Natural gas rate hike would cost typical Utah user $50 more a year
For most of the past five years, Utahns have enjoyed the benefits of an abundance of natural gas that has kept the lid on monthly bills for the fuel used to keep their homes warm and their water hot.
But a recent rebound in the price from a five-year low means that's likely about to change to the tune of about $50 a year for the typical residential customer.
Questar Gas is asking state utility regulators for permission to increase the amount it collects by $61 million.
If the state's Public Service Commission gives the OK, the average monthly bill will increase by around 7 percent, or about $3.95, beginning June 1.
"Our customers have benefited from low gas prices over the past five years and have seen several rate decreases," Craig Wagstaff, chief operating officer of Questar Gas, said in announcing the requested increase. "Those decreases cut rates by 18 percent since the summer of 2008."
Now, Questar's rates need to be increased to balance the amount of money it collects from customers with the amount the company must pay to purchase gas for them, Wagstaff said.
Questar typically asks Utah regulators twice a year for permission to adjust the amount it charges its customers for natural gas. Such requests, known as pass-through rate adjustments, routinely are granted because it is easy for Questar to demonstrate what it has paid for natural gas and what it has collected from its customers.
Natural gas distribution companies such as Questar make their money by charging customers to deliver gas to their homes and businesses. They don't make a profit from gas itself, but rather supply the fuel to their customers for the same price they pay for it.
Since mid-2008, the price of natural gas produced in the Rocky Mountain region declined from a high $9.90 per decatherm to a low $1.76 in April 2012. But since then, the price has jumped 120 percent, with a decatherm of natural gas now costing $3.88.
A decatherm is roughly the equivalent of the heat generated when 1,000 cubic feet of natural gas is burned.
Despite the recent increase in the cost of natural gas, the U.S. Energy Information Administration is projecting that prices will remain relatively stable through 2014.
In its latest "Short-Term Energy Outlook, the EIA indicated it expects the spot price of natural gas, which averaged $2.75 per decatherm in 2012, will average $3.80 this year and $4 in 2014.
Questar natural gas rate adjustments
Request Effective date Percentage change
+ $195 million July 1, 2008 + 22.8%
â $68.8 million Nov. 1, 2008 â 5.9%
â $161 million March 1, 2009 â 16.5%
â $32.7 million Oct. 1, 2009 â 4.0%
+ $48.3 million Aug. 1 2010 + 5.5%
â $6.6 million Jan. 1, 2011 â 0.73%
â $13.3 million June 1, 2011 â 1.5%
â $26.1 million Oct. 1, 2011 â 2.7%
â $13.3 million Feb. 1, 2012 â 1.5%
â $42 million* May 1, 2012 â 5.1%
â $5.7 million Sept. 1, 2012 â 0.69%
+ $61 million June 1, 2013 + 7.0%
* One-time refund on May bills tied to lower natural gas costs
Source: Utah Public Service Commission
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