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Southwest Gas Corporation

Southwest Gas Corporation. R. February 16, 2001. Southwest Gas Corporation Update on Factors Affecting Gas Prices. Storage Storage levels continue below recent years Deliverability Rig count at over 800 Power generation High power demand keeps pressure on prices Crude oil

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Southwest Gas Corporation

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  1. Southwest Gas Corporation R February 16, 2001

  2. Southwest Gas CorporationUpdate on FactorsAffecting Gas Prices • Storage • Storage levels continue below recent years • Deliverability • Rig count at over 800 • Power generation • High power demand keeps pressure on prices • Crude oil • Futures below $30 • Industry structure • No recent changes

  3. Southwest Gas CorporationShort Term Influences • Capacity allocations on El Paso • Weather

  4. Southwest Gas CorporationService TerritoryArizonaNevada California

  5. Southwest Gas Corporation • Customers served • Arizona 748,000 • Nevada 455,000 • California 124,000 Total 1,327,000

  6. Southwest Gas Corporation • What demand (or load) growth rate are you currently experiencing? • Growth rate exceeds 5%/annum

  7. Southwest Gas Corporation • What are your load projections for the next two years? • Southwest’s extreme peak day sales forecast in dekatherms • Arizona 2001 653,000 2002 685,000 • Total System 2001 1,180,224 2002 1,238,161

  8. Southwest Gas Corporation • What is your projected annual sales for 2001 and 2002? • Southwest’s annual sales forecast in dekatherms for the 12-month period ending October of each year • Arizona 2001 70,567,464* 2002 69,110,180* • Total System 2001 118,550,913* 2002 118,254,078* *Includes increased power plant sales that are not forecasted in future years

  9. Southwest Gas Corporation • Do you have firm contracts in place to meet customer demand? YES • Each year, Southwest Gas holds portfolio selection process • Fixed-price solicitations • Indexed solicitations

  10. Southwest Gas Corporation • Are you making any spot purchases on the commodities market to meet local demand? YES • Southwest buys spot supplies in lieu of firm contract supplies when those spot purchases result in lower gas costs for customers

  11. Southwest Gas Corporation • What is the wholesale and retail supply availability for Arizona for 2001 and 2002? • To date, Southwest has been able to enter into firm contracts with suppliers to provide adequate supplies for our customers • We do not foresee problems obtaining future commodity contracts, however, large numbers of natural gas fired generation will create greater competition

  12. Southwest Gas Corporation • What is the interstate pipeline capacity for Arizona for 2001 and 2002? • Is that capacity going to be sufficient to meet the projected needs of both retail and wholesale gas consumption? • Full requirements contracts • Non-coincidental peaks • Allows growth • Staff’s support in EPNG rate cases • May not be able to hold full requirements in next EPNG rate case • Expect capacity expansion will be required to meet power plant growth

  13. Southwest Gas Corporation • With the new power plants planned or approved for Arizona, are there steps that you would take today to prepare for future demands on the infrastructure? • With regulatory support, Southwest would purchase additional capacity now and hold for future use to ensure that a portion of today’s remaining capacity or a portion of a less expensive expansion is available for retail customers

  14. Southwest Gas Corporation • What effect, if any, will the cost of natural gas have on your supply plan? • Increase existing price volatility mitigation • Develop multi-year mitigation program • Work with Staff to develop plan to ensure retail customers have access to interstate capacity

  15. Questions? R February 16, 2001

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