Questar asks for rate reduction


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SALT LAKE CITY (AP) -- Questar Gas Co. plans to offer a rate cut because drilling in the Rocky Mountains is driving down prices in the volatile natural gas business.

Questar will lower the price it charges households for natural gas by 5.3 percent starting next month. It filed the request on Thursday with the Utah Public Service Commission.

Questar president and chief executive Ron Jibson said gas production is up in the Rocky Mountains, driving down regional prices. He said that's a sign the market is working.

"This is good news for our Utah customers," Jibson said in a statement. "For the third year in a row natural gas costs are dropping going into the heating season, so we're passing the savings on to our customers."

The rate cut would lower a typical homeowner's bill by about $43 a year, the utility said. It's expected to go into effect for the winter.

Outside of Alaska, Questar is the country's cheapest provider of natural gas for home use among major utilities, according to the U.S. Energy Information Administration.

In Utah, Questar delivers natural gas for $9.70 a decatherm, plus taxes. A decatherm has a heat value roughly equal to 1,000 cubic feet of gas, depending on the quality.

The utility is proposing to cut the rate to around $9.15 a decatherm, said Barrie L. McKay, manager of regulatory affairs for Questar. A decatherm is enough gas to heat a typical house for two winter days.

Questar's Utah customers have a special arrangement with the utility. Under a court ruling 32 years ago, Questar was forced to sell gas from its Wyoming fields at no more than the cost of production to its Utah rate payers, who helped pay for the drilling. Utah consumers get about half of their heating gas through this arrangement, which buffers them from market upswings.

When the market price for natural gas goes down, Utah rate payers save even more money.

Questar also said its production costs have been flat thanks to better technology, keeping rates in check. And with more efficient heating appliances, customers use 36 percent less natural gas than they did 25 years ago, the company said.

Questar also serves parts of Wyoming and Idaho.

(Copyright 2008 by The Associated Press. All Rights Reserved.)

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