Southwest Gas customers in Tucson and across Arizona will see some bill relief this winter, as the company is dropping a surcharge that pays for excess wholesale natural-gas costs.
The gas utility has notified the Arizona Corporation Commission that it will drop the usage-based surcharge for its Gas Cost Balancing Account from nearly 31 cents per therm of gas to zero, beginning Oct. 1.
The company said the average single-family residential customers will see a bill decrease of about $7 per month because of the new zero surcharge rate.
The cost-balancing account is adjusted monthly to reflect the average cost of gas over a 12-month period, and allows Southwest Gas to recover costs that are higher than forecast, or to provide credits when prices are lower than projected.
The current cost-balancing surcharge was set by the Arizona Corporation Commission in July 2023 to allow Southwest Gas to recover some $357 million in excess gas costs in 2021 and 2022.
Wholesale natural gas costs have plunged since then, from a high near $9 per million British thermal units and an average of more than $6 in 2022, to an average $2.53 in 2023 and most recently around $2 per MMBtu, based on so-called Henry Hub spot prices tracked by the U.S. Department of Energy.
Falling wholesale gas prices also helped UniSource Energy Services, which provides natural gas to much of the northern half of Arizona, to drop a temporary surcharge for higher gas costs in May 2023.
Meanwhile, Tucson Electric Power earlier this year lowered a similar cost-balancing surcharge meant offset costs for wholesale power and fuel, mainly natural gas.
In May, the ACC approved a reduction in TEPβs Purchased Power and Fuel Adjustment Clause from 1.5 cents per kilowatt-hour to less than a penny per kWh, dropping the average home customer bill by about $12.
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