20250530Direct Ogami.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 NIKI OGAMI
INTERMOUNTAIN GAS COMPANY
MAY 30,2025

INTRODUCTION
1 Q. Please state your name and business address.
2 A. My name is Niki Ogami and my business address is 555 South Cole Road, Boise, Idaho
3 83709.
4 Q. What is your occupation?
5 A. I am the Manager of Accounting and Finance for Intermountain Gas Company
6 ("Intermountain" or"Company") an indirect wholly owned subsidiary of MDU Resources
7 Group, Inc. ("MDUR"). I am primarily responsible for providing leadership to the
8 Intermountain accounting department and ensuring proper FERC and GAAP accounting
9 methods and principles are followed.
STATEMENT OF QUALIFICATIONS
10 Q. Please summarize your education and professional experience.
1 1 A. I graduated from Idaho State University in December 2009 with a Bachelor of Business
12 Administration in Accounting. In October 2010, I began work at KPMG as an Audit
13 Associate. I obtained my certified public accountant("CPA") license in February 2012
14 and continue to keep my CPA license active in the state of Idaho. In March 2014, I began
15 work at Intermountain as a Financial Analyst in the Accounting and Finance department
16 with primary responsibilities related to recording monthly financial transactions and
17 preparing financial statements. In May 2023, I was promoted to Manager of Accounting
18 and Finance.
PURPOSE OF TESTIMONY
19 Q. Please summarize your testimony.
20 A. The Stipulation and Settlement filed in Case No. INT-G-22-07 included an agreement to
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I provide information regarding the Company's allocation methodology with its initial
2 general rate case filing. Specifically, in Item 5 of the Stipulation and Settlement,
3 Intermountain agreed to:
4 During the Company's next general rate case, the Company will
5 provide information regarding the allocation of costs and expenses
6 from its parent company to Intermountain, including testimony
7 documenting and describing the methodologies used to allocate
8 expenses to the Company from the Company's parent company or
9 from any other affiliate. This information will be provided through
10 workpapers detailing the calculations for the allocation factors used,
11 and demonstrating the costs being allocated to the Company for each
12 allocation factor. Intermountain will provide this information to
13 Staff within seven (7) days of filing the Application and to any
14 intervening Party, upon request, within seven (7) days of a
15 Commission order granting intervention to such Party.'
16 My testimony will provide an overview of Intermountain's allocation of costs from MDUR
17 and its MDU Utilities Group ("MDUG") companies. In addition, the Company will
18 provide workpapers within seven days of the filing of this general rate case.
19 Q. Are you sponsoring any exhibits to your direct testimony?
20 A. Yes. I am sponsoring the following Exhibits:
21 Exhibit 17 2024 Segment Structure
' Stipulation and Settlement,INT-G-22-07
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I Exhibit 18 2024 MDUR Shared Services Pricing Methodology
2 Exhibit 19 2024 MDUR Corporate Overhead Allocation Factors
3 Exhibit 20 Example of AP Shared Service Allocation
4 Exhibit 21 2024 MDUG Pricing Methodology
5 Q. Please describe the segment structure of the corporation.
6 A. MDUR, through its wholly owned subsidiary, MDU Energy Capital, owns Montana-
7 Dakota Utilities Co., Great Plains Natural Gas Co. (a division of Montana-Dakota Utilities
8 Co.), Cascade Natural Gas Corporation and Intermountain which are referred to
9 collectively as MDU Utilities Group ("MDUG"). In addition, MDUR owns WMI Energy
10 (primarily an interstate pipeline company), Centennial Capital (which has no employees
11 and primarily holds MDUR's captive insurance company and certain personal property)
12 and until October 31, 2024, MDU Construction Services Group. The phrase "MDUR
13 Operating Companies"will be used when referencing all companies owned by MDUR
14 throughout this testimony. Please see Exhibit No. 17 for a diagram of the segment structure
15 of the corporation in 2024. MDU Construction Services Group (now Everus Construction
16 Group, "Everus") completed its spinoff from MDUR on October 31, 2024 creating two
17 structures for 2024. These diagrams are intended to provide an overview for cost
18 allocation only and are not intended to represent the legal organization.
19 Q. Please describe the methodologies used to allocate expenses to the Company from the
20 Company's parent company.
21 A. Intermountain's parent company, MDUR, consists of shared services departments (payroll,
22 human resources, business services, and enterprise information technology) and
23 administrative and general departments. MDUR's policy is to directly assign costs to the
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I applicable operating companies where possible. Each shared service department has
2 developed a pricing methodology based on services performed to allocate costs to each of
3 the MDUR Operating Companies that utilize their services. For example, payroll shared
4 services allocates costs based on costs per check, whereas accounts payable shared services
5 allocates costs based on the number of payments/vouchers/unclaimed property reports per
6 affiliate. Please see Exhibit No. 18 for a description of each MDUR shared service pricing
7 methodology for 2024.
8 All administrative and general department's costs which are not directly assigned
9 will be allocated to the MDUR Operating Companies using the MDUR corporate overhead
10 allocation factor. The methodology used to apportion MDUR's administrative and general
11 department costs is a capitalization factor which is based on 12-month average
12 capitalization on March 31, effective July 1 and on September 30, effective January 1 each
13 year. Due to the spin-off of Everus completed October 31, 2024, there was an additional
14 capitalization factor in the year 2024 effective November 1. The MDUR Corporate
15 Overhead Allocation Factors for 2024 are shown in Exhibit No. 19.
16 Any cost incurred in a shared service department is allocated to MDUR according
17 to each department's pricing formula. Any cost allocated to MDUR is allocated to the
18 MDUR Operating Companies using the corporate overhead allocation factor. Please see
19 Exhibit No. 20 for an example demonstration of how an accounts payable shared service
20 cost would be allocated to Intermountain.
21 All MDUR allocated costs are charged to Intermountain business unit 48516, with
22 the exception of prepaid insurance. Intermountain's allocated prepaid insurance is charged
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I to FERC account 165 and then expensed monthly by Intermountain based on the
2 amortization period.
3 Q. Please describe the methodologies used to allocate expenses to the Company from any
4 other affiliate.
5 A. MDUG companies have departments that provide services to all four utility companies.
6 These departments include:
7 • Leadership Group - composed of the Executive Group and Directors that oversee
8 shared utility specific functions
9 • Customer Experience Team—composed of the Credit and Collections,
10 Scheduling Customer Service, and Customer Programs and Support
11 • Operations &Engineering Services Group
12 • Information Technology and Communications
13 • Environmental
14 • Safety& Technical Training
15 • Gas Supply& Control
16 •Utility Group Controller
17 •Utility Group Human Resources
18 These operational groups determined the proper allocation to use to allocate the costs to the
19 MDUG companies based on services performed for each utility company. Please see
20 Exhibit No. 21 for a description of each MDUG pricing methodology for 2024. Some costs
21 may be determined within these MDUG group departments to be specific to one company
22 and are allocated directly to that company and will not go through an allocation process.
23 Unlike MDUR allocations all being charged to the same business unit, MDUG allocations
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I are charged to each respective affiliate department business unit. To track these costs, any
2 allocations between affiliates will go through object account 1466.
3 Q. Please describe the methodology used to allocate cost of service to or from the
4 Company to or from any other affiliate.
5 A. Certain owned assets, such as each operating company's general offices, are used for the
6 benefit of MDUR and other MDUG companies. To cover the cost of ownership and
7 operating costs associated with these owned assets, a revenue requirement (asset return
8 plus annual operating expenses) is computed for the shared assets. The expense component
9 included in the return is composed of operating and maintenance costs, depreciation,
10 income tax and property tax expenses. The resulting revenue requirement is billed to
11 MDUR and the MDUG companies as a monthly fee. Intermountain allocates a cost of
12 service charge to MDUR and MDUG companies for the shared service departments that
13 occupy the Boise General Office which include the Customer Experience Team and
14 Enterprise Information Technologies. Intermountain, in turn, is charged a cost of service
15 from other affiliates based on the same methodology.
16 Q. Please explain any labor and reimbursable expense allocations not previously
17 discussed.
18 A. Labor,benefit costs, and reimbursable expenses are directly assigned to a MDUG company
19 where possible. For labor or reimbursable expense allocations outside of the MDUR and
20 MDUG allocations discussed previously, the development of standard labor distributions
21 for MDUG employees is used to account for those type of expenses. If the expense is not
22 direct, the appropriate MDUG company is charged as follows:
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I Union Employees
2 Time tickets are required for productive time. The employee specifies the proper MDUG
3 company, location and FERC account based on work performed. To account for non-
4 productive time, standard payroll labor distributions are established for all employees.
5 These standard labor distributions are calculated for union employees based on the
6 historical actual charges for the prior 12 months from December 1 through November 30.
7 Non-Union Employees
8 Non-union employees are not required to submit detailed time tickets with applicable
9 general ledger accounts specified. Rather, each employee has a"standard" set of general
10 ledger accounts that split the labor costs to the proper MDUG company based on an
11 expected ratio of work. This split can be unique and is based on the employee's position.
12 Costs are distributed based on this standard labor distribution for each employee, and the
13 allocations are reviewed annually. Time studies are completed at least every five years to
14 confirm employee standard labor distributions.
15 Payroll allocations for operations supervisors are a function of their direct reports
16 or may be determined by time studies conducted. Payroll allocations for staff engineers
17 are determined by time studies. Payroll allocations for General Office support staff are
18 reviewed by the applicable department head based on the type of work performed.
19 Reimbursable employee expenses are directly assigned to an MDUG company and
20 FERC account when possible. For employee expenses that are applicable to more than one
21 MDUG company, such as training that is not specific to a MDUG company, the
22 employee's standard labor distribution percentages are used to allocate the cost.
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CONCLUDING REMARKS
1 Q. Does this conclude your testimony?
2 A. Yes, it does.
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