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1993 pact is at heart of battle between Questar, state division

SHARE 1993 pact is at heart of battle between Questar, state division

The state's Division of Public Utilities says Questar Gas Co. overcharged its customers by about $4.7 million during the past couple of years and should give that money back.

Spread over hundreds of thousands of consumers, any refund would not amount to much of a credit per person. And $4.7 million would not be a huge payout for Questar Gas' parent company, Questar Corp., which earned almost $41 million during the first quarter of 1998 alone.But despite the relatively small dollar amount involved, both sides were ready to do battle over the issue before the Utah Public Service Commission Tuesday.

At the center of the debate is the amount charged to Questar Gas by a fellow corporation subsidiary, Questar Gas Management, under a Sept. 1, 1993, gathering agreement. The deal, born out of deregulation of the pipeline portion of the gas industry, called for a four-year transition period during which Questar Gas would pay a set amount to the pipeline company.

Laurie L. Noda, an attorney for the utilities division, said it never liked the 1993 agreement, partially because it felt Questar Gas did not try to drive a hard bargain with the pipeline company.

Noda said the deal resulted in Questar Gas paying 59 cents per decatherm for the gathering service while the average charge was 30 cents per decatherm, and some customers paid about 14 cents.

Attorneys for Questar Gas said its rate was based on the cost of the service. It was higher than that paid by some other companies because Questar Gas had highest priority for the service, and company-owned wells are more geo-graph-i-cally remote than some others.

Jon Duke, Questar Gas legal counsel, told commissioners Tuesday that the 1993 agreement between the affiliates was a good deal for customers.

Chuck Greenhawt, also a Questar attorney, said the state division knew it was a good deal but hoped for an even better deal. To make a retroactive rate adjustment now would be immoral, improper and illegal, he said.

Noda said the division did not fight harder against the deal in 1993 because the pipeline business was under the jurisdiction of the Federal Energy Regulatory Commission, not the PSC. When Questar Corp. reorganized its businesses in 1996, Noda said, the deal moved back under the PSC's jurisdiction.

"The division never approved that contract, never gave it its blessing," Noda said. "We were paying far too much under this contract."

Questar Gas and the division talked about the issue and eventually agreed to a settlement that would lead to Questar paying 35 cents per decatherm for the gathering service.