Southwest Gas Closes Nevada and California Rate Cases

The Tip Desk · November 11, 2026 · 4 min read

The gas distributor posted $14.7 million of adjusted continuing-operations net income and $0.20 a share in the third quarter, and reaffirmed 2026 adjusted EPS of $4.17 to $4.32.

Southwest Gas Holdings (SWX) closed its Nevada and California general rate cases, adding about $80 million of combined incremental annual revenue, and reaffirmed full-year 2026 adjusted earnings per share from continuing operations of $4.17 to $4.32.

Adjusted net income from continuing operations was $14.7 million, or $0.20 a share, for the three months ended September 30, 2026, up $10.5 million from the year-ago third quarter. GAAP net income from continuing operations was $12.8 million, or $0.18 a share. The year-over-year increase in adjusted continuing-operations net income was $10.5 million after a $5.9 million year-over-year increase in the second quarter. Sequential adjusted net income from continuing operations fell from $32.4 million in the second quarter.

President and CEO Justin Brown said the Nevada and California outcomes “resulted in approximately $80 million of combined annual revenue increases, reinforcing regulatory support for infrastructure investments and enhancing earnings visibility.” The company said it is on track to achieve full-year guidance.

The Nevada decision, with rates effective in October 2026, provided nearly $48 million of incremental annual revenue, kept a 9.5% authorized return on equity, and approved a 51.35% equity / 48.65% debt capital structure. Southwest Gas filed a petition for reconsideration on about $50 million of Certification Plant deferred to a future proceeding. California’s case concluded with $32.6 million of incremental annual revenue, a 10% return on equity, and a 50/50 capital structure; California rates were effective January 1, 2026. The Automatic Trigger Mechanism adjustment factor was cut from 50 bps to 20 bps.

In Arizona, Commission Staff recommended $58 million of incremental annual revenue, a 9.75% return on equity, and a transition to a formula-rate model. The hearing is scheduled for December, and the company continues to anticipate new rates becoming effective in April 2027.

Natural gas distribution contributed $13.3 million to net income in the third quarter, up from $6.3 million a year earlier. Corporate and administrative recorded a $0.5 million net loss. Twelve-month-ended Utility return on period-end equity was 8.0%, down from 8.1% at June 30, 2026 and 8.5% at March 31, 2026. Adjusted Utility return on period-end equity was 8.0%, unchanged from March 31.

The company said the year-over-year increase in continuing-operations net income reflected lower interest expense, constructive regulatory outcomes, continued infrastructure investment recovery, and operational execution. In the distribution segment, net interest deductions were $4.9 million lower, primarily from lower over-collected purchased-gas-adjustment balances for Nevada, a lower Southern Nevada variable interest expense recovery rate, and higher capitalization of borrowing costs. Operating margin was $3.8 million higher, with updated California rates adding about $3.2 million. Income tax benefit was $3.4 million higher, primarily from a deferred state income tax benefit tied to a change in state apportionment rates. Operations and maintenance expense was $2.0 million higher, including employee-related labor costs of $2.7 million, of which a $2.0 million one-time incentive award was excluded from the non-GAAP measure. Depreciation and amortization was $1.8 million, or 2%, higher, reflecting a $788.2 million, or 7%, increase in gas plant in service.

Gross margin was $115.1 million and operating margin was $278.1 million for the three months ended September 30, 2026. The company ended the quarter with nearly $0.7 billion in available liquidity. Year-to-date operations and maintenance remained relatively flat, and Southwest Gas continues to target relatively flat O&M on a per-customer basis.

The Great Basin 2028 expansion remains on track for a fourth-quarter FERC certificate of public convenience and necessity filing. Shippers have executed binding precedent agreements and posted surety supporting 1 billion cubic feet per day of contracted demand. The estimated $2.3 billion investment is expected to generate approximately $270 million to $300 million of incremental annual margin beginning at the expected fourth-quarter 2028 in-service date. Capital spending is expected to be about 15% in 2026, 25% in 2027 and 60% in 2028. The company does not expect the updated project estimate to materially affect 2026 capital-expenditure guidance.

It reaffirmed 2026 capital expenditures of about $1.25 billion, 2026–2030 adjusted EPS CAGR of 12.0% to 14.0%, 2026–2030 capital expenditures of $6.3 billion, and 2026–2030 rate-base CAGR of 9.5% to 11.5%.