Utah gas bills could climb by nearly a third Questar seeks increase of 29 percent, blaming skyrocketing gas prices

Wednesday, December 20, 2000

By DAVID TROESTER Standard-Examiner staff

SALT LAKE CITY -- Utahns will likely pay 29 percent more for natural gas in 2001, under a rate-hike request filed Tuesday by Questar Gas.

The natural gas provider is petitioning the Utah Public Service Commission for a "passthrough" increase for its 680,000 customers statewide. If approved, residents will see their bills increase by about $17 a month, the company said.

"We realize this will be tough for folks to come up with extra money, and encourage those who can to look at contributing to the REACH program, the Red Cross REACH program to help the less fortunate pay their energy bills," said Questar spokesperson Chad Jones.

The rate hike request is a result of higher natural gas use as a result of frigid temperatures, coupled with skyrocketing natural gas prices, officials said.

The company last week said it anticipated filing a 10 percent rate-hike request, but revised it up this week after Standard & Poor released its pricing forecast. The 29 percent increase would raise Utah natural gas rates a combined total of $167 million.

"We're as surprised as anyone in what's going on. It's been a roller coaster ride for customers. It's been a roller coaster ride for people who provide energy," Jones said.

After hovering below $2 per 1,000 cubic feet in 1998 and 1999, natural gas prices soared this year to a recent high of nearly $10 per 1,000 cubic feet of gas. The jump has prompted wide-scale drilling and exploration, after nearly 15 years of a near-dead market.

Completion of new wells drilled nationwide may reach 13,500 this year, according to the American Gas Association. Only 10,500 wells were completed last year.

Questar has followed the trend, increasing its exploration efforts. Questar Corp., parent company of Questar Gas, plans to spend as much as $563 million on capital projects, including $194 million for drilling, development and related activities in 2001.

More than half the natural gas supplied to customers comes from company reserves, helping offset market price spikes, Jones said.

"The market price for gas right now is up about 60 percent," he said. "We're up about 30 percent compared to the rest of the market."

Questar Corp. had revenue of $924 million and net income of $98.8 million in 1999. Questar Gas had $450 million in revenue and net income of $19.2 million.

The passthrough increase requested for Utah customers is for gas price increases paid by Questar. "All we do is pass on our costs dollar for dollar with no markup," Jones said.

Questar is seeking the rate increase to kick in Jan. 1.

You can reach Business Editor David Troester at 625-4244 or dtroester@standard.net.

http://www1.standard.net/stories/local/12-2000/FTP0201@local@20questar@Ogden.asp

-- Martin Thompson (mthom1927@aol.com), December 20, 2000

Answers

Leavitt: West's power crisis will last for years Governor calls for greater conservation efforts to combat rising prices

Thursday, December 21, 2000

By CHARLES F. TRENTELMAN Standard-Examiner staff

SALT LAKE CITY -- Gov. Mike Leavitt says the current power crisis is going to last for years and threatens the economy of the entire western United States.

Utahns face "voluntary" conservation efforts that may have to become permanent, Leavitt said Wednesday, fresh from an emergency meeting with other Western governors.

"This is a problem of the highest order of seriousness," he said. "What we're talking about is the competitiveness of the economy of the American West."

There is no short-term solution in sight. The problem will last for two-to-five years, "and longer if we don't solve it."

Leavitt attended an emergency meeting of the Western Governors Association Wednesday morning in Denver.

The meeting was also attended by U.S. Energy Secretary Bill Richardson.

It was called in the face of renewed threats of rolling brownouts in California, action by Richardson to force power suppliers to sell electricity to cash- strapped California utilities, and word from Utah's natural gas supplier, Questar, that it is seeking a 30 percent increase in rates.

The problem covers the entire western United States, Leavitt said. Utah generates more power than it uses, but buys and sells power in a power grid that stretches from Colorado to California, from Canada to Mexico.

As a result, it's a problem of "California getting a cold and everyone having to sneeze."

California has been hit in recent weeks by a power crisis that has threatened several electricity suppliers there with bankruptcy and caused some power producers to refuse to sell to them.

Leavitt said California "has a regulatory system that is clearly not working," but the rest of the states in the grid will be affected by it.

Leavitt said Utahns can expect more requests for increases in electrical rates in the next 60 to 90 days and Utah's Public Service Commission will probably have to approve them.

To not let the Utah electrical companies pass their costs through is to threaten them with bankruptcy, too, he said.

"The bottom line is the market is solving the supply problem. We just haven't received the bill yet."

Electrical and gas rates will both go up, he said, because natural gas is used to generate electricity.

Rate payers, he said, have to help fight back.

"The most immediate relief will be conservation," he said, although there hasn't been time to put together a concerted plan of how to do that yet.

Leavitt said conservation by Utahns can have a major impact, both on keeping their home bills down and on power generation needs.

But he said those conservation efforts may need to become permanent as the western power grid struggles to keep up with the booming growth of the whole area.

The governors issued a five-point list of actions they want to see done:

Called for a coordinated, state-by-state conservation effort asking consumers both to reduce and reschedule their use of electrical power, starting no later than Jan. 1.

Called on California to reduce electricity usage and stabilize prices in its power market.

Called for President-elect George W. Bush to form a task force to work with the western governors on this problem.

Agreed to meet again in January or February to see what more can be done to increase supply of electricity.

Called for an investigation by the Federal Energy Regulatory Commission.

Leavitt said prices for a megawatt of electricity have soared from $20 to $30 last year to as much as $5,000 in recent weeks. The governors want to know where all that money is going and whether the market is being manipulated to keep prices high.

Leavitt said Utah is in the unusual position of generating more power than it uses, but still having to pay higher prices.

If Utah is to help boost the supply, he said, he wants to make sure Utahns get a fair shake on rates. He also wants to make sure that new power won't go to areas of the country that are not conserving power.

Leavitt said generating more electricity, not federal intervention, is the ultimate solution to the problem.

"For the federal government to step in and be interfering with the marketplace is not only poor economics, but does some violence to the power supply system," he said.

Building more power generation stations will raise environmental questions, he said.

Whether the new stations are coal, natural gas or water powered, he said, they raise "environmental challenges" that have to be met.

That may mean compromises, he said, but a balance has to be set.

"The citizens of this country are not going to stand for electrical brownouts. They're just not going to stand for it," he said.

You can reach reporter Charles Trentelman at 625-4232 or ctrentelman@standard.net.

http://www1.standard.net/stories/local/12- 2000/FTP0023@local@21energy@Ogden.asp

-- Martin Thompson (mthom1927@aol.com), December 21, 2000.