Southwest Gas Holdings' Q2 2025: Unpacking Contradictions in CapEx, Regulatory Timelines, and Market Dynamics

Great Basin expansion CapEx, Nevada formula rate rulemaking timeline, Arizona System Integrity Mechanism (SIM) case duration, Great Basin expansion cost and return expectations, regulatory environment in Arizona are the key contradictions discussed in Southwest Gas Holdings, Inc.'s latest 2025Q2 earnings call.



Strong Financial Performance and Capital Management:
- Southwest Gas Holdings reported record net income for the first half of 2025, with a trailing 12-month ROE of 8.3%.
- The company successfully executed two secondary public offerings of Centuri shares, generating over $470 million in net proceeds.
- The record net income was driven by operational efficiency and capital investments, while the capital raise facilitated debt reduction and balance sheet strengthening.

Great Basin Expansion Project:
- The Great Basin expansion project received interest for approximately 1.76 billion cubic feet of capacity or 1.76 million dekhatherms per day, significantly higher than the existing capacity of 250,000 dekhatherms a day.
- The incremental capital expenditure opportunity is now estimated between $1.2 billion to $1.6 billion, depending on the number of shippers signing precedent agreements.
- This was supported by strong demand for natural gas in data centers and supercomputing, highlighting the importance of their infrastructure in delivering reliable energy.

Regulatory Success and Strategic Initiatives:
- Southwest Gas achieved a constructive outcome in Nevada with the signing of SB 417, enhancing the regulatory framework for natural gas utilities.
- The company obtained approval for a capital tracker in Arizona, although the commission amended the settlement to impose a cap of $50 million on qualifying capital.
- The regulatory success is aimed at reducing regulatory lag, improving price stability, and supporting customer protection and economic growth.

Centuri Divestiture and Financial Positioning:
- The company retained a stake of 52.1% in Centuri after secondary offerings, generating proceeds used to repay debt and strengthen the balance sheet.
- With a strong cash position of over $350 million and liquidity exceeding $1 billion, Southwest Gas Holding is positioned to execute its strategic goals and return over-collected purchased gas costs to customers.