Opinion ID: 2622975
Heading Depth: 2
Heading Rank: 1

Heading: questar i

Text: ¶ 3 In 1998, Questar, a regulated public utility, entered into a contract with its unregulated affiliate, Questar Pipeline, to construct a processing plant that would reduce the CO2 in coal seam gas, otherwise known as coal bed methane (CBM). [2] Questar Pipeline was transporting CBM in steadily increasing quantities and needed the CO2 processing plant to address safety risks to Questar customers. [3] CBM has a low heat content that cannot be used safely in most homes unless special adjustments are made to appliances or CO2 is first removed from the gas at a processing facility. ¶ 4 On November 25, 1998, Questar submitted an application to the Commission for approval of the contract and requested authorization to transfer the costs of constructing and operating the CO2 plant directly to ratepayers. [4] In its December 3, 1999 order, the Commission denied Questar's request on the basis that these costs were not the kind of expenses allowed under Utah Code section 54-7-12(3)(d)(i), which is known as the pass-through statute. [5] The Commission also noted that Questar bears the burden of establishing the prudence of its contract with Questar Pipeline because of their affiliate relationship. [6] The Commission did not address whether Questar's decision to enter into the contract with Questar Pipeline was prudent; rather, the Commission determined that, even assuming the prudence of the contract and the reasonableness of its terms, Questar had failed to present substantial evidence that the resulting rates would be just and reasonable. [7] ¶ 5 In Questar Gas Company v. Public Service Commission (Questar I), we set aside the Commission's December 3, 1999 order, holding that Questar's ability to recover costs was not limited to the pass-through statute. [8] We based our decision on the Commission's own prior practice, noting that the Commission, when reviewing past requests for cost recovery, determined whether the resulting rates were just, reasonable and cost justified and whether their approval was in the public interest. [9] Also, based on the Commission's finding that it was impossible to make a [prudence] determination because the record was insufficient and could not be created, we limited our holding to the question of the procedure Questar should have followed to recover processing costs incurred between June 1999 and August 2000. [10] We remanded the case to the Commission for further consideration in accordance with the appropriate cost recovery procedure. [11]