electronic law project, and assisting with other community projects. He addressed Internet
infrastructure issues relating to Internet performance and how it can be developed and improved to
meet current and future demands.
Chris Blake, Mayor of Ivins, Utah, demonstrated how local Internet traffic staying local would
improve the functions of the Internet.
Mr. Ames recognized Rep. Evans for her work in furthering the improvement of the community's
Internet access.
4. Federal Communication Commission Rulings: State Options _ Access and Universal Service Funds.
* Ted Smith, Vice-President Utah, US West
* Nancy Gibbs, Exchange Carriers Of Utah
* Jerry Oldroyd, Suitter Axland & Hanson
This discussion was postponed to a later date.
5. Natural Gas Service To Unserved Rural Areas: Draft Legislation
Rep. Hatch reviewed citizen efforts over the past ten years to try to transport natural gas service
to Panguitch. He emphasized that the Mayor and City Council feel the Mountain Fuel proposal
would be in the best interest of the community. This legislation would direct the Public Service
Commission (PSC) to allow this customer cost-sharing subsidy to take place. He explained that the
people of Panguitch have agreed to pay a $30 service charge per household for 15 years in addition
to the normal gas rate. The urgency exists, Rep. Hatch said, so that Mountain Fuel will be able to
acquire the needed rights-of-way and construction could take place next summer. The terrain is high
and mountainous, he stated, and the Bureau of Land Management (BLM) is hesitant to give rights
of way unless they have been assured of the project. He reviewed some changes made since the bill
was introduced in June:
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Page 2, line 7 lower the subsidy cap from ½ of one percent to 1/4 of one percent (The maximum paid by a consumer in the state on their bill would be about 10 cents per month).
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Tie to the rate effective July 1, 1997; and
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Make the effective date July 1, 1997.
He stated that there would not be an automatic rate increase to customers, because Mountain Fuel
will have to justify the cost through a rate case. He mentioned other cities or communities that could
qualify to come in under the precedent set by this legislation. He emphasized that Panguitch
consumers would have a choice between liquid propane and natural gas.
Page two, lines 8-11, limiting the amount of expendable gas corporation funds to 1% of net book
value of gas plant annually, was discussed in the light of it being a protection to the provider against
the PSC mandating them to provide service to certain areas.
Sen. Jones expressed concern that competing companies might be legislated out of business if the
state allows a monopoly to be subsidized. He asked if there are bordering states' companies that
would or could provide the service without being subsidized? There are many areas of the state that
should be attractive enough to Mountain Fuel, he stated, that they should be willing to bear some of
the risk.
Steve Mecham, Chair of the Public Service Commission (PSC), stated the PSC has been
supportive of universal service and Rep. Hatch's efforts, knowing the citizens of the state want
natural gas. He noted that each expansion has paid for itself rather than requiring a subsidy of this
nature, and he is not convinced that this is the only avenue to accomplish this goal. He addressed
expansion provisions that are built into the average rate structure, noting there will be a $1.6 million
shortfall, even after the subsidy. In response to questions from Rep. Harward, he explained that
Mountain Fuel would not first install service into an area and then petition the PSC in a rate case to
include those costs because there is the risk of the PSC rejecting those costs if it cannot be proven
it was a prudent investment. There also may have to be some sort of universal service mechanism if
it is concluded that natural gas service is necessary to the rest of the state he said, and the PSC would
not stand in the way of the Legislature providing that by statute.
Rick Campbell, Director, Division of Public Utilities, stated they opposed the natural gas petition before the PSC because the statute directs them to prevent undue discrimination. As a division, he
stated, they are neutral on this bill. He noted that with the 1/4% cap, there is about $6 million of
subsidy of which Panguitch will use only $1.6, so there is room for other communities to come in
under this bill according to Mountain Fuel's choice and only during the two-year window. Other
companies could also utilize this subsidy, he stated.
Roger Ball, Committee of Consumer Services, distributed a proposed amendment to the bill. The
amendment would change the subsidy from 1/4% to 1/16%, he explained. He stated since the
Committee has spoken in favor of Panguitch receiving natural gas, his office would not want to delay
or inhibit that process. He recommended, however, that the Committee adopt the amendment and
limit the geographic area of the bill to Panguitch, and then draft a completely new bill for universal
service that will not discriminate.
Vern Fisher, President, Intermountain Municipal Gas Association (IMGA) and representing
approximately 40 municipalities and agencies throughout the state, expressed concern that this bill
does not provide municipal gas statewide. He stated that a subsidy should be afforded to all
consumers throughout the state and distributed to all who are eligible. He noted Green River and
Manila, who are presently in the Utah Gas Service area, as well as others, who would benefit from
this universal fund. He declared IMGA's support for the legislation, but stated it should be run by
a state agency.
Claire Geddes, United We Stand, referred to previous testimony and noted that this legislation
is in violation of the Constitution because we have a free market. She expressed concern that
subsidizing a monopoly to keep out the competition is not good public policy.
Rep. Jeff Groscost, Chair of Ways and Means Committee, Arizona Legislature, expressed his
desire to see the Utah Legislature consider all options. He spoke in favor of the proposed legislation
saying, "It does need to be set up so the competitive marketplace is not majoritively impacted." He
noted it will bring other desirable industry to that community, the subsidy should be kept in a state
trust account, and an RFP should be put out.
Harold Ranquist, Nielsen & Senior representing IMGA, reviewed and summarized the issues at
hand:
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How to get natural gas to rural Utah;
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This subsidy should be administered by a state agency and every community should have equal access to it;
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Existing pipelines can be used by others - The PSC should set guidelines so others can use Mountain Fuel's pipelines;
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Let the communities choose their provider for themselves, having access to the fund;
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If this legislation is enacted, Mountain Fuel will be beneficiary of a State Action Doctrine.
Rep. Evans encouraged Rep. Hatch to continue working with the companies and to come back
with recommendations.
Rep. Hatch indicated that Mountain Fuel is the best at what they do in America. They provide
the best energy product at the best price and they should have time to respond, he said.
Allan Allred, Mountain Fuel Supply, clarified this legislation will not set up a fund, no rates will
change until after rate case, and this would allow service to cities that do not receive it now. He
encouraged the committee to give the PSC the authority to approve the proposed application with
Panguitch. Mountain Fuel will then install the system and absorb all the costs between now and the
next rate case. He stated this legislation is a liberalization of the rules, and does not require Panguitch
to take service from Mountain Fuel. In response to questions, he indicated that the existing tariff has
a bias in favor of the new customer. He stated that Mountain Fuel has extended natural gas service
as far as they can under the existing rules.
Rep. Evans noted the Senators members have been called up to their Chambers by leadership and
the committee is losing a quorum.
Sen. Dmitrich indicated rural Utah deserves to receive the same services as the rest of the state.
This legislation should pass to start the process and later refined. It is not a subsidy, he said since
Panguitch has agreed to pay.
Craig Twitchell, City Councilman in Panguitch, indicated the city ran cost studies and considered
other products and other systems, and found the best proposal now is Mountain Fuel's. If this
legislation is not passed, then it will take another year to obtain natural gas service, he said.
Alan Henry, City Manager, Panguitch, expressed appreciation for those who spoke in support of
their efforts to bring natural gas to Panguitch.
Rep. Evans expressed appreciation for the dialogue. She apologized for those on the agenda who
were not able to present because of time constraints and indicated they would be on the next month's
agenda.
6. Orientation - Electric Power Deregulation Issues
* Sen. Leonard Blackham, Senate Chair, Electrical Deregulation & Customer Choice Task Force
This discussion was postponed to a later date.
7. Electrical Deregulation And Customer Choice Task Force Update
* Rep. Christine Fox, House Chair - Task Force
This discussion was postponed to a later date.
MOTION: Rep. Seitz made a motion to adjourn the meeting. The motion passed by unanimous vote.
The meeting was adjourned at 11:55 a.m.