SANTAQUIN — Utah's only municipal gas company is relying on a line of credit to stay afloat.
"We're trying to get it (the utility) to stand on its own," Mayor LaDue Scovill said.
Scovill said the city does not want to use city property tax funds to keep the utility in the black. He said leaders have been surprised at the extent of borrowing and have commissioned a staff study to get a handle on the growing accumulation of red ink. The study should be completed by the end of April.
Santaquin city leaders formed the gas company in the late 1990s as an alternative to then-Mountain Fuel Supply Co. Salt Lake-based Questar, which replaced Mountain Fuel, continues to serve the town's central core. New residents in the rapidly growing outer edges of the city are served by Santaquin Gas. The company has 300 connections and a City Council that's wondering how good of a job it's doing.
While the study could lead to higher gas rates, current rates are not the focus of the review, City Manager Roger Carter said.
Scovill says rates are always a focus. He said the city needs to be cognizant of the rates it charges in comparison to those charged by Questar. If rates go higher than Questar, "are we really doing a service" to customers?" muses Scovill.
Santaquin is an anomaly in the natural gas business, said Questar spokesman Chad Jones. It's the only town in the state that has competing gas lines running through some of its streets side by side with Questar lines.
"It's more of a safety concern than a competitive one," he said. If someone digs into a gas line, it raises the question of which company needs to be called.
The study will also examine whether the city should offer its gas to residents and businesses that currently subscribe to Questar gas. That would be feasible in the parts of town where the gas lines run side by side.
Scovill questions the wisdom of trying to squeeze Questar out. But the city would consider purchasing competing Questar lines "if it came to that," he said.
The city needs to make sure its getting its money's worth when it comes to the cost of expansion and operation and maintenance, Scovill said. The largest expansion would be into the new Summit Ridge, a developing residential, business and golf community of about 2,000 acres on Santaquin's south end.
Once the study is complete, then it's up to the City Council to decide the future and fate of its gas company. That could come next month, Scovill said.
E-MAIL: rodger@desnews.com