Questar Pipeline is seeking an increase of $20 million in its transportation rate from the Federal Energy Regulatory Commission.
If approved, the request could affect rates paid by residential customers of Mountain Fuel Supply Co. in Utah. A hearing on the request is scheduled for March 1 in Washington, D.C.The effect on residential Utah customers is difficult to gauge. Mountain Fuel spokesman Susan Glassman said the natural gas supplier uses a number of sources to meet customer demands and the average cost from those suppliers determines the rate paid by Utah customers.
The average is determined about twice per year and that information is used in determining what action the company will take in relation to customer rates. Over the last few years, the cost of natural gas has declined significantly, resulting in several Mountain Fuel rate reductions.
The Utah Division of Public Utilities is opposed to the proposal as are FERC analysts, said Darrell Hanson, a division spokesman. He said the division will file testimony opposing the increase and suggesting alternatives allowing a rate increase of between $3 million and $5 million. He said FERC staff recommendations are expected to be similar.
Hanson said if those recommendations are accepted and the rate hike is cut to $5 million, the result could be a rate reduction for Mountain Fuel customers.
A major factor in the rate request is the cost allocation for gas transported in the pipeline. Questar contends that gas going to residential users is taking a larger share of the pipeline capacity than is reflected in current rate allocations. The company therefore wants a rate increase reflecting that usage.
Hanson said the state division is not convinced and believes the request is spurred in part by a Questar desire to keep rates for industrial customers lower. "Usually, pipeline companies try to shift as much of that cost as possible to captive (residential) customers," Hanson said. If the cost to industrial customers is too high, they will look for other transport options.
Transport rates for pipeline companies are adjusted quarterly by FERC. The rates are based in part on projections of volume. Hanson said the last projections were set too high by FERC and the net effect was that Questar's revenues fell short of expectations.