20250530Direct Harris.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 ZACHARY L.HARRIS
INTERMOUNTAIN GAS COMPANY
MAY 30,2025

INTRODUCTION
1 Q. Please state your name and business address.
2 A. My name is Zachary L. Harris and my business address is 555 South Cole Road, Boise,
3 Idaho 83709.
4 Q. By whom are you employed, and in what capacity?
5 A. I am employed by Intermountain Gas Corporation ("Intermountain"or"Company"), a
6 wholly owned subsidiary of MDU Resources Group, Inc. ("MDU Resources"), as Manager
7 Regulatory Affairs. In this capacity, I am primarily responsible for rate design, cost-of-
8 service studies, and tariff administration.
9 Q. Please describe your educational background and other qualifications.
10 A. In December of 2008, I received a Bachelor of Science degree in Accounting from
11 Brigham Young University-Hawaii. In December of 2011, I received a Master of Science
12 degree in Accounting from Boise State University. I have also attended the utility
13 ratemaking course offered through New Mexico State University's Center for Public
14 Utilities, as well as other utility specific courses.
15 Q. Please describe your work experience.
16 A. I have been employed in the utilities industry since 2011, primarily in Regulatory Affairs. I
17 have experience in the electric utility industry, the freight handling and transportation
18 utility industry, and the natural gas utility industry. In November 2021, I became employed
19 as a Regulatory Analyst by Intermountain. In 2023, I was promoted to Manager,
20 Regulatory Affairs with responsibility for both Cascade Natural Gas Corporation
21 ("Cascade") and Intermountain.
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I Q. Please summarize your testimony.
2 A. My testimony will (i)provide a progress update on the Company's fixed network;
3 (ii)provide general information regarding Intermountain's rate design; and (iii) discuss the
4 Company's proposed tariff schedules.
5 Q. Are you sponsoring any exhibits to your direct testimony?
6 A. Yes. I sponsor the following exhibits:
7 Exhibit 39 Proposed revisions to the Company's tariff, redline version
8 Exhibit 40 Proposed revisions to the Company's tariff, clean version
FIXED NETWORK
9 Q. What is a fixed network?
10 A. A fixed network is an Automated Meter Reading network that utilizes a fixed mounted
11 data collector to gather time-synchronized interval data on gas consumption and
12 communicate it to the utility for billing and analysis.
13 Q. Why is the Company implementing a fixed network?
14 A. In Commission Order No. 33757, issued in Case No. INT-G-16-02, the Commission stated
15 that the Company did not have sufficient data for use in definitively allocating revenue
16 requirement among the various customer classes.'Following that case, the Company began
17 implementing a fixed network to provide daily data that could be used in the development
18 of a load study and provided an update of the progress on its fixed network in the
19 Company's most recent general rate case.2
' See Order No.33757 at p.28,Case No.INT-G-16-02.
2 See Case No.INT-G-22-07,Direct Testimony of Lori Blattner,pp,7, 8.
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I Q. Has the Company made progress on the implementation of its fixed network since its
2 last general rate case?
3 A. Yes. In the Company's most recent general rate case, Case No. INT-G-22-07,
4 Intermountain's fixed network system was 60 percent complete with full installation
5 estimated for the end of 2023.3 At the end of 2024, the Company had installed over 85
6 percent of its fixed network with full installation estimated by the end of 2025.
7 Q. Why was the Company unable to complete the full installation as it had originally
8 estimated?
9 A. Due to supply chain issues and factory shutdowns overseas related to the COVID-19
10 pandemic, the Company did not receive all the equipment and devices needed to fully
11 implement its fixed network until the end of 2023. Intermountain was not allowed
12 permission to install devices on a local electric utility's poles, which hindered the full
13 implementation of the fixed network design. While the Company has installed a significant
14 portion of its fixed network, the remaining areas will be installed as Intermountain gains
15 permission to access alternate locations for its fixed network.
16 Q. How was the fixed network used in this case?
17 A. The data available from Intermountain's fixed network deployment was used to inform the
18 development of a load study as described in greater detail in the pre-filed direct testimony
19 of Ronald J. Amen. Mr. Amen, a managing partner of Atrium Economics, LLC
20 ("Atrium"), provides testimony in support of the Company's Load Study, Cost of Service
21 Study, and rate design. As explained in Mr. Amen's testimony, the increased level of the
3 See Case No.INT-G-22-07,direct testimony of Lori Blattner at 8.
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I Company's fixed network(Mr. Amen refers to the fixed network as advanced metering
2 infrastructure) improves the data available to perform a load study.
RATE DESIGN
3 Q. What rate design considerations were part of this general rate case?
4 A. The Company's primary goal in this general rate case regarding rate design was to take a
5 meaningful step towards cost of service based rates. In addition, Intermountain considered
6 the potential impact on customers. The Company engaged Atrium to perform a cost of
7 service study ("COSS") and develop resulting rate design options utilizing the COSS as a
8 guide. The Company advised Atrium to strike a balance between moving toward rates
9 wherein the cost causer pays the full cost of service and ensuring the principle of
10 gradualism was taken into account with respect to the rate impact for individual customer
11 classes. The COSS and resulting rate design are discussed more fully in the direct
12 testimony of Ronald J. Amen.
13 Q. Did the Company identify any specific area within its rate design that needs to be
14 updated?
15 A. Yes. The COSS revealed that one area of misalignment with cost-based rates is the
16 Company's customer charges, specifically with the residential customer class.
17 Intermountain's customer charges and other fixed charges are lower than the COSS
18 indicate.
19 Q. How does a cost-based customer charge benefit customers?
20 A. A cost-based customer charge benefits customers by providing a clear price signal, which
21 helps customers understand the cost Intermountain incurs to serve them. In addition, a
22 cost-based customer charge establishes better price expectations,providing longer-term
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I price predictability and budgeting reliability. Finally, a cost-based customer charge is more
2 transparent because it shows the fixed costs required to provide service in the appropriate
3 fixed charge. Intermountain is applying the same concepts that the Commission has
4 recently approved for Avista Corporation("Avista"). For example, the Commission
5 recently stated:
6 The Commission believes that accurately assigning costs is a fair
7 component of rate design, and the misalignment of costs can create
8 revenue recovery distortions and give an incorrect perception of the
9 cost and value of the Company's services . . . The Commission
10 believes that customers will likely see more levelized summer and
11 winter bills and that the changes provide the benefit of energy bill
12 stabilization, which is an advantage for budgeting and planning
13 purposes for all customers.4
14 Intermountain believes a cost-based customer charge will provide the same benefits
15 to Intermountain customers as those outlined by the Commission for Avista customers.
'Case No.AVU-G-23-01,Order No. 35909 at pp. 12-13
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I Q. How does Intermountain's customer charge for residential customers compare to
2 other utilities in Idaho?
3 A. The Company has the lowest customer charge for residential customers when compared to
4 its peer utilities, as shown in Table 1 below.
Table 1 —Comparison of Customer Charges -Residential
Rocky
Utility Intermountain Avista Mountain Idaho Power
Power
Residential $8.005 $20.006 $16.507 $15.008
5 Atrium's updated COSS provides a sound basis to review the fixed costs. The
6 Company proposes bringing its customer charge to an amount that is closer to a cost-based
7 allocation.
8 Intermountain's customer charge for residential customers was increased from
9 $5.50 to $8.00 in 2023.9 The $5.50 customer charge was established in 2017 to remove the
10 seasonal customer charge in effect at that time and more closely align with customer-
11 related costs.10 The Company's customer charge in effect prior to 2017 had remained at
12 the same level for over 10 years. As shown in Table 1, each of the other Idaho utilities
5 See Intermountain Rate Schedule RS,Residential Service,at
https://puc.idaho.gov/Fileroom/PublicFiles/GAS/INT/General/Otarif`f/Intennountaingas.pdf
6 See Avista Corporation Schedule 101,General Service—Firm—Idaho,at https://www.myavista.com/about-us/our-
rates-and-tariffs/idaho-natural-gas
See Rocky Mountain Power Electric Service Schedule No. 1,Residential Service,at
https://www.rockymountainpower.net/content/dam/pcorp/documents/en/rockymountainpower/rates-
regulation/idaho/rates/001_Residential_Service.pdf
a See Idaho Power,Schedule 1,Residential Service Standard Plan,at
https:Hdocs.idahopower.com/pdfs/aboutus/ratesregulatory/tariffs/15 6.pdf
9 See Case No.INT-G-22-07,Order No 35836 at p.2.
10 See Case No.INT-G-16-02,Order No 33757 at pp. 30-32.
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I have a customer charge that is $15.00 or more; all of which are substantially more than
2 Intermountain's current customer charge.
3 Q. Is there precedent for similar increases in customer charges?
4 A. Yes, the Commission approved an increase in the customer charge from $7.00 per month
5 to $20.00 per month for residential customers within Avista's service territory and found
6 the increase fair,just, and reasonable.)l The Commission approved Avista's increase to its
7 customer charge over a two-year period. In addition, the Commission approved a
8 "Residential Rate Modernization Act" ("RRMA") for residential customers within Rocky
9 Mountain Power's service territory. The RRMA approved customer charges increasing
10 over the course of five years.12 By the end of the five years, the customer charge will
11 increase from $8.00 per month to $29.25 for residential customers,13 an overall increase of
12 approximately 265 percent.
13 Q. How does the Company propose to increase the customer charge to the residential
14 customer class?
15 A. The Company proposes a two-step rate increase to its residential customer charge, similar
16 to the approaches the Commission approved for Avista and Rocky Mountain Power, as
17 mentioned above. The first step of the increase is proposed to take effect January 1, 2026,
18 resulting in a customer charge of$14.00 per month. The second step is proposed to take
19 effect one year later, January 1, 2027, resulting in a total customer charge of$20.00 per
20 month.
11 See Case No.AVU-G-23-01,Order No.35909 at 12.
12 See Case No.PAC-E-22-15,Order No.35802.
13 Id.
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I Q. Why is the Company proposing a two-step increase?
2 A. The Company is proposing a two-step increase to allow for a gradual step toward
3 accurately assigning costs. The gradual step will align the residential customer charge with
4 the fixed costs required to serve them. In addition, the Commission has approved this
5 approach for other utilities.
6 Q. Will the second step result in increased revenue for the Company?
7 A. No. The Company proposes a revenue neutral approach for step two of the increase to the
8 customer charge. The customer charge will increase with a concurrent and offsetting
9 decrease in the distribution charge, and the overall revenue impact will be zero for the
10 residential customer class.
11 Q. Did the Company consider alternative proposals to its rate design?
12 A. Yes, Intermountain considered introducing a decoupling mechanism to recover its fixed
13 costs. However, Intermountain determined that utilizing proper rate design to recover costs
14 ultimately achieves the same goal as a decoupling mechanism in a simpler and more
15 effective manner.
TARIFF UPDATES
16 Q. Please explain, in general,the changes the Company is proposing to make to its tariff.
17 A. In general, Intermountain updates its rate schedules with the proposed rates included in
18 Exhibit 37 of the direct testimony of Ronald Amen. These changes, as well as textual
19 changes discussed below, are found in Exhibits 39 and 40, which I am sponsoring. Exhibit
20 39 shows the proposed revisions in redline format within the currently approved rate
21 schedules. Exhibit 40 is the final proposed tariff revisions in a clean format. The rate
22 changes conform to the direct testimony and exhibits of Ronald Amen. Besides rate
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I changes, Intermountain proposes revisions to text in Rate Schedule LV 1, and updates the
2 layout of its tariff schedules by adding tables showing the applicable charges for service on
3 each rate schedule. The revised layout provides improved transparency and clearly
4 identifies the total per therm charge for each rate schedule.
5 Q. What are the textual changes the Company is proposing to the tariff?
6 A. Intermountain is proposing textual changes for Rate Schedule LV 1, the tariff schedule
7 applicable to the Company's large volume sales customers. In paragraph 2, page 2 of Sheet
8 No. 7, Intermountain revises the language to refer to the LV I Block 1 Distribution Cost
9 rate as the basis for any punitive charges for a customer's deficiency in meeting their
10 contract minimum of 200,000 therms during the current contract period. This is appropriate
I I because the previous language referenced the "LV 1 Block I rate adjusted for the removal
12 of variable gas costs,"which requires the Company to adjust its purchased gas cost
13 adjustment("PGA") accounting records manually for fixed gas costs collected through
14 these deficiency billings. Due to the short timeframe under consideration and the often-
15 offsetting nature of fixed gas cost variances from actual costs, this process is burdensome
16 and unnecessary.
17 Q. Is the Company making any other changes to its tariff?
18 A. Yes. The Company is adding the Property Tax Charge to each customer class tariff
19 schedule with additional language to describe the new charge. The Property Tax charge is
20 described in more detail in the direct testimonies of Lori Blattner and Jacob A. Darrington.
CONCLUDING REMARKS
21 Q. Does this conclude your testimony?
22 A. Yes, it does.
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