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Questar's quandry... how can our benevolent utility cope with demand?

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  • Questar's quandry... how can our benevolent utility cope with demand?

    June 3, 2008
    If you are just tuning in, you might want to jump to post #32 for your marching orders

    Utah NGV owners are the envy of the country when it comes to our low CNG prices. But the current refueling infrastructure is simply not designed to handle the load we are already placing upon it, let alone what we are soon facing as more and more vehicles come into the state or are being converted to run on natural gas. I know folks in Cedar City who are getting up at 5am just to get reasonable pressure at the overwhelmed lone station there. Oklahoma is facing a similar situation with their gas utility too.

    The harsh reality is that Questar (parent company) makes a profitable (approx. 40% margin?) business by punching holes in the ground and selling the gas to various markets. Its subsidiary Questar Gas is a regulated utility which provides a marginally profitable but essential gas service to homes, business, oh and yes to its little-thorn-in-the-side NGV refueling group too.

    It is no wonder the parent company took no interest in the NGV business... that is, until the Sandy station mishap. Suddenly the sleeping giant has awoken to our little corner of its trade and it is my understanding they are taking a very hard look at what ought to be done to either shore it up or get it sold (hence the rumors flying around this web site over the past few days).

    I would like to use this discussion thread as an opportunity for you, the NGV owners to chime in with some realistic suggestions as to what Questar ought to do to better service this growing customer segment of theirs. Posts that simply whine and complain or have snide remarks will be deleted. We need some real answers to a real problem here.

    Allow me to start with a few suggestions based on my own observations:

    1. Don't sell-off, invest in the future. Questar has had its share of PR snafus (most recently the widely-publicized billing problem). Selling off the stations lock, stock and barrel to anyone else would place the new owner overnight into an unregulated monopoly position, creating significantly higher prices at the pump. The backlash among NGV owners would be deafening. I'm sure everyone would agree that we are all OK with higher prices if it meant plowing some of it back into the crumbling infrastructure.

    2. Get the Public Service Commission onboard with an NGV station growth and reinvestment plan. Work with us, the NGV owners to come up with a plan to present to the PSC. We will fill the hearings with supportive voices. For starters, there is no reason why the PSC should not be supportive of Questar using the 50 cent/gge federal excise credit toward additional compressors and storage at the current facilities. That was the intent of Congress when it was put into place. I would gladly pay $1.13 if there was a plan to plow this into better infrastructure for everyone. My understanding is last year Questar dispensed 2,000,000 gge's so that would have been a million dollars in new equpiment if it had been re-invested last year. Think of the capacity we would be enjoying now! The PSC should also support what has been done in California and other states in tacking-on a $3 fee to all vehicle license renewals to pay for alternative fuel infrastructure.

    3. The old business model of scratching around for Clean Cities grant money for building out stations is ancient history. These alt fuel infrastructure grants are by and large now going toward ethanol. Brigham City was the end of the line for this gravy train. Time to try something new.

    4. Use your own rate tariff for these stations.
    Leveling the playing field for others to build public stations is a must. The published rate of $7.9543 / Dth is very reasonable. It works out to around a dollar per gasoline gallon equivalent before adding federal road tax & obtaining the federal excise credit. The net effect is 68.2 cents before the cost of compressing. Since our prices are 63.8 cents (and 7 cents of that goes to the station owner) it would seem to the public that the NGV business unit is either operating at a loss, or at a minimum not taking into account the cost of the natural gas used by the compressors nor allocating anything whatsoever toward maintenance and new station build-out.

    5. Encourage home refueling. Follow SoCal Gas' lead in providing an attractive tariff and rebates for those of us with home refueling devices. Your ThermWise program could also easily be augmented to include some money for these installations. It is odd that we pay more to refuel at home than at your overwhelmed stations. Nowhere in the country do you find this situation except in Utah and Wyoming (possibly Oklahoma too).

    Thank you all in advance for your productive comments.
    - JM

  • #2
    Re: Questar's quandry... how can our benevolent utility cope with demand?

    You have several good ideas here. I really like this one.


    2. Get the Public Service Commission onboard with an NGV station growth and reinvestment plan. Work with us, the NGV owners to come up with a plan to present to the PSC. We will fill the hearings with supportive voices. For starters, there is no reason why the PSC should not be supportive of Questar using the 50 cent/gge federal excise credit toward additional compressors and storage at the current facilities. That was the intent of Congress when it was put into place. I would gladly pay $1.13 if there was a plan to plow this into better infrastructure for everyone.
    Any growing business model needs to reinvest for improvement. The reinvestment money needs to come from that same business.


    I don't like the home refueling push as well for several reasons. One is it is still too expensive initially in my opinion. Another, and I think more importantly, home refueling does not further the cause of building public infrastructure needed for the public to adopt and rely upon CNG for primary transportation because it is difficult if not impossible to go on long trips.

    Comment


    • #3
      Re: Questar's quandry... how can our benevolent utility cope with demand?

      If you need to get up at 5am to fill your tank, then even at $0.63/gal it's not much of a bargain. The convenience and RELIABILITY of fueling at home (always available, always full pressure) is worth a lot.

      During the 70s Oil Embargo there were lines around the block for gasoline. If another gas crunch comes, those of us with CNG and home fueling pumps will be ready.
      02 GX
      01 GX
      03 Crown Vic
      06 GX
      Home Fueler

      Comment


      • #4
        Re: Questar's quandry... how can our benevolent utility cope with demand?

        I think all of the above suggestions are good... we have to have a common sense approach that includes adequate profit for all providers of CNG service including compressing of the gas. Governor Huntsman himself has a suburban that was set up by Sno-Motion... He is one of the best business minds in the country. Why couldn't the CNG community try to set up a Utah coalition (including the governor, Questar, PSC, and CNG owners) to brainstorm and maintain a good price at the pump that would attract further CNG vehicle use, thus lowering the smog on the Wasatch front.. which has been a big problem for both the state of Utah and Governor Huntsman? To get enough compressor capacity to fill all of the new CNG vehicles purchased lately will be very expensive, but if each CNG car owner is paying his share, it won't cost too much to each individual. If we move quickly we may be able to preserve good CNG prices before the problem gets out of hand. Home compression will have to be part of the solution in order to buy time for the compressor stations to be improved. whatdayallthink!

        Comment


        • #5
          Re: Questar's quandry... how can our benevolent utility cope with demand?

          I agree, get the gov. involved and get the cost of the Phill, or other stations to a managable point. (ie bigger tax credit for people who purchase a home unit, or somthing along those lines). Even business owners who install a system and open it up for public use, give them a credit, monitary advantage, something. Opening up the advantage for others will take the demand off of the people who opperate it now.

          Comment


          • #6
            Re: Questar's quandry... how can our benevolent utility cope with demand?

            I hate to say this folks But raise your rates. Do you know what a .25 cent increase per gge. would net Questar? This would be my recommendation,

            .05 to the general fund make the investors Happy. This goes a long way to get other things done such as huge capital expense.

            .15 to upgrading stations. Increase thru-put at the busiest stations and add more to improve the infrastructure.

            .05 to install a incentive program for home refueling. This is a quick way to relive the burden on over taxed stations.

            Questar has been in this business a long time and has done it quite well but upgrading stations is not easy, expensive and time consuming.

            Comment


            • #7
              Re: Questar's quandry... how can our benevolent utility cope with demand?

              Seems like the cheapest, easiest thing to do would be to get larger storage tanks at the existing pumps. This would create faster fills for shorter lines, or no lines, and could fill more vehicles before it ran low. I know this probably isn't the 'best' solution, but it seems like a reasonable first step?? Anythink would help. I'm starting to consider an FM4, so that i can avoid my Orem station as I'm always just frustrated there.
              2000 Escalade (option 3 conversion) FOR SALE
              2004 F150 XLT (OEM conversion)
              2000 Camry (Awesome Car!!)

              Comment


              • #8
                Re: Questar's quandry... how can our benevolent utility cope with demand?

                Enough storage to make any difference would be about $85,000. with about 3 month weight time. In vegas the 3 storage suppliers were there and said they are working very hard to keep up. But all of them had very long lead times.

                Comment


                • #9
                  Re: Questar's quandry... how can our benevolent utility cope with demand?

                  Originally posted by John Mitton View Post

                  2. Get the Public Service Commission onboard with an NGV station growth and reinvestment plan. Work with us, the NGV owners to come up with a plan to present to the PSC. We will fill the hearings with supportive voices. For starters, there is no reason why the PSC should not be supportive of Questar using the 50 cent/gge federal excise credit toward additional compressors and storage at the current facilities. That was the intent of Congress when it was put into place. I would gladly pay $1.13 if there was a plan to plow this into better infrastructure for everyone. My understanding is last year Questar dispensed 2,000,000 gge's so that would have been a million dollars in new equpiment if it had been re-invested last year. Think of the capacity we would be enjoying now!

                  I agree with #2. As someone looking to move to Utah in the future, I would like to have a good system that is running and always ready for use. There is nothing wrong with paying $1.00/gge and it is still a very good deal.

                  Comment


                  • #10
                    Re: Questar's quandry... how can our benevolent utility cope with demand?

                    I like your concept around number 2 and think Questar ought to have some margin for the express purpose of re-investing in the fueling infrastructure. How about a goal of a public CNG pump within 75 miles of any town inside the state?

                    I worry that if Clean Energy is allowed to buy out Questar we will lose the considerable cost advantage enjoyed by CNG over gasoline and the CNG movement on the Wasatch Front will lose the recent momentum we have gained (there are 130+ CNG cars on KSL and Ken Garff is selling dedicated CNG Hondas like hotcakes). It would seem that Questar would need to open up the bidding if they are in talks with Clean Energy.

                    One additional possibility to consider would be for the counties on the Wasatch Front to require any of the oil companies proposing to build a new gasoline station in Davis, Salt Lake or Utah Counties with 12 or more pumps to include at least one CNG filling pump. Each company would have a maximum of one pump per year state wide (in any year they build one or more 12 pump+ stations in these three counties).

                    Imagine the benefit of just 4 or 5 new stations each year with consistent pressure on the Wasatch Front would do. I would pay a bit more per gallon to support the infrastructure (but not for the excess profits for Clean Energy).
                    Last edited by bobmac; 05-27-2008, 10:12 PM.

                    Comment


                    • #11
                      Questar is listening

                      There are some senior people at Questar who monitor this board. One of them called me today, essentially agreeing with what we are saying here, and reaffirming the need to get Questar (parent company) on board with getting serious about the refueling infrastructure.

                      It's probably time to launch a letter-writing campaign to Keith Rattie, CEO of the parent company. I know the hot button for him will be the "green" element of the NGV program. All of the oil and gas exploration companies are trying to burnish their image after the flack they have been getting from the environmentalists for drilling on public lands. We can (sincerely!) compliment him on the great job Questar is doing with responsible exploration for this wonderful domestic vehicle fuel.

                      We will need to cc the Public Service Commission and Gov. Huntsman too.

                      Anyone want to take a stab at a form letter for us to use?

                      Comment


                      • #12
                        Re: Questar's quandry... how can our benevolent utility cope with demand?

                        John, I believe that another CNG member hit the nail on the head when you said "Governor Huntsman himself has a suburban that was set up by Sno-Motion... He is one of the best business minds in the country. Why couldn't the CNG community try to set up a Utah coalition (including the governor, Questar, PSC, and CNG owners) to brainstorm and maintain a good price at the pump that would attract further CNG vehicle use, thus lowering the smog on the Wasatch front.. which has been a big problem for both the state of Utah and Governor Huntsman?"
                        The govenor is a business man and an envornmentalist. I believe you should incorporate the letter with as you said "letter-writing campaign to Keith Rattie, CEO of the parent company. I know the hot button for him will be the "green" element of the NGV program. All of the oil and gas exploration companies are trying to burnish their image after the flack they have been getting from the environmentalists for drilling on public lands. We can (sincerely!) compliment him on the great job Questar is doing with responsible exploration for this wonderful domestic vehicle fuel. Then you tie these to together on a business, and an environmental tie. Let alone the fact that they are going to in the near future start more drilling in the Govenors dear home state of Utah. By bringing this to his attention. He can then prove that he has taken steps to prohibit or at least make himself look better in the green world. Boy would that help his pollitical presence. With all the new exploration that is on the horizion, and in our back yards.

                        Comment


                        • #13
                          Re: Questar's quandry... how can our benevolent utility cope with demand?

                          Does anyone know what the procedure would be for Questar to ask for a rate increase?

                          Wouldn't this affect all users?
                          How could the PSC seperate out CNG with good 'ol natural gas?

                          How do we get something on the PSC's agenda?

                          http://www.psc.state.ut.us/faq/index.html
                          Q: Why does the Public Service Commission grant multiple rate increases when Questar is reporting record profits?
                          A: The simple answer is that Questar Gas Company (QGC) is not making record profits. The confusion lies in the fact that QGC, the distribution company that provides natural gas service to your home, is owned by a parent company called Questar Corporation. It is Questar Corporation, not the regulated utility QGC, that is reporting high returns. Today, Questar reports that QGC makes up only 12 percent of Questar Corporation. State regulators regularly audit QGC returns to ensure it earns no more than the Commission authorized return, currently 11.2 percent. Other companies owned by Questar Corporation are contributing to its reported high returns. The profits earned by other Questar Corporation companies are not regulated by the Utah Public Service Commission.

                          So, it looks like we need the PSC to spilt CNG because of the added cost (compressors, etc.) And to me that means a change in State Law?

                          Any lawyers or state reps out there?

                          Maybe Rep Hunsaker could help. Since he reps the Logan, USU, area maybe someone from that area could contact him

                          We really need some help from Questar's professionals to direct us through the best course.

                          And while I'm not sure about benevolent, we really don't want to remove the CNG part from the PSC.

                          I think that's what CA did. So, whatever we do we need to be
                          EXTREMELY CAREFUL...

                          Any CA people out there to explain what you thought went right and not so right?
                          CH

                          Comment


                          • #14
                            Re: Questar's quandry... how can our benevolent utility cope with demand?

                            I agree with you on this one, ch4. We cannot let the PSC move away from Questar's CNG fueling stations. This will allow others (Clean Energy, etc.) to move in and "jack up" the price. I agree that the Questar should raise the price of CNG at the pump to account for compression, maintainence, etc. What can we do?
                            Jared.
                            Mountain Green, Utah
                            2003 CNG Cavalier
                            2003 CNG Silverado 2500HD

                            Comment


                            • #15
                              Re: Questar's quandry... how can our benevolent utility cope with demand?

                              What we need to do is work with Questar to come up with a workable solution. If they say they need the Federal Tax money to keep stations running, put in new stations, then we should support that.

                              I can tell you, 20 people showing up to a PSC meeting in *support* of Questar will really make a difference.

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