An unlikely ally on Questar's price plan

An unlikely ally has joined forces with Questar Gas Co. over a proposed pricing mechanism that critics believe will shift more risk to customers.

The Natural Resources Defense Council, a New York-based environmental group, says Salt Lake-based Questar's new pricing plan — which would guarantee the company captures 100 percent of its nongas revenues — also will mean lower natural gas bills for customers.

Ralph Cavanagh, senior attorney for NRDC, said during a Wednesday meeting on the issue that the proposal represents an important first step in removing the link between the utility's financial health and the usage of natural gas. By removing the link, Cavanagh said, the utility has the incentive to promote conservation programs that ultimately will reduce customer usage.

"Normally I am suing these people," Cavanagh said. "The reason I am willing to speak on their behalf today is I really do think they have got it right. It ought to be obvious that I'm not for sale. They are not paying me."

A hearing on the issue is scheduled June 26 before the Utah Public Service Commission. Cavanagh said he plans to testify at that time on Questar's behalf.

"I will be a witness for a utility for only the second time in my entire career," Cavanagh said. "I don't do it often. I'm doing it here because I think it is a very important precedent. What's in it for customers, we think, will be the most aggressive energy efficiency programs in the history of the gas industry in Utah."

Cavanagh said at least 10 states have tried the so-called "revenue decoupling" mechanism, although only four states currently use the method.

While NRDC and local environmental groups like Utah Clean Energy support Questar's plan, the Utah Committee of Consumer Services said the proposal provides clear benefits to Questar and uncertain benefits, if any, to ratepayers.

Reed Warnick, interim executive director of the committee, said the plan represents a major and substantial deviation from the way utility rates have been determined in the past.

The new method would change how Questar collects roughly $214 million in revenues to cover fixed costs.

Instead of collecting those revenues based on usage, the utility would be allowed to pass any shortfalls automatically on to customers. At the same time, if the utility collected more than $214 million — an amount the PSC authorizes — customers would see a rate decrease.