R Southwest Gas Corporation February 16, 2001

Southwest Gas Corporation Update on Factors Affecting Gas Prices n Storage u Storage levels continue below recent years n Deliverability u Rig count at over 800 n Power generation u High power demand keeps pressure on prices n Crude oil u Futures below $30 n Industry structure u No recent changes

Southwest Gas Corporation Short Term Influences n Capacity allocations on El Paso n Weather

Southwest Gas Corporation Service Territory Arizona Nevada California

Southwest Gas Corporation n Customers served u Arizona 748,000 u Nevada 455,000 u California 124,000 Total1,327,000

Southwest Gas Corporation n What demand (or load) growth rate are you currently experiencing? n Growth rate exceeds 5%/annum

Southwest Gas Corporation n What are your load projections for the next two years? n Southwest’s extreme peak day sales forecast in dekatherms n Arizona , ,000 n Total System ,180, ,238,161

Southwest Gas Corporation n What is your projected annual sales for 2001 and 2002? n Southwest’s annual sales forecast in dekatherms for the 12-month period ending October of each year n Arizona ,567,464* ,110,180* n Total System ,550,913* ,254,078* * Includes increased power plant sales that are not forecasted in future years

Southwest Gas Corporation n Do you have firm contracts in place to meet customer demand? YES n Each year, Southwest Gas holds portfolio selection process u Fixed-price solicitations u Indexed solicitations

Southwest Gas Corporation n Are you making any spot purchases on the commodities market to meet local demand? YES n Southwest buys spot supplies in lieu of firm contract supplies when those spot purchases result in lower gas costs for customers

Southwest Gas Corporation n What is the wholesale and retail supply availability for Arizona for 2001 and 2002? n To date, Southwest has been able to enter into firm contracts with suppliers to provide adequate supplies for our customers n We do not foresee problems obtaining future commodity contracts, however, large numbers of natural gas fired generation will create greater competition

Southwest Gas Corporation n What is the interstate pipeline capacity for Arizona for 2001 and 2002? n Is that capacity going to be sufficient to meet the projected needs of both retail and wholesale gas consumption? n Full requirements contracts u Non-coincidental peaks u Allows growth u Staff’s support in EPNG rate cases u May not be able to hold full requirements in next EPNG rate case u Expect capacity expansion will be required to meet power plant growth

Southwest Gas Corporation n With the new power plants planned or approved for Arizona, are there steps that you would take today to prepare for future demands on the infrastructure? n With regulatory support, Southwest would purchase additional capacity now and hold for future use to ensure that a portion of today’s remaining capacity or a portion of a less expensive expansion is available for retail customers

Southwest Gas Corporation n What effect, if any, will the cost of natural gas have on your supply plan? u Increase existing price volatility mitigation u Develop multi-year mitigation program u Work with Staff to develop plan to ensure retail customers have access to interstate capacity

R February 16, 2001 Questions?