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Heating bills could drop

Questar is proposing new pricing to cover its costs

Your winter heating bill could be lower beginning in January under a new pricing system that changes the way Questar Gas Co. captures its fixed operating costs.

That's good news for Questar customers, whose home heating costs have risen nearly 38 percent this year compared to 2004.

It is also good news for the Salt Lake-based utility, which, despite skyrocketing natural gas prices, says it has struggled to cover its fixed costs.

Why?

Under Utah's current pricing mechanism, Questar collects fixed costs as customers use more natural gas. About 22 percent of a monthly heating bill goes to fixed costs — items like employee wages, buildings, trucks, pipes and overhead items.

However, rising natural gas prices and more efficient homes have actually reduced customer usage, resulting in the utility not being able to cover its fixed costs. That, in turn, has left Questar reluctant to champion energy efficiency campaigns aimed at reducing customer usage.

On Wednesday, Barrie L. McKay, Questar's manager of regulatory affairs, told a legislative interim committee that natural gas usage for Questar's Utah customers in October 2005 was 12 percent lower compared to October 2004, even after accounting for temperature differences.

"We are reluctant to encourage customers to reduce using our product when the only way Questar can collect its fixed costs is by them using the product," McKay said. "If I have to encourage everybody to use less volumes, I'm really saying, 'Don't cover my fixed costs.' "

Also on Wednesday, Questar officials outlined to state regulators three possible new pricing mechanisms.

McKay said under one of the proposals — modeled after similar plans in North Dakota, Oklahoma and Georgia — residential heating costs for single-family homes could be lowered about $20 a month in the winter. However, summer costs would rise. Heating bills would reflect the change, itemizing what a customer pays in fixed costs versus the cost of natural gas.

The new pricing mechanisms would not decrease the amount customers pay for natural gas, simply the way the company collects its fixed costs.

Sarah Wright, executive director of Utah Clean Energy, pointed to a 2004 study by GDS Associates that indicates Utahns could save more than $800 million in natural gas costs over a 10-year period by simply implementing conservation and energy efficiency measures.

The new pricing mechanisms, McKay said, would encourage Questar to launch campaigns, similar to those promoted by Utah Power, that are aimed at reducing energy usage.

Connie White, director of the Utah Division of Public Utilities, said the pricing issue has been looked at for the past several years. A new method could be implemented as soon as January.

"You really do want people to conserve now with the prices and the scarcity and the winter coming," White said. "We want the gas company to sell less gas, but if they do, their revenues go down. We just have to design rates a little bit more creatively."


E-mail: danderton@desnews.com