This is an archived article that was published on sltrib.com in 2008, and information in the article may be outdated. It is provided only for personal research purposes and may not be reprinted.
Questar Gas Co. is facing some stiff opposition to its proposed $22.2 million rate increase.
The Committee of Consumer Service, charged under state law with representing residential customers and small-business owners in utility rate cases, says Questar Gas only should get a rate increase of approximately $100,000.
And the Division of Public Utilities, whose role is to balance the interest of consumers and utilities in its rate case recommendations, believes the company deserves a rate increase of just $5.4 million.
"We've looked at Questar's filing very closely, and while there are some areas where they may be able to justify their requests [for more money] we don't believe they have provided adequate documentation to back those up," said Michele Beck, Committee of Consumer Services' director.
In filing for its rate increase, Questar asked the state's top utility regulators sitting on the Public Service Commission that it be allowed to earn a return of up to 11.25 percent from the investments it has made in its system - the same percentage it has been allowed to earn the past several years.
Questar Gas spokesman Chad Jones said the company needs to be earning up to 11.25 percent from its equity so it can make needed improvements to its system and serve a growing number of customers.
"That's what this rate case is all about," Jones said. "We're not asking for an increase in our allowed rate of return. We're just asking that it remain unchanged."
The Committee of Consumer Services and the Division of Public Utilities, however, believes the company's allowed rate of return should be much less.
"Our models suggest that a 9 percent return on equity is the correct number," Beck said, indicating if that recommendation is accepted it would cut Questar's rate increase by about $14 million.
The committee also believes the company has overstated its labor costs by $1.7 million and correcting some accounting methodology problems could reduce the rate request another $4.4 million. It also has identified a number of adjustments that could lower the increase another $1.8 million.
The Division of Public Utilities is asking Questar's allowed rate of return be set slightly higher at 9.25 percent. Still, that represents millions of dollars less than the company wants.
Questar in December initially requested a $27 million rate hike but lowered that number to $22.2 million after the PSC shortened the time period for calculating the company's costs and projected future expenses.
If the company's $22.2 million rate hike request is approved, the typical Utah natural gas customer will see his or her monthly gas bill rise by approximately $3.20.