You enjoy a warm winter month with the heat turned off, and you wait for your financial reward.
This month, that reward — a significantly lower gas bill — didn’t come.
Dean McClellan noticed it right away. He would: He keeps detailed track of every utility expense for the east-side house where he’s lived more than 30 years.
Thanks to the warm mid-January-through-February period, and thanks to him keeping the house cool, McClellan used a relatively low amount of gas for him, 126 therms, and expected a lower bill. Instead he was hit with $220.17.
The culprit for the extra amount is a weather adjustment charge. On his bill it was $29.53.
Look at your own, most recent gas bill and you’ll likely find a similar charge. My latest bill, mailed out Feb. 19, included a $22.50 weather adjustment charge — 24 percent of the entire $94.02 billing.
This charge stems from the most recent rate case Southwest Gas filed with the Arizona Corporation Commission, which settled the case in December 2011. The case created a new billing system that is a dramatic departure from the old one.
The commission allowed the full “decoupling” of the utility’s revenue from the amount of gas that it sells. This is supposed to be a good conservation measure because no longer does Southwest Gas have an incentive to sell as much gas as it can.
Instead, the new system guarantees a level of revenue and profit that is accomplished in part by monthly adjustments to customers’ bills, some up, some down.
“The idea behind decoupling is to make the utility more open to working with the customer to help the customer reduce their bills,” said Jeff Schlegel, a Tucsonan who works for the Southwest Energy Efficiency Project. “The utility doesn’t collect any more revenue than the commission authorizes.”
The weather adjustments can come in the form of an additional charge if the month was particularly warm, or as a credit if the month was colder than normal. My Jan. 20 bill, for example, had a $3.52 weather-adjustment credit.
The complicated formula that determines your weather adjustments is based largely on the deviation from average of the number of “heating degree days.” That’s a measure of the number of degrees below 65 Fahrenheit that the average temperature is every day during the billing period.
There’s another adjustment you’ll see regularly on your bill, an “annual adjustment” that is billed in order to ensure that Southwest Gas gets neither too much nor too little revenue. The last couple of months, customers have received small credits of around one dollar, money that is being given back because the utility made excess revenue earlier.
Conservationists were in favor of the plan in 2011- 2012 when it was being debated. Their argument was that, without the incentive to sell more gas, the company would more actively pursue programs such as rebates for gas-saving appliances, weatherizing assistance, and help for builders to do construction in an energy-efficient way.
“Decoupling was devised as a way of addressing that problem, so that the company would have an incentive to implement, hopefully enthusiastically, energy efficiency measures,” said Tim Hogan of the Arizona Center for Law in the Public Interest.
But other consumer groups roundly criticized it. One of the main reasons is clear from McClellan’s experience: When the commission decoupled the company’s revenue from its sales of gas, they also decoupled the direct relationship between a customer’s usage of gas and their bill.
Among the groups protesting the decoupling plan was Arizona’s Residential Utility Consumer Office and AARP of Arizona. Many AARP members have limited incomes and watch their energy consumption carefully, said Steve Jennings, the group’s associate director for advocacy.
“Our concern is that people should be able to predict their expenses,” he told me Friday. “We believe that if a person uses less, they should pay less.”
Sounds logical, but this point was considered and rejected by the Arizona Corporation Commission in 2011.
Before the decision, RUCO argued in testimony before the commission: “We remain concerned that the decoupling proposals could provide a disincentive to customers to undertake conservation efforts, because they would be required to pay for gas they did not use.”
Another risk not emphasized in the filings is the relative likelihood of warmer- or cooler-than-average winters. The averages on which the weather adjustment is based go back 10 years. But more recent weather has been consistently warmer: 2014 was the warmest year on record in Tucson, and three of the previous five years were also among the warmest ever.
So while we may get the occasional credit for cooler-than-average billing cycles, the additional charges like the ones we’ve received this month seem much more likely.
Not that there’s anything much we can do about it. Southwest Gas, of course, is a state-regulated monopoly that owns the natural-gas distribution network here and elsewhere in Arizona. No other company can come in and build a new network to compete with it.
So the likelihood is that the most basic form of conservation we consumers engage in — using less — won’t pay off as much now unless we also are able to invest in efficient appliances, weatherizing programs or other, mostly expensive investments that Southwest Gas will reward.
What’s guaranteed, though, is Southwest Gas’ revenue and its shareholders’ return.
