Price hike riles natural-gas vehicle owners

Published January 6, 2009 6:39 pm
Artificially low » Questar joins in disputing rationale for PSC decision.
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Utahns who drive natural gas-powered cars and trucks are crying foul over a ruling by state utility regulators that will increase the price of the clean-burning motor fuel about 80 percent by midyear.

And so is Questar Gas Co., which operates a network of 19 natural gas refueling stations in the state.

"We were blindsided by the Public Service Commission's decision," said John Mitton of Saratoga Springs, who owns three natural gas vehicles and is helping lead an effort to protest the ruling. "We believe the issue (of how much CNG should cost) is a policy decision that needs to be made by the Legislature with input from the public -- not by the PSC alone."

In late December, the PSC issued an order requiring Questar sell the natural gas it supplies for vehicle use at a price that covers its cost of providing the fuel and operating its refueling stations.

The ruling represented a departure from the precedent of the past 20 years in which the state allowed Questar to provide the fuel at below cost, with the rest of the utility's customers picking up the difference and paying the company for its lost revenue. The idea was that by allowing the company to charge an artificially low price, Utahns would be encouraged to use environmentally friendly natural gas as a vehicle fuel and foster development of a network of refuling stations.

The PSC's December order, designed to halt the practice of all Questar customers being forced to subsidize the company's CNG sales, means a gallon of compressed natural gas (CNG) that last week was selling for about 80 cents a gallon will cost $1.43 six months from now.

That has prompted owners of natural gas vehicles, who feel betrayed, to send more than 60 letters to the PSC asking that it reconsider its decision.

"I trusted state agencies to provide stable/reasonable pricing for motor vehicle use of natural gas," wrote Michael Millet, a professor of automotive technology at Salt Lake Community College. "If I knew you were going to jack the rate up so high, I would have not gone to the trouble to convert or pay for the expensive equipment to burn natural gas."

Questar Gas intends to appeal the PSC's ruling and will be asking commissioners to rethink the order -- a move that may give vehicle owners a chance to speak their minds in a future hearing.

"We think the timing of the order was really poor. With gasoline now selling for around $1.45 a gallon there will be little incentive for people to convert their vehicles to natural gas," said Questar spokesman Darren Shepherd.

The utility is particularly upset that the PSC, in issuing its order, barred the company from providing vehicle owners with natural gas produced from wells operated by its Wexpro subsidiary. Those wells provide home heating fuel to Utahns at the cost of production -- the result of consumers years ago helping Questar pay for the development of its Wexpro wells.

"The PSC's order doesn't allow our customers who drive (natural gas vehicles) to benefit from our low-cost supplies," Shepherd said.

PSC spokeswoman Julie Orchard said once Questar files an appeal, commissioners Ted Boyer, Ric Campbell and Ron Allen have 20 days to make a decision on whether they want to reconsider their ruling. "Or, because we've received so many letters from the public, commissioners may just decide to reopen the case on their own."

Orchard pointed out that in issuing their ruling, commissioners were following the laws and policies spelled out by the Legislature.

"We are encouraging those owners who have sent us comments to contact their legislators to see if they possibly can get the law changed," Orchard said, referring to utility regulations passed by lawmakers.

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Utah compressed natural gas costs

Last week -- 80 cents a gallon

Yesterday -- 86 cents a gallon

July 1, 2009 -- $1.43 a gallon

For a list of Questar-operated natural gas refueling stations go to http://www.questargas.com and click on "Natural Gas for Vehicles."

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