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QUESTAR GAS REQUESTS RATE INCREASE

SALT LAKE CITY -- Citing dramatic increases in natural gas prices across the nation, Questar Gas has asked the Utah Public Service Commission (PSC) to approve a $167 million increase in its Utah natural gas rates. If approved, the typical customer's annual bill will increase 29 percent or $17 a month. This change is requested to go into effect Jan. 1, 2001.

The request is part of Questar's semi-annual gas-cost-adjustment or "pass-through" filing. Such filings enable the company to adjust rates each year to reflect changes in gas-supply costs. These costs are passed on to the customer on a dollarfordollar basis with no markup.

The increase is directly related to the sharp increase in natural gas prices that is occurring on a national level as a result of strong demand for natural gas — including the generation of electricity. Because of this situation, wellhead prices are up 200 percent since this time last year. And although natural gas producers are responding by increasing drilling efforts to provide more gas supplies, significant price relief isn't expected this winter.

Over the past 15 years, Questar Gas has been able to keep rates relatively stable. In large part, this has been due to the fact that nearly half the natural gas Questar Gas provides customers comes from company-owned wells and is delivered to customers at "cost-of-service" pricing, which is considerably lower and more stable than for gas purchased from outside suppliers. Purchased-gas costs are now above $7 per decatherm (Dth), compared to $2.59 per Dth for company production. The availability of this low-cost company-owned production saved customers about $9 million in this filing.

Over the past 15 years, Questar Gas has been able to keep rates relatively stable. This is primarily because half the natural gas Questar Gas provides customers comes from company-owned wells and is delivered to customers at "cost-of-service" pricing, which is considerably lower and more stable than for gas purchased from outside suppliers. Purchased-gas

costs are now above $7 per decatherm (Dth), compared to $2.29 per Dth for company production. The availability of this low-cost company-owned production saved customers about $240 million in this filing.

According to statistics from the most recent Wasatch Front Area Inflation Index (compiled by First Security Bank), the local cost of living increased between March 1988 and May 2000 in every category — from housing to health care — except utilities.

With the proposed increase, the cost of natural gas in Utah will still make up only 1.3 percent of the annual income per household. Back in 1985, natural gas costs were about 1.7 percent of the annual income per household.

Customers should be aware that unusually cold weather this year has also contributed to higher gas bills. The weather, which is about 35-40 percent colder than a year ago, has customers turning up their thermostats, using more gas.