NGI The Weekly Gas Market Report / NGI All News Access

FERC, Utah Rulings On Questar Gas in Sync

January 25, 1999
/ Print
| Share More
/ Text Size+

FERC, Utah Rulings On Questar Gas in Sync

Recent decisions by FERC and Utah regulators involving the extent of their jurisdiction over the interstate transportation activities of Questar Gas, a Utah-based LDC, don't appear to be contradictory, say lawyers and company officials. In fact, the two rulings complement each other, particularly on the issue of states' authority over the interstate function of Hinshaw-exempt gas distributors.

"I don't think there was any conflict," said Charles F. Wheatley Jr., who represented an Arizona municipality, Colorado City, in its case against Questar Gas at FERC. In the order, the Commission disclaimed jurisdiction over a dispute in which Questar Gas refused to transport interstate gas for resale over its facilities in Utah for consumption in Colorado City. Consequently, the Arizona muni was denied its bid for a declaratory ruling, which would have enabled it to ask FERC to order the service so it could establish its own distribution system [CP99-37].

The Questar Corp. affiliate refused service to Colorado City, which is located just south of the Utah-Arizona border, because it argued transporting gas to be consumed out of state would have jeopardized the immunity from federal regulation that it enjoys under the Hinshaw Amendment. Specifically, the measure exempts an LDC's sale for resale of interstate gas received within or at the state boundary as long as all of the gas is consumed within the state. FERC found that Questar Gas still met all of the qualifications for a Hinshaw pipeline, which meant that it was subject to the regulatory purview of the state.

However, FERC urged Questar Gas and Colorado City to continue negotiations to resolve their dispute. As one option, it recommended that parties consider seeking a limited jurisdiction blanket certificate under which Questar Gas would be able to provide interstate service to the Arizona muni and maintain its Hinshaw exemption with respect to its other non-jurisdictional activities.

In a separate yet related decision, the Utah Public Service Commission (PSC) ruled that it had the jurisdiction to order Questar Gas to transport gas for resale to Colorado City's sister border city, Hildale. The Jan. 15th decision was a hard-fought victory for Hildale, which earlier had been denied such service to form its own municipal gas distribution system. It also was something of a Pyrrhic win since the PSC did not actually order Questar Gas to begin providing the service, but left that issue to be decided another time. Hildale has since filed a petition seeking a ruling on the merits of such service, according to a PSC spokeswoman.

The PSC ruling was favorable to Hildale because, in contrast to the Colorado City case, it is located within Questar Gas's service territory and the gas transported to it would be consumed within Utah boundaries. This would enable the LDC to keep its Hinshaw exemption. Questar Gas not surprisingly objected to the PSC decision, saying it would force the company into a new business - sale for resale. Essentially Utah regulators said "they have the right to tell us what business we can and can't be in," according to Chad Jones, spokesman for the LDC.

Like Colorado City's Wheatley, Jones and other Questar officials didn't see any conflicts between the PSC and FERC decisions. However, they are worried the company's Hinshaw status could be called into question should any of the gas transported to Hildale find its way over the Utah-Arizona border to Colorado City. This assumes state regulators in the end will order Questar Gas to actually provide the service to Hildale.

For Questar Gas, this threat to its Hinshaw status is very real considering that Hildale and Colorado City - while located in different states and legally separate - effectively "function as one community that stretches over the border," Jones said. "That was one of our concerns when we were talking to the PSC about being forced to sell gas for resale. We wanted to make sure that if they did put us in that business, and whoever we resold the gas to decided to transport it across state lines, that it [wouldn't] affect our regulatory standing."

Wheatley doesn't foresee a transfer of gas occurring between the two municipalities, and even if it did, "I don't know that that would be any concern of theirs [Questar Gas]." If Hildale should decide to resell any gas to Colorado City in the future, Questar's Jones argued, it should "put them [Hildale] under the jurisdiction of FERC." It shouldn't "put us under any additional constraints."

Susan Parker

©Copyright 1999 Intelligence Press, Inc. All rights reserved. The preceding news report may not be republished or redistributed in whole or in part without prior written consent of Intelligence Press, Inc.

ISSN © 2577-9877 | ISSN © 1532-1266
Comments powered by Disqus