Utah Ratepayers Association
Education and Lobbying for Ratepayers of Utility-type Services with Limited or No Alternatives
Salt Lake Tribune report - 28 January 2007
Questar pits city dwellers vs. rural folks
Some Wasatch Front residents outraged by prospect of paying for gas lines to remote areas
By Steven Oberbeck – The Salt Lake Tribune – Sunday, 28 January 2007
When Doug Duncan built his retirement home in rural Duchesne County two years ago, one of the first things he did was contact Questar Gas and ask the utility to run a line to his home.
It was an expensive proposition.
Duncan's property was about 300 yards from Questar's nearest pipeline, which ran along Highway 40, and the gas company told him it would cost around $3,000 to dig the trenches, lay the line and make the connection to his home.
"I felt in the long run we'd be better off with natural gas rather than propane, so I had them do the work," Duncan said. "But I didn't go out and see if maybe there was some way I could pass the cost on to someone else. I just paid my fair share, just like I think everyone should do."
So Duncan, who recently retired from the U.S. Bureau of Reclamation, was a bit apprehensive when he heard that Questar wants all of its customers to pay $1.7 million more a year - or $2.28 per household annually - to help about three dozen rural communities pay off their debt to the company for extending its pipelines and service to their residents.
It is a request that threatens to pit the interests of hundreds of thousands of natural gas users living along the Wasatch Front against thousands of rural households struggling to make a living away from the Utah's major commercial centers.
"We're seeing unprecedented growth along the Wasatch Front," said Rob Adams of the Beaver County Economic Development Corp. "But with our natural gas rates a lot higher than elsewhere in the state, we haven't been able to attract businesses that could bring new growth and jobs to our communities."
Questar is throwing its weight behind the rural communities, saying it supports their economic development efforts. At the same time, it points out that whatever happens, the company's revenues won't be impacted.
"We'd be happy to go on collecting those revenues (from the rural communities) as we have for years," Questar spokesman Chad Jones said.
Those high rural rates, though, may also be costing Questar money. In many of the high-cost rural communities, not everyone has switched over to natural gas, choosing propane or other competitively priced alternatives instead.
But consumer utility activist Roger Ball believes there are other motives behind Questar's support of the rural communities.
"In my view, they're looking for political allies so that the next time there is some controversy impacting consumers they'll be able to trot out those customers to say that Questar is a great and caring company," Ball said.
For the past 12 years or so, many residents of Beaver, Millard and parts of Iron, Washington and Emery counties have paid an extra $16 to $30 a month on their natural gas bills. The extra charge - originally expected to appear on customer bills for approximately 20 years - was designed to reimburse Questar for extending its pipeline into areas where the company determined it wasn't yet economically feasible to offer service.
As a result, representatives from Beaver County and other areas have appealed to the Utah Public Service Commission, requesting that regulators approve spreading the remaining millions of dollars rural communities still owe Questar to all of the company's approximately 850,000 customers.
In addition to Questar's support, there is backing from the Division of Public Utilities, which is charged under state law with balancing the interests of Utah's public utilities with those of their consumers in rate cases.
That said, there are plenty of consumers along the Wasatch Front who disagree with the idea.
"I can't remember when I agreed to pay anyone else's bill," Michael Gregory of West Jordan recently told the PSC. "If this passes, then I would like to have the southern Utah folks pick up my emission costs for vehicles, and my portion of the Real Salt Lake stadium. That way, they would get just as much benefit from something that they are not using as I would."
Gregory said the price per month rural residents are paying does sounds high. "But they signed a contract with Questar that they should honor."
Gas customer Lyle McMillan of Sandy said the proposal is tantamount to him asking his neighbors to assume a portion of his mortgage because he no longer wants to make the whole payment.
The rural communities "entered into the contract of their own free will, knowing the potential consequences," McMillian wrote. "And for you (the PSC) to even consider it baffles me. What are you smoking? Should we require mandatory drug testing for you prior to the public meeting?"
Arguments are just as impassioned from those on the other side of the issue.
Although most of the comments to the PSC to date have been from angry urban customers, the commission is set to conduct a public meeting in Beaver in southwest Utah at 6:30 p.m. Feb. 15 in the county administration building.
"I'm sure at that time we'll get a different perspective on the issue," said Julie Orchard, the PSC's administrator.
In 2000, natural gas was extended to tiny Cedar Fort, a community of about 100 households that sits to the west of the northern arm of Utah Lake. Its residents were expected to pay an extra $30 a month on their natural gas bills through 2014. Because of a lack of commercial and residential growth in the area, that date might be extended.
"Cedar Fort is at a distinct disadvantage because of the natural gas surcharge when it comes to trying to attract new residents and new businesses," said Cedar Fort Mayor Howard Anderson. And he argues that if the extra charge residents are paying were spread across only the households in Utah County, it would amount to about 36 cents a year - or "about one bite of a hamburger per year."
Anderson and other representatives of the communities that want Utah's rates realigned to help their economic development efforts also are upset that the Committee of Consumer Services has failed to sign on to their campaign.
"We approached them and asked for their support," Adams said. "They told us flat out that they don't represent rural Utah. And they acted like they could not care less what problems we're facing."
The Committee of Consumer Services is mandated by state law to look out for the interests of the majority of Utah consumers in utility matters, a requirement that in this instance might put its members at odds with the interests of those living in rural areas.
The committee heard from representatives of rural communities at its meeting earlier this month. Chairman Dee Jay Hammon said the group didn't have enough information to make a decision, but he said there was sentiment that the rates paid by many rural residents were unreasonable.
The committee's official position was that any change in Questar's rate structure needed to be addressed in a general rate case, which did not set well with many of the state's rural advocates.
Just days after the committee's meeting, Rep. Gordon Snow, R-Roosevelt, introduced a bill at the Utah Legislature that would add a seventh member to the Committee of Consumer Services - one from the Governor's Rural Partnership Board, who ostensibly would encourage more focus on rural economic issues.
Snow conceded that he was encouraged to sponsor the legislation by Rural Partnership Board members who are eager to see the natural gas surcharges lifted from customers in rural areas.
Hammon said he is not opposed to having another voice on the committee but that having someone who would specifically look out for rural economic development might run afoul of state law requiring that the committee focus on residential utility customers.
"I'm not sure they could [under the law] serve two masters."
Last Modified: 3 June 2007