20250530Direct Nygard.pdf

RECEIVED
May 30, 2025
IDAHO PUBLIC
Preston N. Carter, ISB No. 8462 UTILITIES COMMISSION
Megann E. Meier, ISB No. 11948
GIVENS PURSLEY LLP
601 West Bannock Street
P.O. Box 2720
Boise, Idaho 83701-2720
Office: [phone]
Fax: [phone]
[e-mail]
[e-mail]
Attorneys for Intermountain Gas Company
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION Case No. INT-G-25-02
OF INTERMOUNTAIN GAS COMPANY
FOR THE AUTHORITY TO INCREASE
ITS RATES AND CHARGES FOR
NATURAL GAS SERVICE IN THE STATE
OF IDAHO
DIRECT TESTIMONY OF TAMMY NYGARD
INTERMOUNTAIN GAS COMPANY
MAY 30,2025

INTRODUCTION
1 Q. Please state your name and business address.
2 A. My name is Tammy J. Nygard and my business address is 1200 West Century Avenue,
3 Bismarck,North Dakota 58506.
4 Q. What is your occupation?
5 A. I am the Controller for MDU Resources Group, Inc. ("MDU Resources"), which includes
6 Intermountain Gas Company ("Intermountain"or"Company"), a wholly owned subsidiary
7 company of MDU Resources.
Q. Please describe your duties and responsibilities with Intermountain.
A. I am responsible for providing leadership and management of the accounting and the
financial forecasting/planning functions, including the analysis and reporting of all
financial transactions.
STATEMENT OF QUALIFICATIONS
8 Q. Please describe your educational background and other qualifications.
9 A. I graduated from the University of Mary with a Bachelor of Science degree in Accounting
10 and Computer Information Systems.
11 Q. Please describe your work experience.
12 A. I have 23 years of experience in the utility industry. During my tenure with the company, I
13 have held positions of increasing responsibility, including Financial Analyst for Montana-
14 Dakota, Director of Accounting and Finance for Cascade Natural Gas Corporation,
15 Controller for our utility companies, and now Controller for MDU Resources.
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T.NYGARD,DI
INTERMOUNTAIN GAS COMPANY

PURPOSE OF TESTIMONY
1 Q. Please summarize your testimony.
2 A. My testimony supports the Company's overall cost of capital recommendation in this case.
3 To that end, I explain and support the Company's recommended cost of debt, capital
4 structure, and rate of return. In addition, I provide testimony supporting the financial
5 group's 2025 pro forma capital expenditures for which Intermountain seeks recovery in
6 this case.
7 Q. Are you sponsoring any exhibits to your direct testimony?
8 A. Yes, I am sponsoring Exhibit No. 2.
9 Q. Please explain Exhibit No. 2.
10 A. Exhibit No. 2 shows the utility capital structure of Intermountain for the twelve months
11 ended December 31, 2024 and the projected capital structure for 2025. Exhibit No. 2
12 includes the associated costs of debt and common equity. The proposed capital structure is
13 calculated excluding short-term debt. This capital structure and the associated costs serve
14 as the basis for the overall rate of return requested by Intermountain in this rate filing of
15 7.86 percent. The basis for the requested 10.8 percent return on common equity contained
16 within the overall requested rate of return is supported by the testimony of Ann Bulkley.
17 Page 1 of Exhibit No. 2 summarizes the utility capital structure and the related
18 utility costs of capital at December 31, 2024 and the projected capital structure and the
19 related utility costs of capital for 2025.
20 Q. What is the capital structure as proposed by the Company in this rate case
21 proceeding?
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T.NYGARD,DI
INTERMOUNTAIN GAS COMPANY

I A. As shown on Page 1 of Exhibit No. 2, the components of the 2024 and 2025 projected
2 overall annual rate of return continue to move towards a capital structure comprised of an
3 even split between long-term debt and equity. Because the two components are so close to
4 even, with equity being slightly higher, the Company proposes a capital structure with 50
5 percent debt and 50 percent equity. The proposed capital structure components, which are
6 used by Jacob Darrington to calculate the revenue requirement, are:
Weighted
Cost of
Ratio Cost Capital
Long-Term Debt 50.000% 4.918% 2.46%
Equity 50.000% 10.800% 5.40%
Rate of Return 100.000% 7.86%
7
8 Q. How does the Company finance its regulated utility operations and determine the
9 amount of common equity and debt to be included in its capital structure?
10 A. As a regulated public utility, the Company has a duty and obligation to provide safe and
11 reliable service to its customers across its service territory while prudently balancing cost
12 and risk. In order to fulfill its service obligations, the Company has made significant
13 capital expenditures for new plant investment throughout its service territory, including
14 new plant for mains, services, meters, and other support facilities. These new investments
15 also have associated operating and maintenance costs. Through its financial planning
16 process, the Company determines the amounts of necessary financing required to support
17 these activities. Intermountain finances its operations targeting a 50 percent common
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T.NYGARD,DI
INTERMOUNTAIN GAS COMPANY

I equity capital structure at year end. Capital expenditure investments are financed through a
2 mix of internally generated funds, the utilization of the Company's short-term credit line
3 and the issuance of additional debt and common equity financing as required to maintain
4 targeted capital ratios and finance the utility operations.
5 The Company expects to receive approximately$22.0 million of common equity
6 during 2025.
7 Q. What are the Company's expected long-term debt issuances during 2025?
8 A. The Company has $25.0 million of senior notes maturing in October 2025 and plans to
9 issue $50 million,partially to replace the $25.0 million senior notes. On May 9, 2025, the
10 Company filed Case No. INT-G-25-03, Application for Authorization to Issue and Sell
11 Securities, to allow for the planned debt issuance.
12 Q. Are there other debt obligations that the Company must consider?
13 A. Yes. In addition to long-term debt, the Company's has a revolving credit agreement which
14 was amended and restated on June 20, 2024 increasing the borrowing capacity from $100
15 million to $175 million.
16 Q. What do Exhibit No. 2, pages 2 and 3 show?
17 A. Page 2 shows the cost and the debt balance by issue at December 31, 2024 and page 3
18 shows the projected cost and the debt balance by issue at December 31, 2025.
19 Q. How did you derive the projected cost of debt for 2025?
20 A. The projected cost of debt for 2025 is based upon the yield-to-maturity of each debt issue
21 outstanding and is based on the information included in Case No. INT-G-25-03.
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T.NYGARD,DI
INTERMOUNTAIN GAS COMPANY

I Q. What does Exhibit No. 2,page 4 show?
2 A. The schedule presents the common equity balance at December 31, 2024 and the projected
3 balance for December 31, 2025 reflecting the projected activity in the balance.
4 PRO-FORMA ADDITIONS TO PLANT PLACED IN SERVICE IN 2025
5 Q. Are you sponsoring any pro forma plant additions?
6 A. Yes. I am sponsoring two pro forma plant additions as summarized in Table l below.
Table 1 -Additions to Plant In-Service
Description Specific Projects Programmatic Total
Projects
2025 Major Projects over$200k
Testimony of Tammy J Nygard $ 1,310,679 $ - $ 1,310,679
7
8 FP-322682 - UG—UI Planner Upgrade- IGC
9 Q. Please describe the FP-322682 —UG-UI Planner Upgrade-IGC.
10 A. The UI Planner software is an essential tool for facilitating the financial planning process
11 at Intermountain. Support for the current version is being phased out by the vendor. To
12 ensure continued support for the software, we must upgrade to the latest version, which
13 includes enhancements designed to improve the efficiency and detail of the financial
14 planning process.
15 Q. What are the estimated costs for the project?
16 A. Total estimated costs for 2025 are $745,545.
17 FP-326274 -IGC Share of FS Software Purchase
18 Q. Please describe FP-326274.
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T.NYGARD,DI
INTERMOUNTAIN GAS COMPANY

I A. FutureSource is a separate company from MDU Resources that has owned certain
2 corporate shared assets. It was decided the bulk of FutureSource's assets, should be held by
3 the individual operating companies that use those assets. That process required that the
4 three individual utilities "buy"the assets from FutureSource. The costs included in that
5 transaction for Intermountain were to purchase software related costs that had previously
6 been allocated to Intermountain. That activity needed to be processed as any other
7 purchase, so capital funding projects and associated workorders were required in
8 PowerPlan. FP-326274 is the Intermountain project to achieve that purpose.
9 Q. What are the estimated costs for the project?
10 A. The total project costs for 2025 are $565,134.
CONCLUDING REMARKS
1 1 Q. Does this conclude your testimony?
12 A. Yes, it does.
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T.NYGARD,DI
INTERMOUNTAIN GAS COMPANY