As a barometer of just how much wholesale natural gas prices have jumped in recent months, Questar Corp. distribution utility Questar Gas Co. Thursday filed for more than $405 million in separate natural gas cost recovery rate cases with both the Utah and Wyoming regulatory commissions, which will result in substantial retail rate hikes starting July 1.

The bulk of the increase ($390 million) is in Utah where Questar serves more than 800,000 customers. To ease the rate shock there the utility is rolling in the higher costs in two phases (July and October). Overall, Questar Gas estimates that it is facing a doubling of its wholesale gas costs to more than $800 million, a Salt Lake City-based spokesperson said.

For Utah customers, an average residential increase of $12.50/month will start in July and another $12.50/month on Oct. 1. In Wyoming Questar’s proposed rate hike is $15 million, and its residential customers among the 40,000 retail meters it serves will face an average monthly increase of $28 starting July 1. In Utah the change amounts to a 45% increase and in Wyoming the increase is 44%.

Emphasizing that none of the proposed increases go toward the utility’s profits, Questar said it typically goes to the Utah and Wyoming Public Service Commissions (PSC) twice a year to adjust rates based on updated gas cost projections. Since its November estimates for future wholesale gas costs, the market price has nearly doubled, Questar said.

Even with this increase, Questar Gas’ rates will remain among the nation’s lowest, according to Questar Gas CEO Alan Allred. “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.” Questar is not alone in seeking a rate hike to cover commodity costs (see Daily GPI, June 4).

Questar said about half of the gas it delivers in the two states comes from its own reserves, and the cost to develop and deliver those supplies “is considerably lower and more stable” than the cost of gas the utility needs to purchase from third-party suppliers. The utility said that without its supplies from Questar affiliates, it would be asking for an increase of more than 70%, which it said would be “more in line with other gas utilities” around the nation.

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