ENERGY/RHG CA-25

11/21/00

Decision _________

BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA

In the Matter of the Application of SOUTHWEST )

GAS CORPORATION U-905-G, for authority to: )

(1) issue and sell one or more series of Debt )

Securities not to exceed $250,000,000; (2) issue ) Application 00-09-069

and sell one or more series of Preferred and/or ) (Filed September 29, 2000)

Preference Securities not to exceed $50,000,000; )

And (3) issue and sell up to 3,000,000 shares of )

Its $1 par value Common Stock. )

)

O P I N I O N

Summary

This decision grants Southwest Gas Corporation (Southwest) the authority requested in Application (A.) 00-09-069 (Application).

Southwest requests authority, pursuant to § 818 of the Public Utilities (PU) Code to issue and sell one or more series of Preferred and Preference Securities¹ not to exceed $40,000,000.

This Application was originally filed as a Petition to extend the time period of the financing authority granted to Southwest by D.93-02-008 in A.97-02-049 as modified, to issue $250,000,000 Debt Securities, $50,000,000 Preferred or Preference Securities, and 3,000,000 shares of $1 par value Common Stock (the Petition was filed over one year after the effective date of the decision, hence the Application).

Notice of A.00-09-069 appeared in the Commission's Daily Calendar on October 17, 2000. There were no protests or responses to the Application.

Background

Southwest, a California corporation, is a public utility under the jurisdiction of this Commission, and is primarily engaged in the business of distributing and selling natural gas in certain portions of San Bernardino, El Dorado, Placer and Nevada Counties, California. Southwest is also engaged in the intrastate transmission, sale, and distribution of natural gas as a public utility in certain portions of the states of Nevada, and Arizona and is a "natural gas company," within the meaning of the Natural Gas Act, subject to the jurisdiction of the Federal Energy Regulatory Commission with respect to interstate transmission facilities and sales of natural gas for resale on its northern Nevada system.

D.93-02-008 as modified, granted Southwest among other things, to issue one or more series of Preferred and Preference Securities not to exceed $50,000,000. Of this authority, $10,000,000 have been issued and the remaining unused $40,000,000 will expire in December 31, 2000.

Discussion

By A.00-09-069, Southwest requests authorization to issue and sell $40,000,000 Preferred and Preference Stock until the amount is fully used.

Southwest states in the Application that the requested amount will address part of its expected external financing requirements over the next three years.

As discussed in D.93-02-008 as modified, Southwest's proposed sale will be issued through the offering and sale of shares to the public through either negotiated underwritings or otherwise or by private placements with institutional or other investors. The sale or sales will be made in one or more series of one or more issues. Proceeds from the sale will be used for any or all of the purposes specified under PU Code § 817.

The precise amount and timing of each offering and sale of one or more series of Preferred and Preference Stock, the method of sale, the price, the dividend rate (which may be fixed, adjustable, variable or set by auction, remarketing procedures or other rate setting procedures), dividend period, the liquidation preference and other rights, preferences, privileges and restrictions (including redemption, repurchase and sinking fund provisions, if any) have not yet been determined and will be established prior to the offering and sale with due regard to the financial condition and requirements and the then prevailing and anticipated market conditions.

The offering and sale will be made through the use of purchase and underwriting agreements and other documents and instruments customary for issuance of such stock by the method selected by Southwest.

Southwest's financing request raises no questions that should dissuade us from giving favorable consideration to the authority requested. The Commission established the reasonableness of Southwest's financing requirements in D. 93-02-008 as modified and Southwest paid the required fee set by PU Code § 1904(b).

PU Code § 1904(b)

Whenever the Commission authorizes a utility to issue debt, the Commission is required to charge and collect a fee in accordance with PU Code § 1904(b) which states as follows:

For a certificate authorizing an issue of bonds, notes, or other evidences of indebtedness, two dollars ($2) for each one thousand dollars ($1,000) of the face value of the authorized issue or fraction thereof up to one million dollars ($1,000,000), one dollar ($1) for each one thousand dollars ($1,000) over one million dollars ($1,000,000) and up to ten million dollars ($10,000,000), and fifty cents ($0.50) for each one thousand dollars ($1,000) over ten million dollars ($10,000,000), with a minimum fee in any case of fifty dollars ($50). No fee need be paid on such portion of any such issue as may be used to guarantee, take over, refund, discharge, or retire any stock, bond, note or other evidence of indebtedness on which a fee has theretofore been paid to the commission. If the commission modified the amount of the issue requested in any case and the applicant thereupon elects not to avail itself of the commission's authorization, no fee shall be paid, and if such fee is paid prior to the issuance of such certificate by the commission, such fee shall be returned.

This decision authorizes Southwest to issue $40,000,000 Preferred and Preference Stock whereby the fee has been previously paid for. Therefore, pursuant to PU Code 1904(b), no fee is required in this authorization.

In Resolution (Res.) ALJ 176-3049 dated October 19, 2000, the Commission preliminarily categorized this Application as ratesetting, and preliminarily determined that hearings were not necessary. No protests have been received. Given these developments, a public hearing is not necessary, and there is no need to alter the preliminary determinations made in Res. ALJ 176-3049.

This is an uncontested matter in which the decision grants the relief requested. Accordingly, pursuant to PU Code 311(g)(2), the otherwise applicable 30-day period for public review and comment is being waived.

Findings of Fact

1. In A.00-09-069, Southwest seeks authority to issue $40,000,000 Preferred and Preference Stock.

2. The terms and conditions of the Preferred and Preference Stock that Southwest requests under A.00-09-069 were previously established by the Commission in D.93-02-008 as modified.

3. Southwest states that it needs authority to issue Preferred and Preference Stock to meet part of its external financing requirements over the next three years.

4. Notice of the filing of the Application appeared on the Commission's Daily Calendar of October 17, 2000, and no protests have been received. There is no known opposition to the Application and no reason to delay granting the authority requested.

Conclusions of Law

1. A public hearing is not necessary.

2. The Application should be granted to the extent set forth in the order which follows.

3. The issuance of Preferred and Preference Stock requested by Southwest in this Application should be subject to the terms and conditions established by the Commission in D.93-02-008 as modified.

4. The proposed issue of Preferred and Preference Stock is for lawful purposes and the money, property, or labor to be obtained is required for these purposes. Proceeds from the securities issue may not be charged to operating expense or income.

5. There is no fee associated with A.00-09-069.

6. The following order should be effective on the date of signature.

ORDER

It is ORDERED that:

1. On or after the effective date of this order, Southwest Gas Corporation, upon terms and conditions substantially consistent with those set forth or contemplated in Application

00-09-069 (Application), is authorized to issue and sell (until the securities are fully issued) Preferred and Preference Securities in an aggregate principal amount not to exceed $40,000,000.

2. The Preferred and Preference Securities shall be issued pursuant to the terms and conditions established by the Commission in Decision (D.) 93-02-008, as modified by

D.95-08-048, D.96-11-013, D.98-12-015, and D.99-12-017.

3. The Application is granted as set forth above.

4. A.00-09-069 is closed.

This order is effective today.

Dated ___________________, at San Francisco, California.

¹ The terms and conditions of this type of offering were indicated by the Commission in Decision (D.) 93-02-008, as modified by D.95-08-048, D.96-11-013, D.98-12-015, and D.99-12-017.