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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) February 3, 2000
SOUTHWEST GAS CORPORATION
(Exact name of registrant as specified in its charter)
California 1-7850 88-0085720
(State or other jurisdiction of (Commission (I.R.S. Employer
incorporation or organization) File Number) Identification No.)
5241 Spring Mountain Road
Post Office Box 98510
Las Vegas, Nevada 89193-8510
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (702) 876-7237
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Item 5. Other Events
Northern California Expansion Project. In 1995, Southwest Gas Corporation
(Southwest) initiated a multi-year, three-phase construction project to expand
its northern California service territory and extend service into Truckee,
California. The California Public Utilities Commission (CPUC) established a
$29.1 million cost cap for the project. Cost overruns experienced during the
construction of Phase II of the project led Southwest to pursue regulatory and
legal avenues aimed at minimizing its regulatory disallowance exposure. See
Note 11 of the Notes to Consolidated Financial Statements in the 1998 Annual
Report to Shareholders for additional background information.
In April 1999, following six months of mediation, Southwest and the town of
Truckee negotiated a settlement agreement and mutual release (Agreement) that
reconciles disputes and claims against each other. The Agreement provides for
natural gas service to be offered to all areas of Truckee, California,
consistent with the original scope of the project. The estimated remaining cost
to complete the project was reduced from $25 million to approximately
$18 million based on construction bids received. Service to potential customers
in certain areas would be provided pursuant to mains and services extension
rules. Southwest agreed to provide a $2 million subsidy to assist customers in
covering the mains and services extension costs. Southwest also agreed not to
file a general rate case applicable to its California service territories to be
effective before January 1, 2002.
In June 1999, Southwest and the town of Truckee filed the Agreement as part of a
joint petition with the CPUC to modify the certificate of public convenience and
necessity granted in 1995 and the related cost recovery mechanism.
On February 3, 2000, the CPUC approved the joint petition, including the terms
and conditions of the Agreement, with the modifications that Southwest file a
project status report within two months following each construction season
through project completion, and that the project be completed with due
diligence, but in no event later than January 1, 2004, subject to delays in
construction for any cause beyond the control of Southwest. All parties have
consented to the Agreement and accepted the modifications ordered by the CPUC.
Based on the approval of the joint petition, Southwest's regulatory disallowance
exposure was reduced from $17 million to $2 million. A $2 million pretax charge
was recognized in the fourth quarter of 1999, representing the customer subsidy
for mains and services extension costs Southwest has committed to provide.
Southwest expects to complete the project by January 1, 2004, at or under the
current cost estimate. Therefore, no additional write-offs related to the
expansion project are anticipated.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
SOUTHWEST GAS CORPORATION
Date: February 8, 2000 /s/ EDWARD A. JANOV
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Edward A. Janov
Vice President/Controller and
Chief Accounting Officer
