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Front Page » July 17, 2008 » Carbon County News » Carbon County residents face paying significant natural g...
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Carbon County residents face paying significant natural gas price increases

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For Carbon County residents who call Questar and want to set up a level pay plan with the utility company, a shock may well be in store.

Natural gas rates are going to increase in the late summer and fall to the tune of more than 20 percent.

"I called to put our home on a level pay plan so we could avoid those $300 heating bills in December and January," explained Daisy Fraughton of Carbonville. "The company representative told me that would be fine. He then told me our bill in July would be $76. Then he said it would rise in August to $92 because of the rate increase that had been granted. Then he said that, in October, another rate increase would take effect and the bill would be $115 per month. I just gulped when he said that."

The climbing price of natural gas is one of the increases that most people have forgotten about because of the higher costs of gasoline and diesel fuel.

Most people have concentrated on motor fuel increases, but have forgotten that other energy sources coming out of the ground are also rising in price.

According to a press release from Questar, the company typically asks for public service commission approval twice yearly to adjust rates to reflect changing supply costs, which are passed on to customers with no markup and therefore no impact on the utility's profits. The company bases its requests on forecasts of what it will cost to buy natural gas supplies for customers.

Since the last rate adjustment in November 2007, the market price for natural gas has nearly doubled.

As of early June, forecasts showed that Questar Gas's rates need to be increased by a total of 45 percent to cover future supply costs.

In late June, Utah officials approved the rate increases for residential customers of Questar Gas.

Company officials said the increase is necessary to cover the mounting costs of purchasing natural gas as well as providing the labor, materials and pipelines to supply the heating fuel in an efficient and dependable manner.

"Even with this increase, Questar Gas's natural gas rates will remain among the nation's lowest. Our commitment is to keep them there," said Alan Allred, Questar Gas president and chief executive officer. "However, like all other natural gas utilities, we now face higher purchased-gas costs. Although national supplies are increasing, demand for natural gas is also growing."

"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," continued Allred.

For Fraughton, the increases quoted to her seem higher than what the experts have been predicting.

Most forecasts estimate that the cost would go up $12 to $14 per household per month ,with the average being about $150 annually.

But then Fraughton, like many people living in Carbon County, may not live in the average home.

Natural gas bills are often proportional to the size of the home being heated.

However, the costs are also affected by the temperatures outside in that area, what the thermostat is set at, how much insulation there is in the attic and walls.

Older homes are frequently more expensive to heat.

But for Fraughton, that is no comfort.

"This house was built in the 1920s and added onto in the 1960s," said the Carbonville resident as she stood in her kitchen. "There is some rock wool insulation that was blown in the ceiling many years ago, but other than the insulation my husband and I have put in various rooms we have remodeled we have found there is none in most of the outside walls."

Despite having a new furnace put in two years ago to replace the original gas furnace that was installed in the 1960s when the house was converted from coal to gas, the cost of heating has climbed higher and higher.

And it appears that the costs will continue to climb as it takes energy to produce energy.

Questar operators a huge fleet of service vehicles and of course has to pay its increased cost from field exploration and drilling, equipment that is most often driven by diesel fuel.

About half of the natural gas Questar provides customers comes from company owned reserves.

The cost to develop and deliver the gas is considerably lower and more stable than the expense for a utility that needs to purchase the fuel from third-party suppliers.

Without the benefit of lower cost company-owned supplies, Questar Gas would be asking for more than a 70 percent increase which is more in line with other utilities nationally.

"As a percentage of household budgets, the annual natural gas bill for a typical customer in 2008 is still about what it was 15 years ago," pointed out Allred. "And even with this increase, the cost to heat a typical Utah home will be about what it was in 2005, before the past four decreases. But we realize these facts are small comfort to customers facing large increases."

"Higher natural gas prices are the market's way of sending a simple message: We need to produce more natural gas and use less. U.S. natural gas production has begun to respond to higher prices. Production is up over the previous year, and capital spending by producers has jumped. In the meantime, we encourage customers to take advantage of programs offered to help reduce natural gas use," indicated the company's CEO.

Examples include ThermWise energy-efficiency programs designed to offer customers incentives to take steps to save energy as well as money and enrolling in Questar Gas' budget plan.

The budget plan is designed to help spread the annual cost of natural gas service evenly throughout the year as Fraughton did.

But to the Carbonville resident, that move was just putting off the inevitable.

"During the winter, I strictly enforce the thermostat not being above 62 degrees. People come in here and think we are nuts. But if we raise them to 70 degrees, our bills go up dramatically. This next winter, we will need to be more careful than ever with these increases. I just wonder when these increases will end," said Fraughton.

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