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SALT LAKE CITY (AP) -- State regulators are likely to approve a 25-percent hike in Utah natural gas rates effective July 1.
Questar Corp., a utility unusual for the size of its company-owned reserves, sells gas at cost to ratepayers. But it can satisfy only half of Utah's demand and turns for the rest to the open market, where prices are rising.
Questar filed for a twice yearly adjustment in gas rates to reflect the higher cost.
A consumer watchdog group says the rate hike appears warranted and that the state Public Service Commission probably will vote as early as June 27 to approve it.
"This is not about Questar making extra profits. It's about them being reimbursed for the cost of the gas they sell us," said Roger Ball, administrator of the state Committee of Consumer Services.
Questar sells gas at cost, but is allowed to make a return on distribution. Questar says its extensive gas fields in Wyoming and Utah provide Utah consumers with some of the nation's lowest gas rates, now about half the prevailing market rate of $5.70 for 1,000 cubic feet of gas.
"We've had among the lowest rates in the country for as long as I can remember -- 20 or 30 years," said R. Curtis Burnett, Questar's vice president for public affairs.
Ball said another factor pushing rates was the completion a month ago of the Kern River pipeline from Wyoming through Utah to southern California. That opened for export a lot more natural gas that was landlocked in Utah, which kept prices low here.
The pipeline is moving prices for Utah gas closer to the national average.
Questar started out as a gas developer with a limited market, building a pipeline from southwestern Wyoming to Salt Lake City in 1929. It also has extensive reserves in the Uinta Basin and other parts of Utah.
Its proven reserves of 419 billion cubic feet of natural gas will satisfy current residential demand in Utah for 8-10 years, Burnett said.
A Questar subsidiary continually is developing new reserves.
The plentiful supply helps fuel 83 percent of Utah homes, the highest percentage using natural gas in the nation, according to the state Division of Oil, Gas and Mining.
But Questar's corporate predecessor didn't surrender to low rates two decades ago without a legal fight, Ball said.
Mountain Fuel sought to charge prevailing market rates for its gas, but Utah courts ruled that its ratepayers helped finance dry holes as well as productive wells and deserved payoff in the form of cheap gas, Ball said.
Burnett said this unusual arrangement was sealed in a 1981 settlement.
The utility's oil royalties also help keep gas rates low, he said.
When natural gas prices spike, new drilling often follows, increasing supply and lowering prices. Burnett said the new rate Questar is seeking is likely to drop later, although some analysts say that could take years.
Questar can ask regulators for a rate adjustment every six months.
When it does, "We hold their feet to the fire to make sure they aren't getting too much," said Ball, who seemed unconcerned this time.
"This one's pretty straightforward. It's basically a bookkeeping exercise," he said. ------ (Copyright 2003 by The Associated Press. All Rights Reserved.)
