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Article

Utah Public Service Commission Approves Wexpro II

April 1, 2013

Salt Lake City—The Utah Public Service Commission has approved Wexpro II, a new agreement that duplicates a unique natural gas-production model that has benefited Questar Gas customers and Questar shareholders for more than three decades.

 “We’re very pleased the forward-looking Utah PSC is allowing us an opportunity to replicate the long-term success of the Wexpro Agreement,” said Ron Jibson, chairman, president and CEO of Questar Corporation. “Since its 1981 creation, the Wexpro Agreement has saved Questar Gas customers more than $1.3 billion and produced an average return on investment of more than 20 percent for our shareholders. This win-win model is unique in our industry, and we’re confident we can perpetuate this success by adding new properties to a new agreement.”

Wexpro II is similar to the original 1981 Wexpro Agreement. That 1981 agreement is a major reason Questar Gas’s residential natural gas rates are among the nation’s lowest. It governs a contractually dedicated gas supply produced by Questar subsidiary Wexpro Company. Under the terms of the 1981 agreement, Wexpro Company produces and delivers natural gas to Questar Gas at its cost of production. In return, Wexpro Company earns a contractual return on capital invested in successful development wells. Wexpro Company’s economic model is similar to a regulated utility.

“The original Wexpro agreement governs production from certain properties that Questar owned in the ’80s,” Jibson explained. “In recent years, more than half of Questar Gas’ supply has been produced from these properties. Even though technology has extended the life of those original properties beyond expectations, it makes sense to evaluate new properties that could potentially be added under a new agreement for the long-term benefit of our customers and shareholder.”

Wexpro Company’s technical staff is evaluating properties that regulators could consider for inclusion in the agreement.

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