Since mid-2008, the price of natural gas produced in the Rocky Mountain region as declined from $9.90 per decatherm to just over $1.90. A decatherm is roughly the equivalent of 1,000 cubic feet of natural gas.
Natural gas distribution companies such as Questar make their money by charging customers to deliver gas to their homes and businesses. They don't make a profit from natural gas itself, but rather supply the fuel to their customers for the same price they pay for it.
Typically, Questar asks state regulators twice a year for permission to adjust the amount it charges customers for the natural gas used.
Those adjustments are designed to keep the amount the company pays for natural gas and the amount its charges its customers in balance. And that means when natural gas prices are falling, Questar will adjust bills downward. When prices are going up, Questar will raise rates to reflect the rising cost and ensure it has enough money on hand to buy the natural gas consumers demand.
This time, though, rather than asking the PSC to adjust rates, Questar is seeking permission to take the unusual step of passing on the lower cost of natural gas in one lump sum. The last time it made such a request was in 2009, and prior to that, 1995.
Michele Beck is the state official who oversees the Committee of Consumer Services, which serves as the voice for residential and small-business owners in utility rate cases. She said Questar's request isn't too surprising, given the downward trend in natural gas prices.
Questar usually asks to adjust the amount it collects from its customers at the beginning and end of each heating season, she said. "Their request may be a little early this year, but it is certainly within that general time frame."
She pointed out, though, that the $34.50 rebate amount is for the "typical" Questar customer. She added that a benefit to Questar asking for the refund of $42 million in one lump sum is that rebates will be calculated based on the amount of natural gas each customer used over the past heating season. So, those who used more gas will get back more than those who used less. "It is a fair way to do it."
Utahns have been enjoying the benefits of declining natural gas prices for the past four years.
Since mid-2008, Questar has requested approval to adjust its rates 10 times. And eight of those pass-through cases involved the company seeking regulatory permission to lower the amount it charges its customers for gas.
Those pass-through rate cases helped lower the average Utah's annual natural gas bill by $115 since 2008. The requested one-time rebate is the equivalent of an annual decrease in natural gas charges of about 5 percent, according to Questar.
Recent Questar natural gas rate adjustments
Request Effective date Percentage change
+ $195 million July 1, 2008 +22.8%
- $68.8 million Nov. 1, 2008 -5.9%
- $161 million March 1, 2009 -16.5%
- $32.7 million Oct. 1, 2009 -4.0%
+ $48.3 million Aug. 1, 2010 + 5.5%
- $6.6 million Jan. 1, 2011 -0.73%
- $13.3 million June 1, 2011 -1.5%
- $26.1 million Oct. 1, 2011 -2.7%
- $770,000 Feb. 1, 2012 -0.10%
- $13 million Feb. 1, 2012 -1.5%
Source: Utah Public Service Commission