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TransitJohn Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Oct-17-05 07:33 AM
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Wyo customers don't get break from state's gas production
Wyo customers don't get break from state's gas production

Star-Tribune energy reporter Monday, October 17, 2005

GILLETTE -- Throw a rock in Wyoming, and you might hit a gas well -- or someone on his way to go drill a new gas well.

Considering the state's relatively sparse population, there's about one natural gas well for every 15 people. With that kind of proximity, it would seem Wyomingites should be the last people in the nation concerned about spiking home heating bills this winter.

Not so.

This week the Wyoming Public Service Commission granted a 73 percent increase for customers of Wyoming Gas Co. in the Big Horn Basin, and the forecast for other natural gas customers across Wyoming is much the same.

Natural gas producers don't connect their wells directly into Wyoming homes. Instead, they connect them to a national network of pipelines. Simply put, producing natural gas and piping into homes are two different businesses separated by a sea of regulation.

"The distribution companies make their money off of building the pipes that deliver the natural gas to the burner tip, and their allowed rate of return is strictly regulated by the Wyoming Public Service Commission," said Bryan Hassler, executive director of the Wyoming Natural Gas Pipeline Authority.

The profit margin for natural gas distribution utilities is based in investment in distribution facilities. That margin is usually in the 8 percent to 11 percent range in Wyoming, according to PSC Chairman Steve Furtney.

As for the actual natural gas commodity, utilities pass on the price to customers dollar for dollar.

Two businesses

The Natural Gas Pipeline Authority is a quasi-governmental arm of the state given $1 billion in bonding authority to help finance construction of pipelines that export Wyoming gas. The idea is that with adequate access to national markets, Wyoming gas producers can get top dollar for their commodity and generate more revenue to state coffers.

This month, the authority announced its intention to pledge all $1 billion of its bonding authority to a $3 billion main line to Ohio. The project is being spearheaded by Kinder Morgan Energy Partners and Sempra Energy. That announcement drew questions from many Wyomingites about the possibility of returning the favor by cutting rates to Kinder Morgan gas customers in the state.

But that won't happen, according to state and Kinder Morgan officials, because Kinder Morgan Inc. the natural gas distribution company, and Kinder Morgan Energy Partners the pipeline company, are two separate companies under two separate regulatory authorities.
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