Gas subsidy plan rejected

Utah's rural communities will not get a break when it comes to paying higher prices for their natural gas service.

The Utah Public Service Commission issued an order Tuesday denying a request that Questar Gas customers across the state be forced to subsidize natural gas service in areas like Beaver, Brian Head, Fayette and Panguitch.

"While we are personally sympathetic to the economic challenges faced by rural residents and businesses, the commission is charged to ensure that rates are just and reasonable for all customers," Ric Campbell, commission chairman, said in a prepared statement. "The stipulation ... would have inappropriately increased rates for over 800,000 customers, while conferring a windfall for a selected group of customers."

Under a proposed deal supported by the state Committee of Consumer Services, the Division of Public Utilities and Salt Lake-based Questar Gas Co., $1.7 million of rural natural gas costs would have been shifted annually to 830,000 Utah Questar customers.

Rural area customers have paid an additional $16 to $30 a month to cover the costs of extending natural gas lines to their counties.

Questar said about 8,600 of its customers are paying the higher rates.

Had the subsidy been extended to all Questar Gas customers, residential natural gas rates would have increased about 19 cents per month, or $2.24 a year.

"We were supporting a task force recommendation, but it's really not our fight," said Chad Jones, a spokesman for Questar Gas. "It's the rural communities' fight. Rural customers lose, but Questar doesn't lose anything. We'll collect the revenues one way or the other."

Roger Ball, the former consumer committee director and an opponent of the settlement, said Questar's request did not deserve the support of the committee and called the economic development advantages of the proposed deal "very questionable."

"Every new customer, whether they are a few hundred yards from existing infrastructure or 50 miles away, gets a subsidized connection price," Ball said. "It pays for a certain footage allowance, and beyond that the new customer must pay the actual costs of the additional pipe."

Rob Adams, director of the Beaver County Economic Development Corp., had argued for subsidizing the natural gas rates in an effort to promote economic development in rural Utah.

"When you ask them, 'Show me an instance in which your economic development has actually been inhibited,' they can't produce one," Ball said. "And when you ask them to show a hard case where transferring the cost would bring a business to them in the future, they can't do that, either."

The PSC agreed with Ball's argument, saying "there is no evidence to weigh the import of economic development benefits that might come."

The commission noted that a possible solution could be to refinance the unpaid balances of the natural gas extension costs on a community-by-community basis, amortizing those balances over a longer period of time.

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