Looking at Southwest Gas and wondering if you should work there, do business with
them, or purchase their stock? We analyze all things Southwest Gas, including the history of
natural gas, why it might make sense for you and your situation, and if those pesky negative
reviews are as bad as you might think.
Southwest Gas has been around since the 1930s and today serves millions in the tri-state area. Should it be your natural gas provider? We take a close look at all things natural gas and Southwest Gas to learn more about the industry and the company. Keep reading to uncover what Southwest Gas customers think about their energy provider, plus learn the surprising truth about the negative reviews that keep popping up.
2,000 Years of Gas
More than 2000 years ago in the Szechuan province of China, local Chinese engineers were searching for brine and salt. In their search, they discovered natural gas seeping up through the earth, and they ingeniously created pipelines made from bamboo to carry the gas to desalination plants.
They called these natural gas wells--some as deep as 800 feet--fire wells. Later, during the Song Dynasty, scientists Shen Kua wrote a book in which he predicted that natural gas and oil would become vital sources of energy for the world.
It wasn’t till 1825, however, that somebody first began to extract natural gas for industrial purposes, and that was done a world away in Fredonia, New York.
What is Natural Gas, Exactly?
Natural gas, like gasoline, is a fossil fuel. This means that it was created long before modern time, deep underground; it also means natural gas is non-renewable and is a finite resource--it will run out at some point.
Petroleum is a similar fossil fuel found close to natural gas, but natural gas emerges when buried organic matter experiences extreme pressure and heat for a long period. Since its rediscovery in more recent times, natural gas is used for energy generation, including electricity, heating, and cooking. It’s also used to make plastic and organic chemicals that we use in everyday life.
It can’t be used raw, however; it must be processed to be usable. Byproducts of the cleaning process include ethane, propane, and water.
Why Natural Gas?
Natural gas is cleaner and cheaper than many other energy alternatives, though it can be expensive to transport. In markets near natural gas sources, however, it can be an excellent fuel source, especially when used for domestic purposes such as cooking and heating.
Natural gas has always been surrounded in controversy, however, both because it is a fossil fuel and because the extracting process can cause significant damage to the environment. It is
popular in Europe and the United States, however, as a cost-effective home energy source.
Enter: Southwest Gas
Natural gas, like most fossil fuels, has weathered periods of booms and busts. Southwest Gas come into being in 1931, when three men (John Koeneman, Joe Gray, and H.G. Laub) in Barstow, California, in the butane distribution business, decided to expand their business to include liquefied petroleum gas.
Business was good, and within a few decades the trio expanded their reach to Arizona (the small community of Douglas) and was converting customers from propane to natural gas, making history in the energy business. By the 50s, Southwest Gas was also serving Las Vegas and Henderson in southern Nevada.
A Hundred Years of Progress
Almost a hundred years since its beginning, Southwest Gas today is a publicly traded company that serves residents of California (including Lake Tahoe), Nevada, and Arizona. It also employs roughly 2,000 employees throughout the tri-state region and gets good reviews on GlassDoor.com, a company that allows employees to leave anonymous reviews on the companies they work.
Current and past Southwest Gas employees rate the company 3.4 out of 5 stars overall, with a 91% CEO approval rating. A satisfactory 61% would recommend the company to a friend. While this doesn’t directly translate to a good customer experience, happy employees often provide better customer support, company innovation, and better overall value, so this is a good sign if you’re considering switching to Southwest Gas.
What Makes Southwest Gas Unique?
Southwest Gas is the largest natural gas provider in Arizona and Nevada, thanks in part to large investments made in pipe and facility infrastructure, which the company calls “investing in integrity.” As a publicly traded company, Southwest Gas is focused on developing value for its shareholders. By no means does this mean bad business, however.
Smarter Greener Better
One of the things that set Southwest Gas apart is its Smarter Greener Better Campaign. The campaign is an example of how the company actively works to help locate energy efficiency rebates for its customers.
In addition to providing information on rebates available in California, Arizona, and Nevada, Southwest Gas also provides a wealth of information to help people increase home and business energy efficiency, cutting their consumption of natural gas while also reducing energy costs. Residents of these states can visit Southwest Gas’ website to learn more about weatherization, solar water heating, and building greener homes.
Southwest Gas also actively considers corporate citizenship to be an important part of how it does business. The company has two main initiatives for giving back in the communities it serves. One is called Fuel For Life, Southwest Gas' employee workplace giving campaign. The other is called Blue - Building Lives Up Everywhere, and is the company's employee volunteer arm. Southwest Gas also assists customers who find themselves in unexpected financial crises'.
Built-in Services for Customers
In addition to larger initiatives programs, Southwest Gas also offers all the services you’d expect from a natural gas company. It offers:
- Multiple payment options (pay by auto draft, credit card, phone, or online)
- Natural gas connections for vehicles, water heating, cooking, home heating, outdoor living, and clothes drying
- Energy Share program (a locally managed program that provides utility assistance to customers in need; customers can make tax-deductible donations)
- Language interpretation and hearing-impaired services
- Deferred payment plans in case of hardship (plus, if you qualify, receive referrals to local agencies that can also help)
- Energy Assistance Program and the Weatherization Assistance Program, both in Nevada, which assists low-income families
- Low-Income Ratepayer Assistance (LIRA) to reduce the cost of heating for low-income Arizona residents
- Customer-Owned Yard Line (COYL), also available to Arizona residents, helps customers save money in the case of discovering a leak
- California Alternate Rates for Energy (CARE) helps provide energy rebates for low-income families in California
- California Medical Baseline Allowance for California customers
- 24/7 hotline you can call (even if you're not a customer) if you suspect a gas leak
Customer Reviews & Public Perception
Here's the thing about utility companies: there aren't a lot of reviews available. Normally, we'd be able to analyze hundreds or even thousands of reviews on just about anything else, but at most we only found about ten reviews.
And, unfortunately, all of those reviews were negative. People complained about techs not showing up on time and about customer support reps being rude and lacking compassion. In truth, however, we're somewhat surprised that with two million customers, there were only ten negative reviews.
It's very common to find reviews from people who are disgruntled or upset, and it's common for local utility companies to have very few reviews available. The fact is, also, that most of the area Southwest Gas operates in is regulated, meaning people aren’t free to choose another company.
As you can imagine, this also contributes to people being frustrated. For the most part, however, we think that ten negative reviews probably indicates that most people are satisfied with how the company does business.
Whether or not you decide to put much stock in those ten negative reviews, it’s of interest that Southwest Gas has been named a Partner of the Year by the EPA (Environmental Protection Agency). This means that (for that year, at least), Southwest Gas achieved emission reductions by using different Natural Gas STAR strategies.
The STAR program in natural gas invites partners to find areas to reduce methane emissions, carry out methane-reduction projects, and report these activities to the EPA each year.
While this award from the EPA was a bright spot for Southwest Gas, the company has also been in the news for some not-so-great reasons, as well. For instance, it has recently been fined for failing to keep proper maps of its gas lines, resulting in two line breaks and costing thousands of dollars.
The fines--hundreds of thousands of dollars--are some of the highest civil penalties assessed for such behavior and are designed to incentive the company to change whatever actions resulted in its fining. Southwest Gas must also agree not to try to make up the fine in higher charges to its customers.
Southwest Gas Pricing & Competitors
Most utility markets today are either public (government-held) utilities or private companies. In the latter, they’re monopolies and to counter all the problems that come with monopolies; these are regulated markets. Some markets (notably, markets in Texas and California), have been deregulated in recent decades, which means consumers can choose from a variety of utility providers. There are many reasons for the continuing regulation of many large markets, some of those include the nature of the power grid and local geography and boundaries. Whatever the case for other markets, however, Southwest Gas, is regulated by market regulators in Arizona, California, and Nevada.
This means that commissions in each market set pricing--Southwest Gas itself does not, though it can commission to change pricing based on assets and investments in infrastructure. Southwest Gas’ biggest competitors in the region are Pinnacle West (similar size) and UNS (much smaller).
Southwest Gas Stock
Thanks to market regulation, you probably won’t have much of a choice about using Southwest Gas--if your home needs it and you live in the area, it will be your company of choice! We thought, then, that we’d take a look at Southwest Gas Stock since that often gives us an excellent idea of how the company is doing.
Southwest Gas Stock (SYX on the NYSE) is currently trading close to $80, almost double where it was five years ago. Even better than its overall growth trend is its dividend rate--the company pays out a yield of 2.6%, terrific for a solid utility stock at this growth and price. Plus, the overall yield in the Gas Distribution industry is ahead of the S&P 500’s annual yield, meaning you’ll have chosen a solid, performing stock in a solid, performing industry.
What We Think
After carefully analyzing the data above, here’s what we think about Southwest Gas: depending on the other options you have in your market (whether you’re in Arizona, California, or Nevada) for energy (namely, electricity), natural gas is often a cheaper, cleaner source of energy for your home. However, it will cost more to set your home up for gas or to switch your home from electricity or gas, and in some cases, electricity might be cheaper. You must also consider solar energy, which, again, while expensive, can pay for itself quickly. Since you can’t compare Southwest Gas rates or services to other natural gas providers, you’ll
have to compare the option of natural gas, itself.
While we don’t think the company as a whole is anything exceptional (prices aren’t particularly low nor are customers particularly thrilled with the company, despite its many corporate initiatives), it is a decent company. We will go so far as to say the stock is a good buy! In short, if natural gas makes sense for your home, Southwest Gas is a solid choice. If you’re able to invest in switching from electricity, it will probably be worth the upfront cost in the long run.
Finally, if you’re looking for a job, Southwest Gas has a good reputation and employs several thousand people--several more hundred than its closest competitor. If you’re looking for an employer that is stable, it’s a good bet.