Utah Ratepayers Association

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Rural Gas

Opinion articles by Roger Ball

Salt Lake Tribune - 28 January 2007

Deseret Morning News - 21 January 2007


Paying for Questar's mistake

Roger Ball – Salt Lake Tribune – Sunday, 28 January 2007

 

Questar wants us to pay $1.7 million a year for an indeterminate period to bail out communities that earlier made deals with the utility. Back then, they claimed having natural gas would help their economic development; now, the cost is deterring new industry.

On Jan. 20, the Tribune reported that the State has offered $1.92 million over 10 years to ST Paper if it employs 140 people in Washington County at 40% more than the county median wage.

Do the math: The economic development argument doesn't add up. This is about subsidizing rural residents and business owners who want out of a deal they once welcomed.

Majority Whip Gordon Snow, R-Roosevelt, has been enlisted to run House Bill 269. It adds a rural economic development advocate to the Committee of Consumer Services to dilute the committee's statutory duty to represent the majority of ratepayers.

Remember how then-Majority Whip David Ure ran Questar’s HB 320 in 2000, intending to euthanize the Committee because it was opposing a rate increase for coal-seam gas processing?  Ure embarrassed the Republicans, lost his leadership position and is no longer a legislator.

To get utility service at a new home or business you must typically pay a connection charge - kind of an impact fee. If you build close to existing facilities, it's a flat rate that, on average, allows the utility to recoup the costs of extending its infrastructure. But if you build far from other customers, even in Salt Lake County, expect to pay a much higher amount related to the actual cost of extending pipes to your location.

Twenty-plus years ago, communities in Sanpete, Sevier, Piute, Iron and Washington counties - far outside the Questar's service territory - wanted the advantages of natural gas in place of solid fuel or propane. They said it would help attract new jobs.

Questar initially declined to expand its infrastructure because it thought the Public Service Commission unlikely to approve a rate increase for existing customers so the company could depreciate such investment and get a return on it.

Municipalities thought about bonding for their own gas utilities. Questar didn't want that; it preferred to extend its monopoly. A deal was struck: Questar built the pipes to bring gas to those communities and customers who took service agreed to pay a little more for 10 years. In places like Manti, Richfield and Cedar City, higher rates ended almost 10 years ago.

Smaller communities, farther from Questar lines, agreed to pay extra for 20 years. Places like Beaver, Enterprise, Fillmore and Emery County have six or seven years left.

From 1995, Questar found another way of charging in places where the economics of extending service were even less attractive: surcharges (as much as $30 a month) with indeterminate (depending on how many customers took service) expiration dates.

Customers in the Ogden Valley have completed their commitment. Those in places like Panguitch, Cedar Fort and Clarkston have perhaps eight or nine years left.

Now, Questar wants the rest of us to make the remaining payments for communities with outstanding obligations. They say rates are unjust and unreasonable because people who chose - no one was compelled - to sign up are paying more than customers in Questar's original service territory and the expansion areas that have completed their payments.

A retired couple across the street bought their house almost 30 years ago and have paid off their mortgage. I bought mine 12 years ago when the price was much higher, and have several more years to pay. Should my neighbors have to help meet my obligations?


ROGER BALL, former director of the Committee of Consumer Services, is now moderator of the Utah Ratepayers Association.


Don't use utility bills to fund development

By Roger Ball - Deseret Morning News - Sunday, 21 January 2007

 

Should Questar Gas ratepayers be taxed to subsidize economic development in rural Utah? That's what Beaver County Economic Development Corp. director, Rob Adams, is demanding. He's feeling let down because the Committee of Consumer Services doesn't agree.

"They have affirmatively and without reservation said, 'We don't represent you,'" Adams told Dave Anderton (Jan. 10). Adams said he was disappointed but not surprised. Nor should he have been.

The committee is statutorily mandated to represent the "majority of residential (and small business) consumers. Utility customers right across Utah have better reason to be disappointed, yet again, with the committee they pay $1.5 million a year through their rates. After a two-hour closed meeting on Jan. 9, the committee formally adopted a pathetically weak resolution that attempted to placate rural development advocates, while persuading the Public Service Commission not to be in too big a hurry to give those vocal and influential minority interests everything they want.

Clearly, the committee has failed in the first regard, and the commission is likely to pay scant regard to the second. In August 2006, the Committee told it that more investigation was needed.  The Commission ignored that recommendation, asked everyone to file written testimony on February 2nd, and scheduled hearings for February 8th, including a Public Witness hearing at 4:30pm.

This is the same commission that, over the past two years, hastily raised Questar's rates for gas processing, leading to a ratepayer appeal to the Utah Supreme Court, denied a general rate case and approved Questar's "Conservation Enabling Tariff" and approved the third PacifiCorp rate case in a row to be settled in private negotiations without hearing all the facts.

Utility customers, who also pay $5 million a year through their rates for the Commission and Division of Public Utilities, should remember that both these agencies are highly political.

Chairman Ric Campbell is approaching the end of his first six-year term on the commission. He no doubt hopes Gov. Jon Huntsman Jr. and the state Senate will appoint him for another beginning in March. Division director Connie White was appointed by, and serves at the pleasure of, the executive director of the Department of Commerce, Francine Giani, in turn appointed by, and serving at the pleasure of, Huntsman. White, appointed Commerce Department head by newly elected Gov. Mike Leavitt, promptly fired my predecessor, Joe Ingles, as committee director in 1993.

"Economic development" is the "open sesame" or "abracadabra" of the Huntsman administration and Utah's business-oriented Legislature. Hardly surprising that, when Adams and his opposite numbers in other smaller Utah communities raise that cry, the division and commission hasten to comply.

More worrying is the weak-kneed response of the committee. Understandable, in the light of my firing in March 2005 and the incredible political pressure applied to the committee's members and attorneys, not to mention the short-lived appointment of my successor and the botched and strung-out selection of the latest director, Michele Beck.

How can customers expect just and reasonable rates in an environment where lobbying by the utilities has resulted in grossly biased laws, where elected and appointed officials so readily bend to the utilities' wishes, and where those officials see ratepayers as a bottomless well to be taxed for their pet projects?

In the 1980s and '90s, towns like Beaver argued their economic development was hampered by the lack of natural gas. They were delighted then to sign up for higher rates to get it, although suppliers of other fuels such as propane lost out.

We're already funding economic development through other taxes, so why should we pay for it again on our utility bills.

It's time for ratepayers to let the governor, legislators and regulators hear how we feel.


Roger Ball was Director of the Committee of Consumer Services 1997-2005. Currently he is the moderator of the Utah Ratepayers Association.


Portions of text in blue were in the submitted drafts, but omitted by the newspapers' editors.

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Last Modified: 3 June 2007