Friday, April 18, 2008

Questar Gas In Full Damage Control Mode, Will Recheck Transponders Installed On All 840,000 Meters In Utah

Click HERE to review all posts regarding the Questar issue. The most recent post will appear first.

Update: April 18th, 2008, 9:30 P.M. MDT - Found new Provo Daily Herald story which provides more precise and current statistics. Updates posted in green.

In the wake of a popular outcry against Questar's March 2008 decision to back-bill 500 Utah customers because of erroneous meter readings, and facing a state regulatory investigation, the company has launched damage control operations. On April 2nd, Questar announced that customers who are disputing their bills as a result need not pay the disputed charges pending the outcome of an investigation. The full Questar statement is posted HERE.

And on April 17th, Questar announced the next step. They intend to double-check all of their meters to ensure the equipment is sending the company the correct information about how much natural gas each customer has used. Full stories from the Salt Lake Tribune, the Deseret News, and the Provo Daily Herald, and aired on KSL Channel 5 and KTVX Channel 4.

Although the utility said that it won't be done rechecking all 840,000 meters in its system until the end of the year, it is confident it already has identified the vast majority that were sending wrong information. "As we go through and recheck, we may find a few more meters out there that have a problem, but we don't anticipate it will be anything like the numbers that we've found so far," Questar spokesman Darren Shepherd said.

Questar started installing transponders, or transmitters, onto its meters about 10 years ago. Its goal eventually was to place a transponder on each meter so it could forgo sending individual meter readers out to each home. The transmitters radio consumption data to computers placed inside company trucks driving through neighborhoods.

In November 2007, though, the utility started loading new software onto laptop computers inside its trucks and discovered 450 transmitters were under-reporting natural gas use by about one-half. The overall cost to the company is now estimated to be at $500,000. After Questar tried to back bill those customers in one fell swoop for the natural gas they had used but not paid for - some customers received bills in excess of $2,000 in February - and customers began raising hell and filing appeals, the Utah Public Service Commission (PSC) ordered an investigation to evaluate the scope of the problem. It asked the state's Division of Public Utilities to conduct the probe. The Division has agreed to conduct a probe and has tentatively scheduled hearings for mid-August. A firm date has not yet been established; check the PSC calendar regularly to find out the firm date. All of the complaints were consolidated under Docket No. 08-057-11 on April 2nd, and are indexed and available for viewing HERE.

In addition, the new software revealed that another 39 households were over-billed a total of $46,800 because the faulty transponders were recording double the actual gas used. The 39 customers have since been refunded by Questar. This indicates that Questar recognizes that over-charging can occur as well, and they have already accounted for it.

One major bone of contention is the time frame for recovery. Under Utah Public Service Commission rules, Questar can seek back payment for up to two years if there was a billing error, but can only seek back payment for up to six months if the problem was a meter malfunction. Questar contends it is a billing error, and the Commission must determine which interpretation applies to this case.

Consumer advocate Roger Ball of the Utah Ratepayers Association said investigators should "have the drains opened up. We need to follow the money and find out what the financial consequences of this [problem] was for the past 10 years, wherever it may lead us".

Michele Beck, director of the Committee of Consumer Services that is charged with serving as the voice of consumers in utility matters that come before state regulators, said while the committee will be working with the division on the investigation it may come to different conclusions and have different policy recommendations on addressing the transponder problem.

Analysis: How should Questar have handled the problem? The two major components to this problem were blindsiding the customer and awarding the benefit of the doubt to the company rather than the customer. Since the company caused the problem, it needs to share in the responsibility. But at the same time, if a customer expects a refund of an overcharge, a customer should be equally willing to make up for an undercharge, otherwise you have an ethical problem. Customers cannot expect to have it both ways. So here are the two steps Questar should have taken:

(1). Since there is a dispute between whether it was a billing error (24 months) vs., a meter error (6 months), Questar should have shared the responsibility by awarding the benefit of the doubt to the customer by declaring it a meter error rather than a billing error, and recovering only six months underpayments. This decision would have prevented the major public relations brouhaha which erupted, and maight have even precluded the regulatory investigation now occurring.

(2). Instead of immediately trying to recover the underpayments without prior warning, Questar should have included a warning notice with the February bills explaining the problem, stating their intention to recover the underpayments in the March bill, and inviting customers to make alternative payment arrangements to mitigate hardship. This would have given customers a heads-up and allowed them time to arrange their finances accordingly.

But because Questar initially chose to be hardline, they now face the prospect of spending $600,000 - or more - in an effort to recover $600,000. Does that make financial sense? Putting a human face on capitalism builds goodwill and increases long term profits.

So is Questar "evil"? Absolutely not! Like so many other companies, Questar has merely gotten caught up in this predatory culture of cutthroat "winner-take-all" turbo-capitalism that first reared its ugly head during the second Reagan Administration (the McCain-Keating Five, the S & L scandals, etc.), but which arose in full fury once George W. Bush and his corporate handlers grabbed the levers of power in 2001. This culture has become so pervasive and embedded in our national psyche that even sports events and arenas are now named after corporations; consider the singularly unimaginative and un-sexy name of "Energy Solutions Arena" appended to Salt Lake's leading sports palace. But the more corporations abuse their power, the more regulatory measures are passed to compensate, which in turn grow government and increase our taxes. The best way for corporations to increase their freedom of action is to voluntarily apply a human face to capitalism and to accept and implement socially responsible business practices. In the long term, this will also shrink government and its corresponding tax burden upon Americans, and rekindle the respect for free enterprise once axiomatic in this country.

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