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S. Utahns seek natural gas co-op with Arizonans

HB255 would help get low-cost service to isolated communities

SHARE S. Utahns seek natural gas co-op with Arizonans

A couple of southern Utah communities want Arizona neighbors to join them in their plans for creating a municipal gas utility, but Questar is worried that it could subject their southern operations to federal regulation.

The House Public Utilities and Technology Standing Committee on Thursday passed on to the full House a bill that would allow Utah municipalities to form agencies for natural gas co-ops with out-of-state municipalities from neighboring states as members. It effectively would allow out-of-state municipalities to join the Intermountain Municipal Gas Agency.

But the committee amended HB255 to state that an agency would not be included in a co-op setup if its inclusion would subject any natural gas provider to federal jurisdiction.

Kanab wants to have Fredonia, Ariz., as a partner, and Hilldale wants a partnership with Colorado City, Ariz. Such partnerships would allow the co-ops to have a larger customer base and thus get better deals for gas and other "economy of scale" savings.

But Questar and gas agencies are awaiting word from the Federal Energy Regulatory Commission as to whether gas crossing state lines in such a co-op arrangement would subject the company's pipes to federal regulation. Municipalities would not be subject to that regulation.

Ruland Gill, representing Questar, told committee members that such federal jurisdiction would mean additional costs "and very large operating difficulties" for the company.

Questar attorney Dave Andersen said the commission probably will take several months to decide on the matter, but he said he expects the regulatory commission will choose to favor its regulatory power as an asset. If so, Questar would not be obligated to provide gas supplies to serve the Arizona communities.

Legislators also were cautious about the commission's pending decision. Rep. Stephen Urquhart, R-St. George, said federal agencies tend to be eager to assert jurisdictional power. "I suspect we would find ourselves subject to federal jurisdiction any way we turn," he said.

But city and Intermountain Municipal Gas Agency officials are hopeful. Kanab Mayor Karen Alvey said the bill "will help immeasurably" in getting reliable, low-cost natural gas to the city, which in turn would boost the city's economic future.

"Our economy is hurting, and our largest export is young people who leave the area to find work," she said.

Jim Matson, a Kanab resident and Intermountain Municipal Gas Agency president, agreed. "Isolated communities are in need of support and help, and this would go a long way toward that," he said of HB255.

Questar currently supplies gas to customers in part of southern Idaho, but that involves a seller relationship and not a resale of the gas. Electric co-ops already have the ability to have out-of-state members.

E-mail: bwallace@desnews.com