20250918Staff Comments.pdf

RECEIVED
September 18, 2025
JEFFREY R. LOLL IDAHO PUBLIC
DEPUTY ATTORNEY GENERAL UTILITIES COMMISSION
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-0074
[phone]
IDAHO BAR NO. 11675
Street Address for Express Mail:
11331 W CHINDEN BLVD, BLDG 8, SUITE 201-A
BOISE, ID 83714
Attorney for the Commission Staff
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF INTERMOUNTAIN )
GAS COMPANY'S APPLICATION FOR ) CASE NO. INT-G-25-04
AUTHORITY TO CHANGE ITS PRICES )
COMMENTS OF THE
COMMISSION STAFF
COMMISSION STAFF ("STAFF") OF the Idaho Public Utilities Commission
("Commission"), by and through its attorney of record, Jeffrey R. Loll, Deputy Attorney
General, submits the following comments.
BACKGROUND
On August 7, 2025, Intermountain Gas Company("Company") applied to the
Commission requesting authority to implement new rate schedules, effective October 1, 2025,
which will increase its annualized revenues by $303,638, due to increases in the Company's gas
related costs ("Application"). If approved, the typical residential customer's monthly bill would
decrease by$0.12, or 0.28%, commercial customer's monthly bill would decrease by$0.06, or
.03%, and on average, large volume and transport customers would see their bills increase
between$435.10 and$649.24, or 5.06%to 11.3%, depending on their rate schedule.
STAFF COMMENTS 1 SEPTEMBER 18, 2025

The Company's rates include a base-rate component set in a general rate case and a gas-
related cost component set in the Purchased Gas Cost Adjustment("PGA") case. The base-rate
component is intended to cover the Company's fixed costs to serve its customers and rarely
change. The Company's PGA is a Commission-approved mechanism that adjusts rates up or
down to reflect changes in the Company's costs to buy natural gas from suppliers—including
changes in transportation, storage, and other related costs. The Company defers these costs into
its PGA account and then passes them on to customers through an increase or decrease in rates.
In Order No. 26109, the Commission approved the Company's use of temporary pricing
for certain rate schedules to be determined by a PGA based on gas-related costs. The
Company's current temporary prices related to the cost of gas were approved in Order No. 36338
and are effective from October 1, 2024, through September 30, 2025.
The Company requests authority to pass through to each of its customer classes: (1) costs
incurred by the Company from firm transportation providers, (2) increases in the Company's
Weighted Average Cost of Gas ("WACOG"), (3) newly determined customer allocation of gas-
related costs under the Company's PGA provision, (4) one year temporary surcharges and credits
related to natural gas purchases and interstate transportation expenses from the Company's
deferred gas cost accounts, (5)benefits from the Company's management of storage and firm
capacity rights on various pipeline systems, and(6)benefits related to the sale of liquefied
natural gas from the Company's Nampa, Idaho facility. Application at 4.
The Company seeks authority to remove the temporary surcharges and credits related to
the cost of gas from the Company's present prices. Id.
The Company represents the proposed changes to its gas-related costs would result in a
price decrease for the Company's RS, GS-1, IS-R, and IS-C customer classes. Id.
The Company represents the proposed changes to its gas-related costs would result in a
price increase for the Company's LV-1, T-3, and T-4 customer classes. Id.
The Company requests that the filing requirement for the Deferred Gas Cost Balance,
Liquefied Natural Gas Sales Cost Benefit Analysis, and Weighted Average Cost of Gas reports
be maintained at a quarterly frequency. Id. at 12.
STAFF COMMENTS 2 SEPTEMBER 18, 2025

STAFF ANALYSIS
Staff examined the Company's Application, exhibits, workpapers, and responses to
Production Requests and confirmed: (1)the PGA proposal would not affect the Company's
earnings; (2) the deferred costs are prudent and properly calculated; and(3) the Company's
WACOG request is reasonable. Staff recommends that the Company's Application be approved.
Table No. 1 summarizes the impact of the proposed changes on customer classes.
Table No. 1: Summary of Proposed Rates
Average Average
Change in Class Change in Average Price
Customer Class: Revenue $/Therm % Change $/Therm
RS Residential $ (560,338) $ (0.00189) -00.28% $ 0.67147
GS-1 General Service (24,716) (0.00017) -00.03% 0.57600
LV-1 Large Volume 288,261 0.01891 5.06% 0.39267
T-3 Transportation(Volumetric) 52,200 0.00136 10.76% 0.01400
T-4 Transportation(Volumetric) - - 0.00% 0.01200
T-4 Demand Charge 548,231 0.02984 11.30% 0.29398
TOTAL $ 303,638 $ 0.00036 00.10% $ 0.35532
Overall, the Company's proposal increases annual revenue by approximately $303,638
which is detailed in Table No. 2 below.
STAFF COMMENTS 3 SEPTEMBER 18, 2025

Table No. 2: Proposed Change to Annual Revenue
Deferrals:
INT-G-24-04 Temporaries Reversed $ 33,578,952
Additional INT-G-25-04 Temporary Credits and Charges
Fixed Deferred Gas Costs $ (42,148,285)
Variable Deferred Gas Costs 5,140,012
Lost and Unaccounted for Gas (1,193,817)
LNG Sales Credit (1,086,693)
Total Additional Temporary Credits and Surcharges (39,288,783)
Total Deferrals $ ( 5,709,831)
Fixed Cost Changes:
NWP Full Rate Reservation $ (2,459,114)
NWP Discounted Reservation 4,794,988
Upstream Full Rate (10,450,391)
Upstream Discounted 11,103,840
SGS-2F and LS-2F 57,915
Other Storage Costs (5,475,000)
Total Fixed Cost Changes $ (2,427,762)
Changes in WACOG $ 8,662,228
Reallocation and True-Up of Fixed Costs $ ( 218,538)
Total Base Rate Price Changes $ 6,015,928
Total Annual Price Change $ 306,097
Total Annual Price Change (Exh.No 1) 303.638
Differences due to rounding $ 2,459
The Company reversed$33,578,952 in temporary credits and surcharges that were part of
last year's PGA, Case No. INT-G-24-04. The deferral account consists of capacity release
revenues, overcollections from last year's PGA, per therm amortization of deferrals, Liquid
Natural Gas ("LNG") off-system sales revenue, and interest. The proposed temporary credits
and surcharges in the Application reduces the deferral by $39,288,783. This results in a total
deferral balance reduction of$5,709,831.
The Company included fixed cost changes in its Application Exhibit No. 1. The fixed
cost changes include changes to the demand charges for transportation and storage of
$2,427,762. Additionally, the Company included commodity price changes (WACOG) of
$8,662,228, which is a reallocation and true-up of fixed costs; an adjustment based upon
normalization of sales volume; and an adjustment to the fixed cost collection rate, of$218,538.
STAFF COMMENTS 4 SEPTEMBER 18, 2025

Overall, the total PGA base rate price changes included by the Company is an increase of
$6,015,928.1
The total deferral balance increase and the increase in the PGA base rate price change
amounts to an annual price change increase of$306,097. The Company calculates a rounding
difference of$2,459 due to the per therm rate going to only five decimal places. This results in a
final annual price change calculation of$303,638.
Weighted Average Cost of Gas
The WACOG is the Company's average variable cost to buy and transport natural gas to
meet customers' estimated annual requirements. The components of the WACOG include the
volumetric interstate transportation rate, the city gate costs, the IGI Resources administration
fees, and the Gas Technology Institute charges. The proposed WACOG is $0.28734 per therm, a
7.1% increase from the current WACOG of$0.26839. Chart No. 1 below displays the WACOG
changes from the previous 10 years.
Chart No. 1: WACOG(Per Therm)
IGC PGA WACOG ($/Therm)
0.600
0.500
E 0.400
t 0.300
H
-Ln 0.200
0.100 —
0.000
$0.297 $0.260 $0.227 $0.209 $0.217 $0.260 $0.424 $0.392 $0.528 $0.305 $0.268 $0.287
2016 2017 2018 2019 2020 2021 2022* 2022* 2022 2023 2024 2025
Year *Out of cycle adjustment
'Note: the PGA base rate is not associated with base rates set in a general rate case.
STAFF COMMENTS 5 SEPTEMBER 18, 2025

Market Fundamentals &Price Analysis
The Company expressed a concern within the industry after the winter of 2024-2025,
regarding stagnant production in some areas as well as speculation that national storage levels
would be well below historical levels by November 1, 2025, thus causing future prices to
increase significantly versus past experience. Application at 7. The Company forecasts benefits
to the Company's customers generated by the Company's management of its significant natural
gas storage assets. Due to gas being added to storage that is procured during the summer season
when prices are traditionally lower than during the winter, the cost of the Company's stored gas
is normally less than what could be obtained on the open market in winter months. The
Company has entered into various fixed price agreements to lock-in the price for portions of its
underground storage and other winter"flowing" supplies, thus stabilizing a portion of the supply
price and insulating it from the significant volatility seen in the futures market. Id. at 8. After
analyzing the Company's projected cost to purchase natural gas by comparing it to forecasts by
the Energy Information Administration("BIA"), as shown below, Staff believes the Company's
projected natural gas costs are reasonable.
Natural Gas Production
Rising natural gas production in recent months has added to higher-than-anticipated
inventory levels. We expect marketed natural gas production to grow by 3% over
2024 volumes, supported by growth of 2 Bcf/d in the Permian region and 0.9 Bcf/d
in each of the Haynesville and Appalachia regions in 2025. This growth has been
sustained in part by the deployment of drilling rigs to natural gas-intensive shale
plays. Baker Hughes reported on August 8 that 19 more active rigs were focused
on drilling for natural gas than there were at the start of April, an 18%increase. The
Haynesville region led the increase in natural gas-directed rig deployment.
Natural Gas Prices
We expect the Henry Hub natural gas spot price will rise from an average of$3.20
per million British thermal units (MMBtu) in July to $3.90/MMBtu in 4Q25 and
$4.30/MMBtu next year. Rising natural gas prices reflect relatively flat natural gas
production amid an increase in U.S. liquefied natural gas exports.
EIA STEO, https://www.eia.gov/outlooks/steo/pdf/steo_full.pdf
STAFF COMMENTS 6 SEPTEMBER 18, 2025

Pipeline Capacity
The Company holds excess pipeline capacity in case of increased demand and it mitigates
the cost of holding this excess by selling it back into the market, benefiting customers through
the PGA. This year, the Company released firm transportation capacity on the Northwest
Pipeline, its upstream pipelines, and from Clay Basin storage. The Company's capacity release
revenue for the current PGA is forecasted to be $17,148,108 which will be credited back to
customers over the coming PGA year, a significant increase from last year's $9 million credit to
customers. Exhibit No. 8. The Company's historical capacity release is shown below in Chart
No. 2.
Chart No. 2: Historical Capacity Releases
IGC Historical Transportation Capacity Release
$20,000,000
$15,000,000
$10,000,000
$5,000,000
2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
Seriesl $3,940, $3,940, $5,453, $7,125, $6,410, $6,351, $6,629, $5,740, $9,056, $17,481
Purchasing
The Company continues to utilize index or spot purchases, allowing it to take advantage
of low prices for real-time needs. Staff reviewed the Company's natural gas purchases during
the PGA period by examining a sample of invoices. Staff confirmed that the natural gas
purchases reconciled with the amount of natural gas purchases reported in the monthly deferrals.
Transportation and Storage
The Company delivers domestically produced natural gas to its city gates through the
Northwest Pipeline. The Company also delivers natural gas from Canada by using pipeline
capacity on Gas Transmission Northwest, TransCanada's Foothills Pipeline system, and
TransCanada's Alberta system.
STAFF COMMENTS 7 SEPTEMBER 18, 2025

Permanent transportation and storage costs reflect savings of$7.8 million. Typically,
natural gas added to storage is procured during the summer season when prices are normally
lower than in winter. The Company has been purchasing storage as needed to meet peak times in
the winter and to hedge against higher prices. Application at 6.
Liquid Natural Gas Storm
In Order No. 32793, the Commission authorized the Company to sell excess LNG
capacity from its Nampa LNG Facility to non-utility customers. In Order No. 35836, the
Commission approved a Settlement and Stipulation authorizing the change in the non-utility
LNG credits to $0.03 per gallon for capital improvements and $0.04 per gallon for operational
and maintenance expenses. The new sales credit rates were used to calculate the 2025 LNG
sales benefits.
Historical LNG benefits included in the PGA are shown below in Chart No. 3. The
Company proposes to credit customers $1,086,693 for their share of revenues of LNG sales.
Staff reviewed the Company's non-utility sales of LNG and verified the credit to ratepayers has
been calculated correctly.
Chart No. 3: LNG Sales Ratepaver Benefits
IGC Historical LNG Benefit
$1,600,000
$1,400,000
$1,200,000
$1,000,000
$800,000
$600,000
$400,000
$200,000
$0
2016 PGA 2017 PGA 2018 PGA 1 2019 PGA 2020 PGA 2021 PGA 2022 PGA 2023 PGA 2024 PGA 2025 PGA
Seriesl $236,805 $495,418 $529,445 $1,129,239 $1,005,060 $717,972 $221,993 $1,423,100 $1,401,373 $1,086,693
Lost and Unaccounted for Gas and Line Break
Lost and Unaccounted For("LAUF") Gas is the difference between the volume of natural
gas delivered to the distribution system at the city gate and volume of gas billed to customers at
STAFF COMMENTS 8 SEPTEMBER 18, 2025

the meter. This year, the Company's LAUF Gas rate is -0.4601% (found gas). Workpaper No.
6. The Company allocates LAUF Gas at 75%to core customers (Residential and General
Service) and 25%to industrial customers (Large Volume and Transportation). In this PGA, the
total credit for LAUF is $993,971, which is a $745,478 credit to core customers and a $248,492
credit credited to industrial customers. Workpaper No. 5.
The Company charges a Line Break Rate to parties who are responsible for damage to the
distribution system causing a gas leak. The Company proposed to increase the rate from the
current rate of$0.47576 to $0.49122. The Line Break Rate includes the WACOG of$0.28734
and Gas Transportation Cost of$0.20388. Exhibit No. 2, page 2. Staff believes the Company
calculated the proposed Line Break Rate consistent with Order No. 33139.
PGA Reporting
In Order No. 34448, the Commission found that quarterly WACOG and monthly deferred
cost reports provide useful information, assist Staff with determining whether to audit earlier
than planned, and whether an interim filing might be needed. In its Application, the Company
requested that the Commission maintain the quarterly requirement of filing for the Deferred Gas
Cost Balance, LNG Sales Cost Benefit Analysis, and WACOG reports. The Company stated
that it is committed to notifying the Commission if an interim filing might be needed. Staff
believes quarterly reporting is reasonable given the Company's commitment to notify the
Commission.
CUSTOMER NOTICE AND PRESS RELEASE
The Company's press release and customer notice were included with its Application.
Staff reviewed the documents and determined that both met the requirements of Rule 125 of the
Commission's Rules of Procedure. IDAPA 31.01.01.125. The notice was included with bills
mailed to customers beginning August 11, 2025, and ending September 10, 2025.
As of September 18, 2025, no customer comments had been filed. The Commission set a
comment deadline of September 18, 2025. Some customers in the last billing cycles may not
have received or had adequate time to submit comments before the comment deadline.
Customers should have the opportunity to file comments and have those comments considered
STAFF COMMENTS 9 SEPTEMBER 18, 2025

by the Commission. Staff recommends that the Commission consider late filed comments from
customers.
STAFF RECOMMENDATION
After examining the Company's Application, natural gas purchases, and deferral activity
for the year, Staff recommends the Commission:
1. Approve the Company's Application, increasing revenues by $303,638 as shown in
Table No. 2, and approve the proposed WACOG amount of$0.28734 per therm;
2. Approve the Company's proposed Tariff Rate Schedules RS, GS-1, IS-R, IS-C, LV-1,
T-3, and T-4 as filed with the Application;
3. Direct the Company to continue filing quarterly reports reflecting deferred gas costs
and WACOG projections;
4. Order the Company to file an adjustment to its PGA-related rates, if gas prices
significantly deviate from projections; and
5. Consider late-filed comments from customers.
Respectfully submitted this 18th day of September 2025.
ffrey 'Loll
Deputy Attorney General
Technical Staff: Leena Gilman, Joe Terry, Curtis Thaden, Vickie Stephens
I:\Utility\UMISC\COMMENTS\INT-G-25-04 Comments.docx
STAFF COMMENTS 10 SEPTEMBER 18, 2025

CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS 181h DAY OF SEPTEMBER 2025,
SERVED THE FOREGOING COMMENTS OF THE COMMISSION STAFF , IN CASE
NO. INT-G-25-04, BY E-MAILING A COPY THEREOF, TO THE FOLLOWING:
LORI BLATTNER PRESTON N CARTER
DIR—REGULATORY AFFAIRS MEGANN E. MEIER
INTERMOUNTAIN GAS CO GIVENS PURSLEY LLP
PO BOX 7608 601 W BANNOCK ST
BOISE ID 83707 BOISE ID 83702
E-MAIL: lori.blattner( int a� E-MAIL: prestoncarterk i�pursley.com
igcre ug latory(kint ag s.com mem(crs_i�pursle.
stephaniewkgivenspursle,
PATRICIA JORDAN, ECRETARY
CERTIFICATE OF SERVICE