Grace Leong

Not only are Utahns getting hit in the pocketbook with higher gasoline and food prices, now their natural gas bills are about to get higher.

"We're asking for a $195 million rate increase in the first phase, and if natural gas prices remain high, we'll ask for another $195 million in fall," said Chad Jones, spokesman for Questar.

If approved, the average residential customer in Utah will pay $12.50 a month more for gas starting on July 1, and another $12.50 a month more on Oct. 1.

Questar typically requests state regulators' approval to adjust gas rates twice a year to reflect the costs of natural gas purchased on the open market for its customers in what it calls a pass-through rate case.

In Thursday's filing, the company is asking for a rate hike of about 45 percent to cover future supply costs because market prices for natural gas have nearly doubled since the last rate adjustment in November 2007.

"The [proposed] rate increase will take us back to 2005 levels," Alan Allred, the company's president and CEO told the Daily Herald editorial board on Thursday. Back then, Utahns were paying nearly 40 percent more for natural gas because of supply disruptions caused by damage inflicted by Hurricanes Katrina and Rita on natural gas-producing areas on the Gulf Coast.

But since 2005, Questar has cut gas rates by a total of more than 30 percent in the last four "pass-through" rate adjustment cases, Ronald Jibson, the company's executive vice president said.

"We regret we must raise rates now, when family budgets are strained by higher gasoline and food prices. But we've held the line on rates as long as possible in the face of increased supply costs, and failure to reflect these costs now will result in larger and more painful increases later," Allred said.

"With this first step, the intent is to collect only what we need to cover our costs to buy gas to meet customers' needs this summer. If natural gas prices remain at or near current levels, we will need to implement the second phase this fall," he said. "Although national supplies are increasing, demand for natural gas is also growing."

Allred said that natural gas usage, which typically peaks in winter and falls off in summer, is staying high even in the warmer months because of a sharp increase in gas-fired electricity generation in Utah. About 95 percent of power plants being built now use natural gas nationwide, he said.

But he pointed out that because Questar produces about half of the natural gas it provides customers and most of these reserves are located in the Rocky Mountain area, that has helped keep the costs to deliver gas low. Without these company-owned reserves, Questar would be asking for more than a 70 percent increase in gas rates, Allred said.

In addition, Questar also has a general rate case pending before the state commission in which the company is asking to raise rates by about $22 million, or about $3 per customer per month, because of rising costs associated with building and upgrading its distribution system.

But Jones said it may be harder for the company to recover its costs in general rate cases compared with "pass-through" cases where the utility can establish more quickly what it paid for the natural gas it provides its customers.