Gas Attack

Arizona Lawmakers Enact An Anti-Impact Fee For Their Pals At Southwest Gas.

EVEN IN THESE greedy times, it's still better to give than to receive. Substantially better, in fact, when the tattered notion includes a little payback gravy for apparent samaritans.

Add a dollop of double-talk and you have the sweetheart deal cooked up by state lawmakers and Southwest Gas, a real rump-roaster that could see gas customers doling cash to already plump developers.

And who's the major driver behind this tasty dish? None other than Southwest's legislative lap dog, Speaker of the House Jeff Groscost. Yep, that's the same Jeff Groscost who already caught lots of heat for lobbying lawmakers in Utah, New Mexico and Wyoming on the gas company's behalf. For his efforts -- and obvious ethical lapse -- Groscost was paid more than $10,000.

Now it seems that last year's sweeping electric power competition bill, a deregulation feast sponsored by the Speaker and signed into law by Gov. Jane Dee Hull, contains a juicy little provision forcing developers to provide gas line trenches and interior hook-ups to nearly every new home built in Arizona. In turn, those builders can now bill Southwest directly for added costs of the requirement, averaging about $200 per trench. Including the four-point hook-ups -- stove, water heater, washer/dryer and furnace, the cost can reach about $1,000 per home.

Down the road, Southwest can be expected to approach the Arizona Corporation Commission for a rate hike to recoup its investment. If that happens, gas customers will end up paying developers to insure that Southwest's product flows into every sprawling subdivision in the near and distant future.

Not surprisingly, Southwest lobbyist Richard Foreman -- who helped draft the trench measure, later attached as an amendment in the Senate by Republican John Wettaw -- adroitly spins the deal as pro-consumer.

The vast majority of homeowners prefer gas over electric, Foreman says, and this just demands that developers give them the choice. Before, when a builder was ready to break ground on a project, "all the (utilities) sales people would go out and beg for business," he says.

For example, electricity companies would offer cash incentives to have homes in a budding subdivision geared to all-electric appliances, thereby shutting gas out. The gas company would then try to match the electric company's enticements. "What it became was a fairly aggressive marketplace, but ironically, the marketplace was just the developer, not the consumer," Foreman says.

If Southwest lost such a bidding war, but homeowners wanted gas anyway, the buyer would then pay out the nose for custom hook-ups, Foreman says. Likewise, instead of sharing a single trench with other utilities for a gas-inclusive development, Southwest (i.e., rate-payers) would often foot the bill for its own trenching, especially in the Phoenix area.

Instead, under the new law, the cost will be split between the utilities for a single, common trench. That, Foreman says, will cut gas trenching costs in half.

At least in theory.

But before Southwest gets all puffy over its supreme concern for the lowly rate-payer, consider this: the company rarely paid trenching costs in southern Arizona anyhow. That's according to one industry insider, who noted that developers generally footed costs for the ditches in these parts, which were typically shared by Southwest, TEP, and whoever else was on board.

Admittedly, the scene is different up north, where Southwest was often at odds with utility titans Salt River Project and Arizona Public Service over trench sharing. There, the new law gives the gas company a big foot in the door. But in this neck of the desert, things were mostly hunky-dory before, despite Foreman's rose-colored rhetoric.

Only difference is that builders can now erase some of their bottom line by sticking Southwest with the trench tab. Southwest can then pass the buck -- literally -- to the consumer. And you can bet your Kenmore they'll eventually try to do exactly that, despite Foreman's assurances that "shareholders will be bearing the burden."

So remember, future natural gas-hounds, when you mail that little yellow envelope to Las Vegas, one of these days it will include a compulsory donation to your favorite stucco king, all for the sake of widening Southwest's market share.

Still, there is a bright spot on this bleak, sprawling landscape: According to one insider, developers have been uncharacteristically slow to slop at the new utility trough. "A lot of them apparently don't know about it yet," the source says. "But just wait."

Reasons for the delayed feeding frenzy are unclear, and Alan Lurie, executive director of the Southern Arizona Home Builders Association, didn't return a call seeking an answer to that question.

Still, while Groscost, Foreman and Southwest's muckety-mucks savor the pervasive aroma of natural gas, one activist simply whiffs a highly perfumed skunk. "Sounds like an anti-impact fee to me," says Dennis Burke, director of the legislative watchdog group Arizona Common Cause.

If trenching costs end up in the rate base, "It will be a way to transfer the costs of sprawl to existing utility customers wherever they live," Burke says. "But it's pretty typical of our corrupt legislature. And coming from Groscost -- who only sponsors three or four bills a year -- my first feeling is that the public should beware."

Speaker Groscost didn't return phone calls seeking comment.