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Show The Enterprise Review , August 18, 1976 Page 10b Warranty Protection Mountain Fuel to Boost Gas Provides Little Impetus Rates $125.4 Million to New Home Sales recent Federal Power Commission decision will result in Mountain Fuel Supply Company having to pay $125.4 millionmore per year for gas it buys from producers. Mountain Fuel Supply Company said Friday it will file for substantial rate increases in both Utah and Wyoming next week because of the FPC action and action by. the Canadian government. The federal Power Commission, on July 27, issued an order raising the price producers charge for natural gas purchased in the field. The FPC ordered that gas found after January 1, 1975, will be raised from 52 cents to $1.42 per thousand cubic feet. Gas found between January 1, 1973, and December 31, 1974, was raised from 52 cents to $1.01 per thousand The order became effective cubic feet. immediately upon announcement. In addition, the Canadian government has increased the price of Canadian gas from the current $1.60 to $1.80 per thousand cubic feet The Canadian effective September 10. increase raises the company's costs by about $2.9 million for a combined total of 528.3 million. This governmental action will bring rate increases amounting to $24.8 million in Utah and $3.5 million in Wyoming. According to the company, this is far less than a tripling of rates which some reports have indicated would result, due primarily to Mountain Fuels own low cost supplies. At a press conference called to explain impact of the FPC decision on Mountain Fuel, president B. Z. Kastler said if the increases are spread uniformly to all classes of customers, and the pattern of usage among those various classes remains the same, an average Utah residential customer will pay $34.86 more per year. An average Wyoming customer, who uses more gas because of higher elevations and the resulting colder weather, would pay $43.61 more per year. Kastler also pointed out that these increases are mandated on Mountain Fuel, and the company has no choice but to pay and pass A Homes in Utah carrying the Home Owners Warranty (HOW) now total S85. Twenty-tw- builders are o authorized to build homes in Utah under the HOW program. But according to Grant Jensen, president of the Utah Home Builders Association, the warranty program hasn't had an appreciable effect on housing sales in Utah. He speculates that if there is a surplus of new homes this fall, the HOW plan could have an effect on which homes consumers will buy but not on how many homes will be sold. He said that if people have several homes to choose from, they might consistently choose homes with HOW protection. This, he said, could cause more builders to apply for HOW building authorization, thereby increasing the overall quality of homes in the state. The HOW program proe owner vides a with ten years of specified warranty protection. During the first year the builder must make good on any new-hom- failures in workmanship or In the second materials. year the builder is still responsible for defects in heating, cooling, electrical, plumbing and structural defects. Through years three to ten, the home owner has protection directly through the insurance company against major structural defects. The insurance company absorbs losses without the right of subrogation against the builder. The HOW plan costs the home owner $2 per thousand dollars of the home's original sale price. That comes to $100 on a $50,000 home purchase. Jensen believes that home warranties will someday be a major consideration for home buyers. The HOW plan, he said, is one of the first major steps in that direction. Jensen speculates that in the near future almost every home will have a major warranty of some sort and home warranties will create a big business and a major sales consideration. WHOS RESPONSIBLE? ...To see that 25.000 youngsters get first-han- d exposure to careers in the community each year? ...To answer more than 1,600 inquiries each month seeking statistical, economic and tourist information about Salt Lake? ...For spearheading downtown improvements which include the First South and Main Street beautification projects? ...For arousing public opinions on such issues as Common Situs Picketing. Clean Air Act Amendment, metrication, crime prevention, low-inco- housing, energy and water resources? ...For hosting and the Salt Lake visit of The Freedom Train, Russian Cosmonauts. Sister Cities Program with Matsumoto diaofficials, business and "Washington communication and sales management logues. seminars? ...For uniting the entire state through cooperative programs in economic development, local chambers of commerce and community development? The Salt Lake Area Chamber of Commerce! (Alone and in conjunction with other civic organizations) d Shouldn't you be a part of this organization? action-oriente- Salt Lake Area Chamber of Commerce 1 19 East 2nd So. 364-363- on the price to customers. If the company refused to pay, the supplies of gas would be sold to other companies, and Mountain Fuel customers would be forced to use even more expensive fuels if available at all, Kastler said. Government Action Since March 1, 1974, when Mountain Fuel began experiencing its recent series of rate increases, approximately 86 percent of the rate increases granted have been the direct result of governmental action such as these most recent orders. This means that only about 14 percent of these increases have come from the company to pay for other increased costs, such as wages, supplies and materials. Kastler said Mountain Fuels rates remain among the lowest natural gas rates in the nation. He said the increases could have been higher were it not for the company's own exploration and drilling program. Mountain Fuel has found and produces much of its own supply, which comes to customers far cheaper than the new or former FPC mandated producer rates. Kastler also emphasized that none of the increase in rates will go to increase returns to The company shareholders in any way. amount of the requested rate hikes simply equals the higher amount Mountain Fuel must now pay for the gas it purchases. He also warned that these rate increases requests are not the end of the impact of the FPC and Canadian governmental action. Later in the year Mountain Fuel will have to ask for further increases when pipeline suppliers pass on to the company their increased prices resulting from the FPC order. And on January 1, 1977, the Canadians have stated their intention to raise their price to SI .94. Also, the FPC order itself provides for further quarterly increases in some gas. |