QUESTAR GAS GRANTED RATE INCREASE

SALT LAKE CITY  The Utah Public Service Commission (PSC) today approved a $13.5 million general rate increase for Questar Gas. This change will raise the annual bill for the typical residential customer from $611 to $620, or 1.4 percent.

 The company originally requested a $22.2 million increase in December. The PSC immediately granted $7.1 million of that on an interim basis pending completion of the rate case. The interim increase raised the typical customer's bill 1.7 percent. Today's order increased the bill an additional 1.4 percent. The PSC's order also provides for an allowed rate of return on equity of 11 percent.

 This will be the first significant general rate increase Questar Gas has implemented in its Utah service area in 15 years. About half of a customer's bill consists of general rates, or nongas costs, such as system maintenance and other expenses related to delivering gas to customers including investor returns. The increase granted today addresses these costs.

 The other half of a customer's bill reflects the cost of the gas itself. Gas costs are passed through to customers on a dollarfordollar basis through periodic purchasedgas adjustments or "passthrough" filings. About half of Questar Gas's supplies come from its companyowned production at prices well below the market average.

 Before the PSC began formal hearings, Questar and various parties to the current case entered into stipulations which produced a range of potential outcomes from $7.2 million to $17.8 million. The PSC heard testimony on the remaining differences which included rate recovery for gasprocessing costs, appropriate return on equity and allocation of postage costs.

 "Overall, we are pleased with the commission's decision and see it as a step in the right direction. In particular, recognizing the necessity of safetyrelated actions we took when we contracted for gas processing is an important signal. We compliment and thank the PSC for its decision on this issue. The processing on our southern system is an essential safety measure, and these significant costs need to be covered," said Nick Rose, Questar Gas president and CEO. "We are, however, disappointed in the commission's decision on rate of return, and feel it doesn't reflect the need for higher returns in what has become a more risky and competitive business  especially in light of higher interest costs.