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Aug. 07, 2008
Copyright © Las Vegas Review-Journal

Southwest Gas posts wider loss

Downturn, low gas use cause dip of $2.7 million drop

By JOHN G. EDWARDS
REVIEW-JOURNAL

Brandie Morris, a customer service representative for Southwest Gas, takes a call June 26. The utility reported its second-quarter net loss rose to $2.7 million from $337,000 in the same period last year. The loss per share was 6 cents, compared with a loss per share of 1 cent a year ago.
Photos by Craig L. Moran.



Southwest Gas reported a 1.2 percent increase in additional active meters in Nevada over the last 12 months, bringing the total to 657,000. The company reported 19,000 additional active meters for all three states it serves -- Arizona, California and Nevada -- representing a 1 percent gain.

Southwest Gas Corp. of Las Vegas reported its second-quarter net loss increased to $2.7 million from $337,000 in the same period last year, but Chief Executive Officer Jeffrey Shaw said he was satisfied with results given the economic downturn.

The loss per share was 6 cents, compared with a loss per share of 1 cent a year ago. The company said it usually records a loss in the second quarter, when gas use is low.

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    • Revenues increased 4.9 percent in the second quarter to $447.3 million.

    "Given the current, challenging economic environment, we were encouraged with the overall operating results for the quarter," Shaw said in a statement.

    The slump in new construction affected gas utility operations and its Northern Pipeline Construction Co., the company said.

    Southwest Gas reported a 1.2 percent increase in additional active meters in Nevada over the last 12 months, bringing the total to 657,000. The company reported 19,000 additional active meters for all three states it serves -- Arizona, California and Nevada -- representing a 1 percent gain.

    However, it installed 45,000 first-time meters companywide. The lower amount reflects the "significant" number of vacant homes, Southwest Gas reported.

    "Looking ahead, we believe we are poised for improvement when currently vacant homes become occupied (and customers begin taking service) and as the market recovers," Shaw said.

    The company expects the Arizona Corporation Commission will grant it a rate increase before the winter heating season and that California will act on a separate rate case by year-end.

    Operating margin, operating revenues less the cost of gas sold, grew by 2 percent or $2.6 million in the quarter.

    Operating expenses rose 2 percent or $2.4 million because of cost increases, higher uncollectible expenses and added costs for serving additional customers. The company, however, said it enjoyed improved labor efficiencies from use of its electronic meter reading system.

    In the 12 months ending in June, the company earned $80.2 million, down from $85.4 million a year ago. Operating revenues grew 2.6 percent to $2.2 million for the 12 months.

    Shares of Southwest Gas declined 15 cents, or 0.5 percent, to close at $28.59 on the New York Stock Exchange.

    Contact reporter John G. Edwards at jedwards@reviewjournal.com or 702-383-0420.



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    NLV Resident wrote on August 10, 2008 01:31 AM: Maybe SWG should consider reducing its expenses, like, say, eliminating all the company-paid cars for directors and above. And by company-paid cars, I mean cars that are GIVEN to directors and above and that can be driven by any member of the family, including teens. The company pays insurance, gas, and all maintenance. And there are a lot of them! In addition, perhaps its time the utility regulatory agencies in all THREE states audit employee expenses and INSIST that employees use the least costly way to travel and use the least expensive hotels. Also, why does the company allow employees to use rewards for personal travel instead of for business? There are some employees who insist on a certain hotel to earn points to use for family vacations. The ratepayers need to demand that the regulatory agencies in ALL three states provide more oversight and disallow unnecessary expenses. Directors (and above) making over $100K per year can well afford to buy and maintain their own vehicles, and its a perk that ratepayers should no longer be burdened with paying.


    presman wrote on August 07, 2008 03:11 PM: It was Jimmy Carter, not Nixon.


    Thomas wrote on August 07, 2008 09:50 AM: Randy,

    During the '70's, then President Nixon appeared on TV in a sweater and asked us to turn our thermostats down. I did and soon afterwards the electric company increased the rate enough so that I was paying a lot more for much less. The cost to generate the electricity did not go up, but the electric company profit went down because they sold less. Southwest can do the same, if you have a gas heating system, you'll have to choose between conversion to another form of energy, or grumble and pay the higher bill.


    Randy wrote on August 07, 2008 09:24 AM: Thomas,

    How could there be a rate increase?

    Gas Commodities are down 35% as of yesterday. Another hedge fund dropped out from trying to corner the natural gas market.

    Gas production is up 34% since 2001.

    Price ought to be dropping like a stone soon!


    Thomas wrote on August 07, 2008 08:48 AM: Do I smell a rate hike coming?


    ths wrote on August 07, 2008 07:59 AM: This is a bad investment. With tens of thousands of homes in the LV valley and across the state that have gas street lamps finally being allowed to convert they will see a drop in steady income.

    Some real traction in conversions are taking place and this stock I would stay away from for some time.