LAS VEGAS, March 8 /PRNewswire-FirstCall/ -- Southwest Gas Corporation
(NYSE: SWX) announced consolidated earnings of $1.15 per basic share for 2005,
a $0.46 per share decrease from the $1.61 per basic share earned in 2004.
Consolidated net income for 2005 was $43.8 million, compared to $56.8 million
during 2004.  Two principal factors adversely affected earnings: lost
operating margin, resulting from warmer-than-normal weather, and a
non-recurring charge related to an injuries and damages incident.  Also
influencing current-year results was the length of time taken to reach a
final decision in the Arizona general rate case.
    According to Jeffrey W. Shaw, Chief Executive Officer, "Weather continues
to be a significant factor in the variability of earnings.  In the desert
southwest, 2005 was one of the 10 warmest years on record.  Consequently, we
did not realize approximately $17 million in operating margin ($0.28 per
share), primarily in Arizona, due to lower usage.  Fortunately, the negative
effects of weather were mitigated by rate design changes in the most recent
California and Nevada general rate cases."  Shaw also commented on the
increase in operating costs, "After a thorough review of outstanding
litigation, and based upon changed circumstances regarding a pending injuries
and damages case, we recorded a $10 million non-recurring charge ($0.16 per
share) at year-end 2005.  Excluding that charge, gas segment operations and
maintenance expenses would have increased five percent compared to the prior
year, which is relatively consistent with the customer growth we have
experienced."
    In February 2006, the Arizona Corporation Commission ("ACC") issued a
final decision on the Company's December 2004 general rate increase
application.  Commenting on the decision, Shaw said, "The $49 million
operating margin increase approved by the ACC was a big step forward toward
our goal of achieving a fair return for investors.  However, the ACC did not
adopt our proposed rate design changes at this time, leaving customers,
investors, and the Company exposed to the risks associated with weather
volatility.  Instead, the Company was encouraged to work with the ACC Staff
and other interested parties prospectively to seek rate design alternatives
that will provide benefits to all affected stakeholders."
    During the fourth quarter of 2005, consolidated net income was
$30.3 million, or $0.77 per basic share, versus $40.4 million, or $1.12 per
basic share, for the fourth quarter of 2004.

                    Natural Gas Operations Segment Results

    Full Year 2005
    Operating margin, defined as operating revenues less the cost of gas sold,
increased $11 million in 2005 as compared to 2004.  During 2005, the Company
added 81,000 customers (excluding 19,000 customers acquired in South Lake
Tahoe), an increase of five percent.  New customers contributed $20 million in
incremental operating margin.  Warmer-than-normal weather, especially during
the first and fourth quarters of 2005, resulted in a $17 million decrease in
margin.  Rate relief in California and Nevada provided $8 million in
incremental operating margin.
    Operating expenses increased $32 million, or seven percent, in 2005
reflecting general increases in operations and maintenance costs as well as
incremental costs (including depreciation and general taxes) associated with
serving additional customers.  The increase also includes a $10 million charge
for a pending injuries and damages case.  Other drivers include higher
insurance premiums, uncollectible expenses, employee-related expenses, and
compliance costs.
    Net financing costs rose $3.5 million, or four percent, between periods
primarily due to an increase in average debt outstanding to help finance
growth and higher variable-rate interest costs.

    Fourth Quarter
    Operating margin decreased approximately $5.5 million when compared to the
fourth quarter of 2004.  Warmer-than-normal weather conditions in the
Company's service territories reduced operating margin by $11 million,
partially offset by the impact of customer growth.  Operating expenses,
excluding the injuries and damages charge, increased $3.8 million, or three
percent, primarily due to higher general costs and incremental operating costs
associated with serving additional customers.  Net financing costs between the
periods were relatively flat.

    Southwest Gas Corporation provides natural gas service to 1,713,000
customers in Arizona, Nevada, and California.  Its service territory is
centered in the fastest-growing region of the country.

    This press release may contain statements which constitute
"forward-looking statements" within the meaning of the Securities Litigation
Reform Act of 1995 (Reform Act).  All such forward-looking statements are
intended to be subject to the safe harbor protection provided by the Reform
Act.  A number of important factors affecting the business and financial
results of the Company could cause actual results to differ materially from
those stated in the forward-looking statements.  These factors include, but
are not limited to, the impact of weather variations on customer usage,
customer growth rates, changes in natural gas prices, the ability to recover
costs through the PGA mechanism, the effects of regulation/deregulation, the
timing and amount of rate relief, changes in rate design, changes in gas
procurement practices, changes in capital requirements and funding, the impact
of conditions in the capital markets on financing costs, changes in
construction expenditures and financing, changes in operations and maintenance
expenses, future liability claims, changes in pipeline capacity for the
transportation of gas and related costs, acquisitions and management's plans
related thereto, competition, and the ability to raise capital in external
financings.  In addition, the Company can provide no assurance that its
discussions regarding certain trends relating to its financing, operations,
and maintenance expenses will continue in future periods.



                  SOUTHWEST GAS CONSOLIDATED EARNINGS DIGEST
                   (In thousands, except per share amounts)

    YEAR ENDED DECEMBER 31,                           2005           2004
    Consolidated Operating Revenues               $1,714,283     $1,477,060
    Net Income                                       $43,823        $56,775
    Average Number of Common Shares Outstanding       38,132         35,204
    Basic Earnings Per Share                           $1.15          $1.61
    Diluted Earnings Per Share                         $1.14          $1.60

    QUARTER ENDED DECEMBER 31,
    Consolidated Operating Revenues                 $496,995       $460,496
    Net Income                                       $30,255        $40,446
    Average Number of Common Shares Outstanding       39,174         36,239
    Basic Earnings Per Share                           $0.77          $1.12
    Diluted Earnings Per Share                         $0.76          $1.11

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