new rates in place, the average residential customer will see an increase of $3.75 per month.
- The Company’s Commission-authorized rate design and basic service charge of $10.70 a month for residential customers remains the same.
The largest component of your natural gas bill pays for Southwest Gas operating expenses. This includes the costs to provide safe and reliable service, as well as the recovery of the investment in the Company's natural gas infrastructure in the State.
The second major component of your gas bill is related to the cost for Southwest Gas to purchase natural gas on behalf of its Arizona customers. Southwest Gas does not earn a profit on the cost of gas. Rather, the cost of Southwest Gas to purchase natural gas is passed directly to customers without any markup or profit added.
Finally, Southwest Gas has to access the capital markets to provide financing for its natural gas operations, and the cost of issuing equity or borrowing debt is the third major component of your gas bill.
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Frequently Asked Questions
How will these new rates affect my bill?
With new rates, we estimate that the average residential customer that uses 23 therms per month will experience an increase of approximately $3.75 a month.
When are new rates effective?
New rates are effective as of March 27, 2025.
Why does Southwest Gas need to adjust my rates?
The Company needed to refresh customer rates to reflect its current level of operating expense. Customer rates before the Commission’s recent decision reflected costs the Company incurred in 2020-2021. Additionally, rates needed to be adjusted to reflect the Company’s investment of $647 million in Arizona since its last rate application in 2021.
When was the last time Southwest Gas adjusted its rates in Arizona?
In January 2023.
How much has Southwest Gas invested in its Arizona distribution system since 2021?
We have invested approximately $647 million in rate base in the Arizona gas distribution system since 2021.
Is Southwest Gas proposing changes to the components on my bill?
No, the Commission’s decision maintains the current rate design that’s been in place since January 2012. The rate design continues to include a monthly basic service charge and a volumetric rate — that captures both the delivery charge and gas cost component on your bill.
Is Southwest Gas proposing to change the basic service charge?
No, the Commission’s decision did not change the basic service charge on your bill.
Where can I get more information?
You can download a copy of our filing by clicking
here
