Delivery Charge Adjustment (DCA) Provision Rate and the Gas Cost Balancing Account (GCBA) Rate Applications
On August 12, the Arizona Corporation Commission (ACC) approved Southwest Gas’ application to more quickly return to customers the over-collection in the Company's Gas Cost Balancing Account, which tracks the difference between the cost of gas purchased by the Company on behalf of its customers and the amount collected from customers through the Monthly Gas Cost rate. The same day, the ACC also approved the Company’s request to increase the Delivery Charge Adjustment rate to recover an under-collection of the Company's authorized revenue per customer.
The GCBA credit will increase through the winter months, while the DCA rate will be seasonal, with a higher rate through October and then decreasing in the winter months.
Average Incremental Bill Impact
| Billing Month | Net Customer Impact |
|---|---|
| Sep-26 | $0.72 |
| Oct-26 | $0.84 |
| Nov-26 | $0.40 |
| Dec-26 | $0.30 |
| Jan-27 | $0.50 |
| Feb-27 | $0.43 |
| Mar-27 | $1.08 |
| Apr-27 | $(0.71) |
| May-27 | $1.08 |
| Jun-27 | $0.97 |
| Jul-27 | $0.84 |
| Aug-27 | $0.86 |
| Total | $7.30 |
Frequently Asked Questions
How will this affect customers?
Single family residential customers can expect an increase in the monthly DCA rate from its current 7.9 cents per therm to 16.3 cents per therm in the summer and 12.7 cents per therm in the winter. To mitigate the bill increase for customers, Southwest Gas proposed, and the ACC approved, a seasonal rate such that the rate will be higher during the summer months (May-October) when customer usage is lowest, and the rate will be lower during the winter months (November-April) when customer usage tends to be higher. The increase in the DCA rate will also be partially offset by the monthly adjustment Southwest Gas will make to increase the GCBA credit. Taken together, single family residential customers are expected to pay approximately $7.30 more per year.
What is the Delivery Charge Adjustment?
The Delivery Charge Adjustment Provision, or DCA, is Southwest Gas’ decoupling mechanism. Decoupling is a rate design methodology that separates a utility’s fixed cost recovery from its sales. Decoupled utilities, like Southwest Gas, collect revenues according to a predetermined amount of margin per customer established by the ACC as part of a general rate case.
Learn more about decoupling
What is the Gas Cost Balancing Account?
Southwest Gas purchases gas on its customers’ behalf, and the gas cost rates on customer bills reflect the price that Southwest Gas actually paid for that gas. Southwest Gas does not earn a profit on the cost of gas. The price of natural gas, like other commodities, can rise and fall and is affected by supply and demand and other external factors. As such, Arizona gas cost rates are adjusted monthly and appear on customer bills as the Monthly Gas Cost rate. Due to time delays between when Southwest Gas purchases gas on behalf of its customers and rules imposed by the ACC that limit how much the cost of gas can fluctuate on customer bills, Southwest Gas’ Gas Cost Balancing Account (GCBA) tracks the difference between the cost of gas and the amount collected from customers through the Monthly Gas Cost rate. If Southwest Gas paid more for gas than it collected from customers through the Monthly Gas Cost rate, a GCBA surcharge is assessed in order to collect the difference; in contrast, if Southwest Gas paid less for gas than it collected from customers, that money is refunded via a GCBA surcredit.
