His background as an auditor is the hallmark of his leadership style as chief executive of Southwest Gas. He espouses the virtue of moderation in all things, particularly in planning.

Yet his company is struggling amid an economic downturn that has seen its main revenue source - new development - all but halt. Within this tense and nerve-racking atmosphere, Shaw has kept a calm head and is laying out plans for his company's long-term financial stability.

He is also a double-decade Nevadan who has laid deep roots here and is active in community and charitable groups and encourages his employees to do the same.

Jeff Shaw SAM MORRIS / STAFF PHOTOGRAPHER

Answer: I guess as a chief executive officer, you really have accountability and responsibility for just about every aspect of a business. You have the customers who you need to make sure are provided top-notch service - safe and reliable service. You have employees who are your lifeblood, and you have to make sure they are challenged and that they are competitively compensated and that you have a wage and benefits package that will attract and retain quality employees, especially in the environment we're in now. The state of the economy impacts that a little bit, but still, as time goes on, as a company you need to be very mindful of employees and how you treat them and compensate them. That's going to be important.

And then, of course, you have the investors. Without the money that investors supply, whether they be the bondholders or the equity investors, you need to make sure your returns are adequate to attracting and retaining capital.

So those three constituents you have to be mindful of. Then you have the political side of the business. We cannot automatically change the rates we charge to consumers. We have to go through a regulatory process and justify what it is we have done. On an after-the-fact basis the regulatory bodies, in our case, three state (Public Utility Commissions) and the Federal Energy Regulatory Commission, can review what you have done and determine whether your actions have been prudent or not.

I can tell you, quite gratefully, that we have been very successful thus far. We pay an enormous amount of attention to efficiency to ensure that customers are getting the best value for the dollar.

So managing those constituents and trying to balance all of that and then also being active in the community, I sit on several charitable boards, and I've taken some leadership positions on those boards and I think it's very important to focus on community. I think you're foolish not to be active and involved in your community because this is where we live. It's not just for the company's sake, it's for your sake. It's important to me to give back. So I spend an appropriate amount of time doing that.

We serve most of Arizona with the exception of the far northern regions of Flagstaff, Prescott and some of those areas. We serve Tucson and the surrounding areas, we serve all of Phoenix and the surrounding areas. We're actually more of an Arizona company because of the number of customers and the operating margins than we are a Nevada company. Nevada is about 35 percent of our business. We serve Northern Nevada with the exception of the Reno-Sparks area, which has service from Sierra Pacific Resources. And then we serve all of Lake Tahoe, both the California and Nevada sides. And we serve the high desert areas above Los Angeles in San Bernardino County, Calif. So all in all, we have a little more than 1.8 million customers.

We have just under 2,500.

The Las Vegas area, which is where most of the customers in Nevada that we serve reside, is served by gas acquired in the Rocky Mountains. We also can take supply from the Four Corners area, San Juan Basin. And we also can take supply from the Permian Basin in Texas. But most of the gas we are buying for Las Vegas today is coming from the Rocky Mountains, where supply is quite plentiful. We do, in Northern Nevada, take some supply out of Canada. Again, that's a smaller part of our company, but an important part. In Arizona we take gas from mostly the San Juan and Permian basins. And we don't own any wells. We buy the gas and transport the gas across other major pipelines until it gets to what we call the city gates and at that point we take over the distribution of gas through our infrastructure that we built.

One of the things that most people don't understand - and I wouldn't expect them to - is the way our company makes money. The profit is only attached to the investment in the plant in the ground, there is no other profit that is made as the natural gas utility. Your debt costs are passed through dollar for dollar, your labor, operations costs, any cost benefits cost are passed through dollar for dollar. There is no markup on that. There's no markup on the actual commodity - the actual natural gas molecules that we pass through the pipe. We buy that at the market at price. And the thing that's critical there is how you buy that. The thing that's most difficult for a customer to understand is the volatility in the price of the bill and most of the volatility in the bill today is a result of the volatility in the price of the commodity. There are big swings. The price of gas has gone up, it's tripled in the last decade. And so the customers see a huge run up in gas costs and when they see the bill come out, they say, "What's going on?"

If you take a look at the cost structure of providing the service, it's very predictable and the increase in that has actually been less than the rate of inflation. We can actually manage that real well. But the only thing we can do to manage the price of the commodity is in the way we buy it. We employ a volatility management program, we call it a VMP. It's essentially the same as if you were going to buy a stock. You typically don't want to time the market to buy that stock. You'd rather buy smaller portions into the market so you average cost that stock, therefore you get the best average price you can.

It's pretty similar with us. We buy gas on a fixed basis out into the future over varying terms for about half the portfolio, and we buy on the floating market on a day-to-day basis on the spot market for the other half. So you're going to have fluctuations, but you're going to mitigate that volatility. That's what we try to do to bring as much stability to a customer's bill as we can.

It's interesting, nearly 99 percent of the customers of Southwest Gas are residential or small commercial. The rest would be your industrial large commercial. The hotels you see in Las Vegas or some of your manufacturing type organizations you may find in our service territory would be classified as other than residential or small commercial. Of the operating margin, which are the revenues less the cost of gas, about 82 to 84 percent of that comes from residential and small commercial and 12 to 14 percent comes from large industrial or large commercial customers.

We don't buy the natural gas commodity for most, if not all, power plants and large commercial customers. They have their own departments to buy natural gas. So they are actually competing for the same natural gas supply that we are.

They then transport it via the large transmission pipelines until it gets into our system that we've put in. We will charge a special rate for transportation across our system. It is a much lower rate than you and I would pay at our home because the volumes of gas that are coming through the pipes are just huge. And we negotiate long-term contracts with them.

Otherwise, some of these large power plants or large commercial customers, if the major transmission pipeline, like Kern River, is in proximity to where they operate, could potentially bypass us, build their own pipe and tap into that large transmission pipeline. We would rather they not do that, we would rather they stay on the system - it benefits all customers if they do because their revenue stream goes in and blends with yours and mine, and it makes everything better for all customers.

Most of the electric generation that has been built in this country in the last decade - and when I say most, I mean most - has been natural gas-fired generation. And that has been the reason that the demand for natural gas has increased, not so much the growth. Growth has contributed to the increased demand, but it gets dwarfed quickly by power plants that use natural gas.

One of the things that is debated, and I think we have some fairly compelling arguments, is that it makes a lot more sense for you or me to have gas from the source. Go straight to the burner tap and be used there, for instance, for clothes drying, or at the gas range for cooking purposes, than it does to go through a generator and then to pass through wires to the house to an electric dryer or electric stove.

At best, natural gas generation is less than 50 percent efficient in the use of natural gas, whereas if you take it to the burner tap, it's about 93 percent efficient. So it makes a lot more sense to do it that way.

I think if we continue to use natural gas only for purposes of electric generation, it will continue because you know the demand for electricity will increase and therefore that will continue to put price pressure on natural gas.

I would argue that there needs to be more balance. There needs to be a national energy policy that is not determined by politicians, but rather is determined by the people who understand the whole picture and can bring balance to the equation. At the end of the day, what really matters is the consumer.

I do not like to deal in extremes. When you deal in extremes there are consequences. Let me give you an example: Ethanol. If you produce ethanol, you're using more energy to produce the ethanol than the ethanol can supply, in terms of energy. And there are unintended consequences: higher corn prices, higher food prices.

When you restrict the ability to tap into natural gas or oil supply that we know exists - if we restrict supply, and demand continues to increase, there's only one consequence: Prices go up. It's fairly simple. At the end of the day, we better start thinking about the consumers because they're the people who have to pay the bills. And I think sometimes that gets lost in this whole political debate - when you deal with extremes. I just believe more balance is necessary, that's what I would hope for.

Harkening back to my previous comments, I believe there is a place for renewable energy. My point is: Let's not be extreme in our approaching this issue, let's be balanced, let's be thoughtful and let's remember the consumer. At the end of the day, if we have to use tax dollars, lots of tax dollars, to subsidize and industry because it isn't productive, then we need to work more on that industry to make it so it's economically feasible.

I think there's a place for solar. We have, right now in test, a solar water heater with gas as a backup. A great idea. When the sun is shining - if you can do it on a thermal basis and bring the sun in to heat the water when the sun is shining - and then gas is used only when the sun isn't, that's great use of natural gas.

There is a big (solar thermal) farm in Laughlin where they have mirrors that heat a fluid that creates steam that runs a turbine that generates electricity. During the night, when the sun isn't shining, natural gas is used to heat the fluid because it always has to remain heated or you have problems. So that's an intelligent use of it.

I think clean coal technology - there is an abundance of coal in this country and if we don't use this coal, it will be sold to another country and they'll burn it there. So, as far as the global warming debate goes, we have to bring reason to that debate as well. I think there needs to be balance. Again, if we deal in extremes, I'm concerned about the consequences to the consumer who ultimately pays the bill.

And if we have all of these renewable portfolio standards that they have to meet by a certain time, if you talk to any of the executives in the utility industry, there's a lot of concern as to whether they will ever be able to meet those standards in the time frames that have been established.

Why have we set those time frames when we have, and have we thought through the consequences to the consumer? Those are the questions I would have and I'd love to see answers. But unfortunately it's in the political arena and it's being debated in the wrong places. They have a place at the table, but so do people in the industry who have facts and data that will support what it might do to the consumer. That is all I'd like to see.

I'm very much in support of renewables. We've tested natural gas air conditioning. It's very viable; they use it in Japan all the time, that's why they're so dependent on (liquefied natural gas) in Japan and Korea.

That's one of the reasons that (liquefied natural gas) is not the answer here in the United States, because it's a worldwide commodity now and those ships are going to go wherever the highest price is. And I'm not sure the United States is willing to pay that price.

So I think renewables have a place in this energy arena. In your lifetime, in my lifetime, in my kids' lifetime, I would hope that we move more and more toward the use of renewables, but let's do it in a wise and balanced manner. That's all I'm saying. Otherwise, you're going to see bills that would get everyone excited, like they're getting excited now with gasoline prices.

It has less than half the emissions of coal. It is the cleanest burning fossil fuel there is by a significant margin. So that's why it has a real place, especially on the transition to something else, whether it be solar or wind. But there are issues with that. Reliability is every bit as important as using a renewable resource. People want to be able to turn their lights on and to power their (homes and businesses) when they want to.

Also, to build the infrastructure, transmission lines for instance, those lines are very costly and without the appropriate balance of building things like coal plants, clean coal technology power plants, it's very difficult to build enough wind or build enough solar or build enough of any of the renewable energy to justify the cost of those transmission lines. Anybody I talk to makes that argument. I'm not in that industry, but that's what I understand.

Interestingly, if you look at the profile of the average customer in Nevada, Arizona, California, the average customer is actually using less natural gas year over year. Going back 15 years there has been a steady decline on an average basis.

And that makes sense because, generally speaking, your home has four principal uses of natural gas: Space heating, clothes drying, cooking and water heating. Two principals you almost always see are space heating and drying. The water heating and the cooking are mixed, depending on the area and the builder.

As you replace appliances as homes age, there is a big efficiency pickup. For the same home, while it has the four uses, over a 20-year period will likely use less gas than it did before because of that.

Also, as the cities like Las Vegas and Phoenix have developed, they become heat islands. There's a lot more concrete, so it retains the heat. And these deserts used to be a lot cooler at night than they are now. But when you see so much concrete that just absorbs that heat all day it doesn't fully cool down until later in the day and the average temperatures are higher. So that's part of the reason as well.

We're different from the electric utilities. I think if you were to ask the CEOs in the electric utilities, they would say their average-use profile has increased because people have new toys: computers and stereos and appliances.

The thing that drives the demand for more natural gas here is the number of new people that are building here. When I first started at this company, we had somewhere around 700,000 customers back in the late '80s, and we have 1.8 million now. We've added 1.1 million customers in our service areas within that time frame. You know, that's going to add to demand, but on the average basis, the customer uses less.

No, I think customers generally demand natural gas in their homes. There are the occasional subdivisions, developments that will be all electric. But if you're using natural gas to create your electricity to run your appliances, that just doesn't make sense. The problem is the builder does have some costs to run gas piping into homes.

Normally, where we've seen (all electric homes) is in the very low entry homes where they are very cost sensitive in terms of what they can pass on to a customer when they buy a home. That is the place where it's most prevalent.

There are actually laws on the books that require someone to call before you break ground and dig. We work closely with all the jurisdictions with respect to "call before you dig" programs. You're required to do that. We have people who will come out and locate the lines before you dig.

We still, though, have line breaks, and we have emergency crews that are on the road all the time that will respond to those line breaks. We ask that if anybody is involved in a line break that they don't try to fix it themselves but, rather, call in our trained personnel who know exactly what to do. That's a much safer alternative course of action.

The effect of those line breaks depends on where it is and how the infrastructure is constructed. We try to build redundancy into the systems so that you lose the fewest number of customers possible if there happens to be an issue in your particular area.

On occasion, we've had major disruptions that have taken several hours to correct. But for the most part it's usually a matter of just a very few hours and service is restored and it usually impacts just a few people.

With our product, we don't take any chances. We odorize natural gas, which is naturally odorless, so that if any customer smells what they think is a rotten egg kind of smell that by now most people recognize, they know if they smell it they need to immediately call us so we can get out there. We have equipment that is highly sensitive - we can walk around an area and we'll know very quickly if there's a problem.

In the event of a line break, safety is paramount to us because our product can hurt people if people are casual with it. We go to extensive lengths to train our people. In fact, we are building in the southwest area of the valley a new operations center, and also we're building one in the northeast to replace our Tropicana facility. We sold that property because of problems with congestion. It just isn't a good location anymore.

When we finish the new center, we will have a training facility where we can actually simulate natural gas leaks, and we will work with the fire department, the police department and our own personnel - suit them up in protective clothing to put them down in the trenches and have them actually go and do some actual repairs in simulated circumstances so when they actually experience an incident they'll know exactly what to do because they've already been through it. So that's something we're excited about. We have one in Tempe, Ariz., and we've had people visit from all over the world because of the training.

So safety is a paramount concern, we do line locates, we do leak surveys routinely throughout our system to ensure the safety of our customers.

I can answer that on several fronts. We have an employee volunteer team where many of our employees devote countless hours to do many things in the community. I can't say we're always worried about getting our name in the lights. But I think if you pay attention you'll see Southwest Gas people are very active.

We have scored very high in the Las Vegas Chamber of Commerce's customer service awards. And we do independent party measurements of customer satisfaction. They call customers, and we routinely run in the mid-90 percentile in terms of customer satisfaction, and that's very, very important.

We have one of the highest per capita leadership giving ratings with the United Way in the entire community because we put a big focus on the community.

Most of our officers and many midlevel management serve on boards of charitable organizations and devote many hours.

It's cultural with us. I'm not sure I can pinpoint when it occurred or why it occurred, but it did and it's my job to ensure that it doesn't go downhill. And we're working on it.

I think giving back to the community, being involved in the charitable organizations is now a bigger issue when the economy has a hiccup like it is right now. It's more important to give more hours and do something to help. It's a big focus for us.

Well, I don't think anybody would have done anything differently. At the time that the gas lights were installed by the builders, natural gas prices were much lower than they are today.

The ambience is very nice in a community with the gas lamps. The gas prices went up, which were being passed on to homeowners associations and people started to take note and said, "We need to do something different." It remains to be seen, when everything is reconstructed, whether it's economically better for them.

That's not really the issue. The issue was how do you make the change. Again, safety is something we had to take into consideration and through a number of iterations, looking at it, we came up with the lowest-cost alternative that we could find and make it available to the homeowners associations.

The Public Utilities Commission was involved every step of the way. We never had any intention to irritate any of the homeowner associations, but by the same token, we had costs we put into the ground and we had to deal with that at the same time deal with providing an alternative to the homeowners associations to convert if they chose to do so.

So I think in the end we worked with them, and we were very pleased with the folks who were in leadership positions in the homeowners associations. I was very proud of our people who worked together and worked out a solution that at the end of the day we all walked away and felt good about what happened.

Over the last several years we have improved our financial position significantly. That being said, we still are one of the weaker utilities in the natural gas space, in terms of strength of balance sheet, in terms of strength of earnings. We're not meeting the industry, we're at the bottom end. Our dividend average is one of the lowest in the industry, but those are things we're focused on.

It's not my intent to gouge customers by any stretch. All we want to do is maintain balance, provide very good customer service, make sure we give a fair and competitive return back to the investors who give us the money in the first place to provide the service to the customers. And if we can balance those parties' interests, then that's when I think it's successful. That hasn't always been in balance and I think the balance has been more in favor of the customer than the investor. We need to have that balance be more equivalent.

Right now we have the lowest bond rating. And the cost of debt passes through to customers dollar for dollar. If our bond rating goes up, the cost of borrowing money goes down. So if our debt rating is low, our debt costs are higher, and I have to pass that cost through to you in your rates.

We don't like being barely investment grade, we'd like to be a little higher than that, and we're working on that.

Our financial condition has improved such that we may get there eventually. But to fully answer your question, with the downturn in construction, new growth pays for itself in all our areas. Since we don't have that, and with inflation going up, that's a bit of a challenge. So I can't say we're setting any world records, but we're performing in a reasonable manner given the circumstances we're operating under.

It's a challenging time to be in the energy space. There's a lot of focus on energy - on the cost of energy to operate your car, the cost of energy to heat your home, to power your home, just about anything having to do with energy.

And you see this economic situation, I think part of it is energy driven and part of it is housing driven. But I don't know how long this downturn is going to last. I think there are about as many opinions as there are people who wish to render them. It's hard to say.

I think we need to see some stability in the housing market and in the credit markets before we'll see the utilities grow again like it did.

We just announced a 1 percent growth rate. I haven't seen a 1 percent growth rate in my career, I think we've been at 3 percent or higher the entire time I've been with Southwest Gas. And here we are at 1 percent.

That's new territory for us, and it causes us to manage differently. We're not adding employees. We're not laying anybody off, we don't do that ... But through attrition we have seen our employee count come down a little bit and I don't see us adding any employees. I just don't see the need for it. We'll keep the ones we have happy and make sure that they feel like they have meaningful jobs and are compensated competitively, but I think we're kind of like everyone else, we're contracting a little bit and watching and managing carefully.