20260909APPLICATION.pdf

RECEIVED
September 09, 2026
IDAHO PUBLIC
UTILITIES COMMISSION
Preston N. Carter, ISB No. 8462
GIVENS PURSLEY LLP
601 West Bannock Street
P.O. Box 2720
Boise, Idaho 83701-2720
Office: [phone]
Fax: [phone]
[e-mail]
Attorneys for Intermountain Gas Company
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION Case No. INT-G-26-05
OF INTERMOUNTAIN GAS COMPANY
FOR AUTHORITY TO REVISE RATE APPLICATION
SCHEDULE EE-GS —GENERAL SERVICE
ENERGY EFFICIENCY REBATE
PROGRAM
Intermountain Gas Company("Intermountain," "Applicant," or"Company"), a subsidiary
of MDU Resources Group, Inc. with general offices located at 555 South Cole Road, Boise,
Idaho, pursuant to the Rules of Procedure of the Idaho Public Utilities Commission
("Commission"), requests authority to revise Rate Schedule EE-GS—General Service Energy
Efficiency Rebate Program as outlined in this Application, effective October 1, 2026.
Please address communications regarding this Application to:
Preston N. Carter Michael Parvienen
Givens Pursley LLP Director—Regulatory Affairs
601 W. Bannock St. Intermountain Gas Company
Boise, Idaho 83702 PO Box 7608
[e-mail] Boise, Idaho 83707
[e-mail] [e-mail]
[e-mail]
APPLICATION PAGE I OF 12

In support of this Application, Intermountain alleges and states as follows.
I. INTRODUCTION
Intermountain is a gas utility, subject to the jurisdiction of the Commission, engaged in the
sale of and distribution of natural gas within the State of Idaho under authority of Commission
Certificate No. 219, issued December 2, 1955, as amended and supplemented by Order No. 6564,
dated October 3, 1962.
Intermountain provides natural gas service to the following Idaho communities and
counties and adjoining areas:
Ada County - Boise, Eagle, Garden City, Kuna, Meridian, and Star;
Bannock County-Arimo, Chubbuck, Inkom, Lava Hot Springs, McCammon, and Pocatello; Bear
Lake County- Georgetown and Montpelier;
Bingham County- Aberdeen, Basalt, Blackfoot, Firth, Fort Hall, Moreland/Riverside, and
Shelley; Blaine County - Bellevue, Hailey, Ketchum, and Sun Valley;
Bonneville County- Ammon, Idaho Falls, Iona, and Ucon;
Canyon County- Caldwell, Greenleaf, Middleton,Nampa, Parma, and Wilder; Caribou County -
Bancroft, Grace, and Soda Springs;
Cassia County-Burley, Declo, Malta, and Raft River;
Elmore County - Glenns Ferry, Hammett, and Mountain Home; Fremont County-Parker and St.
Anthony;
Gem County - Emmett;
Gooding County - Gooding and Wendell;
Jefferson County- Lewisville, Menan, Rigby, and Ririe; Jerome County- Jerome;
Lincoln County- Shoshone;
Madison County- Rexburg and Sugar City; Minidoka County- Heyburn, Paul, and Rupert;
Owyhee County - Bruneau and Homedale;
Payette County - Fruitland,New Plymouth, and Payette; Power County -American Falls;
Twin Falls County - Buhl, Filer, Hansen, Kimberly, Murtaugh, and Twin Falls;
Washington County-Weiser.
Intermountain's properties in these locations consist of transmission pipelines, liquefied
natural gas storage facilities, compressor stations, distribution mains, services, meters and
regulators, and general plant and equipment.
APPLICATION PAGE 2 OF 12

IL BACKGROUND
Intermountain Gas Company ("Intermountain" or"Company") launched its Commercial
Energy Efficiency Program in April 2021 following authorization from the Idaho Public Utilities
Commission in(Order No. 34941, Case No. INT-G-20-04). The program is funded through Rate
Schedule EEC-GS, and was designed to provide incentives for commercial space-heating and
kitchen equipment, with the goal of promoting energy efficiency among commercial customers.
I11. PURPOSE OF THIS REFILED APPLICATION
On November 21, 2025, Intermountain filed an application in Case No. INT-G-25-07
("Case")requesting authority to revise Rate Schedule EE-GS. In Order No. 37033 ("Final
Order"), served May 5, 2026, the Commission denied that application and directed the Company
and Staff to hold one or more workshops concerning: (1)proposed changes to the technical
reference manual ("TRM")used to evaluate the Commercial Energy Efficiency Program, and(2)
revised estimated savings, incremental costs, and rebate incentives for the proposed offerings,
including the tankless water heater and storage water heater measures.
The Commission further ordered the Company to reapply with a proposal that considers
the information exchanged during the workshop process. This refiled Application is intended to
satisfy that directive.
IV. STAFF CONCERNS AND THE COMPANY'S RESPONSE
In the prior case, Staff recommended denial of the application to revise the commercial
energy efficiency rebate program and specifically identified concerns with the proposed
commercial tankless water heater and storage water heater measures. Staff stated that those
measures accounted for approximately 77 percent of the Company's forecasted first-year savings
APPLICATION PAGE 3 OF 12

and concluded that the estimated savings, incremental costs, and rebate incentives for those
measures were unreasonably high.
Staff also questioned whether the Company's tankless-water-heater incremental cost
methodology properly accounted for baseline equipment costs, whether the storage-water-heater
incremental-cost assumptions relied on oversized baseline equipment, and whether the resulting
incentives over-incentivized light-commercial units. Staff further advised that incentives generally
should be no higher than each measure's estimated incremental cost, and that the portfolio as a
whole should be reevaluated in light of any revisions to the water-heating measures.
The Company started by revising the water-heating savings estimates by working with the
technical consultant Qualus. Based on these updated savings, the Company proceeded to cost test
the commercial portfolio as well as conduct sensitivity testing on the portfolio that resulted in the
program revisions that are the basis of this application.
V. WORKSHOPS,TRM REVISIONS,AND PROGRAM UPDATES
Following the Final Order, the Company re-engaged its technical consultant, Qualus, to
review the water-heating assumptions at issue in Case No. INT-G-25-07. The comments and Final
Order in Case No. INT-G-25-07 were shared with Qualus. The Company worked with Qualus on
the methodology for revising the estimates, as well as the benefits and risks of the different
approaches. The Company presented its proposed approach to Staff during workshop discussions
on May 28, 2026. The meeting provided Staff with an opportunity to ask questions. No major
objections were raised at the meeting. The Company summarized the options considered in the
meeting in Attachment 1, "Evaluation of Commercial Water Heater Measure Options."
After the workshop with Staff, Qualus finalized the revised water-heating estimates and
provided the Company with a memorandum describing the TRM update process, the supporting
APPLICATION PAGE 4 OF 12

workbooks, and the updated TRM materials. The following is provided as Exhibit No. 1: "Water
Heater TRM Update Memo."
The Company reviewed those materials and based on its involvement in the revision
process, the supporting memorandum and workpapers, and the additional information exchanged
during the workshops, believes the revised savings estimates are reasonable for purposes of this
refiled Application.
Following Staffs recommendation, the Company took steps to assess the reasonableness
of the savings numbers. In the Case comments and the workshop meetings, Staff compared
commercial savings to residential savings as a reasonableness check. There are several reasons the
commercial water-heating savings are not the same as the residential water-heating savings. In
general savings estimates for commercial and residential energy efficiency measures differ in:
• Different operating hours and usage patterns
• Different building types and heating loads
• Different equipment size and capacity differences
• Commercial savings often vary by building types
Based on those considerations, the Company believes the difference between the revised
commercial water-heating savings estimates and residential water-heating savings estimates is
reasonable and does not, by itself, indicate that the commercial estimates are unsupported.
The Company also evaluated Staff s recommendation that peer-utility benchmarking be
used as an additional reasonableness check, with particular reference to Avista's commercial
program. As part of that review, the Company confirmed the consultant's findings that Avista's
TRM is not publicly available, the Regional Technical Forum does not provide a unit energy
' "SEE Action Guide for States: Guidance on Establishing and Maintaining Technical Reference
Manuals for Energy Efficiency Measures," Section 2.21,p. 28.
APPLICATION PAGE 5 OF 12

savings ("UES") workbook for commercial gas water heaters, and Idaho Power's Version 3.2
TRM does not include a commercial gas water-heating measure. The publicly available
information the Company located for Avista reflected aggregated savings for its midstream
program rather than standalone unit energy savings for commercial water-heating measures,
which is not a directly comparable,publicly available peer-utility UES value for commercial gas
water-heating. This peer comparison was helpful in that the lack of commercial water-heating
incentives by peer utilities may indicate that water-heating is not a cost-effective measure in
Idaho, as was also the Company's conclusion based on cost-testing the updated water-heating
savings. This will be covered in subsequent sections of this application.
The Final Order states, "the Company shall reapply to revise Rate Schedule EE-GS that
takes into account the information exchanged during the workshop." Compliance with this was a
multi-step process conducted by the Company. Exhibit No. 2, "Step-by-Step Commercial
Offering Development—Sensitivity Testing,"provides snapshots of the model outputs for each
step outlined here.
This multi-step process started with the model that was used in the original Case as a
starting point to revise the proposed rate schedule EE-GS. The first step was to update the water-
heating UES assumptions while holding the remaining variables from the prior filing constant.
Cost-testing with the updated water-heating savings demonstrated commercial water-heating
measures are not cost-effective. Table 1 provides a summary of the utility cost test ("UCT") ratios
for the water-heating measures based on updated savings estimates:
APPLICATION PAGE 6 OF 12

Table 1.UCT Ratios for Water Heater Measures
ANNUAL THERM INCREMENTAL Year 1 Rebate FORECASTED
REBATE NAME SEGMENT SAVING ESTIMATE EUL COST PROPOSED REBATE AMOUNT Forecast UCT RATIO
Storage Water Heater NC Commercial 45 13 $ 15,421 $ 3,500 2 0.1
Storage Water Heater Retrofit Commercial S3 13 $ S,846 $ 6,000 6 0.1
Tankless Water Heater NC Commercial 30 13 $ 24,049 $ 6,000 50 0.0
Tankless Water Heater Retrofit Commercial 32 13 $ 10,813 $ 8,000 25 0.0
The Company, therefore, removed the commercial water-heating measures from the
proposed offering(Step 2). After removing the non-cost-effective water-heating measures, the
Company then evaluated the remaining measures and attempted to optimize incentive levels while
maintaining incentives at or below the estimated incremental cost of each measure, consistent
with Staff s recommendation(Step 3). Next, measures that did not support the program's cost-
effectiveness objectives, or presented significant implementation concerns, were removed except
for the 95%AFUE furnace measure (Step 4).
At this stage of cost-testing, the measure-level UCT for the furnace was 0.9, while the
Program-level UCT exceeded the UCT threshold at 1.2. In promoting the commercial energy
efficiency program, customers frequently comment on the lack of a furnace incentive for small
commercial customers. Adding the furnace incentive to the commercial rebate offering is the
program response to customer interest. The Company is proposing to add the furnace incentive to
the offering since energy efficiency programs are delivered as portfolios, not isolated transactions
and as will be demonstrated in the sensitivity testing, individual UCT measure results can be
sensitive to assumptions. Program-level screening allows stronger-performing measures to
balance measures that address customer needs or market barriers. This approach maintains a cost-
effectiveness discipline, while allowing practical market learning.
As a final step (Step 5), the Company updated the program model using the 2027 budget
forecast. This resulted in all measures meeting or exceeding the UCT threshold of 1.0, and a
program UCT of 1.3.
APPLICATION PAGE 7 OF 12

Of all the measures in the portfolio, the gas heat pump measures bear the most uncertainty.
GHP technology is new and will require significant contractor and customer education. The
Company has encountered several contractors who are familiar with GHP equipment, but all cite
cost as the biggest barrier to adoption. Offering an incentive will help address this barrier to
adoption and will support the Company's market transformation work to advance adoption of
energy saving gas heat pump technology in Idaho. The Company proposes adding GHP measures
to the portfolio,but in order to sensitivity test the furnace measures, a base case scenario was
created in which the already modest GHP participation is reduced to zero. Under this base case
(Step 6), all measures met the UCT threshold of 1.0 or greater, and the portfolio met the UCT
threshold at 1.1.
Sensitivity testing was conducted, specifically on the furnace measure, to answer the
questions, "What if UES for the furnace saves less or more than expected," and"What if fewer or
more customers participate than expected?" The furnace measure was chosen for testing for
several reasons: it is forecasted to be a high contribution measure relative to the other measures, it
is a new addition to the portfolio, and it has a measure-level cost-effectiveness result near the
screening threshold.
The sensitivity analysis tested the furnace UES at plus and minus 10 percent and furnace
participation at plus and minus 20 percent. The 10%band was used because the furnace is a
mature, well documented measure, not an unknown or unproved energy efficiency measure.
Furnace participation sensitivity was tested at 20%, a larger band than the furnace savings,
because this is a new offering, and therefore does not have any participation history on which to
base a forecast. The Company also tested a low savings/low participation scenario, as well as a
higher-than-expected savings/higher-than-expected participation scenario. It is important to note
APPLICATION PAGE 8 OF 12

that although the furnace measure did not achieve a measure-level UCT of 1.0 or greater in every
scenario of the sensitivity testing, the entire portfolio remained cost-effective under all tested
scenarios. Table 2 provides a summary of all the sensitivity testing scenarios and results.
Table 2.Sensitivity and Testing Results
SeesftivityTestina Scenario Inputs Scenario UCT Results
Furnace
Scenario Name: Description: Furnace UES Participation Program UCT Furnace UCT
Base Case 108 150 1.1 0.9
Savings Risk:Low Furnace UES is 10%lower than base case 97 150 1.1 0.9
Savings Risk:High Furnace UES is 10%lower than base case 119 150 1.2 1.1
Furnace Market
Participation Risk:Low Furnace participation is 20%lower than base case 108 135 1.1 0.9
Furnace Market
Participation Risk:
High Furnace participation is 20%higher than base case 108 180 1.2 1.1
Low savings,Low Furnace savings are 10%lower than base case and furnace
participation participation is 20%lower than base case 97 135 1.0 0.8
High Savings,High Furnace savings are 10%higher than base case and furnace
Participation participation is 20%higher than base case 119 180 1.3 1.3
The Company believes this portfolio-level result supports the inclusion of the furnace
measure while maintaining overall cost-effectiveness discipline. As demonstrated in the
sensitivity testing, individual measure results may be sensitive to specific input assumptions like
participation, while energy efficiency programs are delivered as portfolios not singular measures.
The final proposed revision to Rate Schedule EE-GS is shown in Exhibit No. 3 (legislative
format) and revised Exhibit No. 4 (clean format).
The Company's updated TRM, workpapers, tariff sheets, cost-effectiveness analysis, and
related supporting exhibits reflect the program updates described above. The Company believes
these revisions are responsive to the Final Order and to Staffs concerns in Case No. INT-G-25-07
and provide a more complete record for Commission review of the revised Rate Schedule EE-GS
proposal.
APPLICATION PAGE 9 OF 12

VI. COMMERCIAL ENERGY EFFICIENCY PROGRAM,
COST-EFFECTIVENESS,AND RIDER BALANCE
The Commercial Energy Efficiency Program remains funded through the Energy
Efficiency Charge rider on Rate Schedule EEC-GS. The rider's over-collected balance declined
from$1,034,285 in December 2024 to $501,409 as of June 30, 2026. The forecasted estimated
first-year rebate cost for the proposed expanded commercial portfolio is $103,900. The Company
will continue quarterly discussions with Commission Staff regarding commercial program
performance and rider balance and, if necessary, will seek future rider adjustments to avoid
significant over- or under-collection to maintain financial balance.
This refiled Application includes updated program-planning and cost-effectiveness
materials based on the revised assumptions discussed above. The revised exhibits provide
measure-level support and updated portfolio-level results so that the Commission can evaluate the
proposal in light of Staff s prior concerns regarding savings, incremental costs, incentive levels,
and rider impacts.
VII. PROPOSED REVISIONS TO RATE SCHEDULE EE-GS
Based on the updated TRM review, workshop discussions, and revised cost-effectiveness
analysis, the Company proposes to revise Rate Schedule EE-GS as shown in revised Exhibit No.
3 (legislative format) and revised Exhibit No. 4 (clean format) filed with this Application. The
revised tariff sheets reflect the Company's updated commercial measure offerings, descriptions,
eligibility requirements, and rebate amounts.
The Company requests an effective date of October 1, 2026. The proposed date is
intended to create a more robust offering of energy saving options for commercial customers and
address an overlooked sector of small commercial customers.
APPLICATION PAGE 10 OF 12

VIII. MODIFIED PROCEDURE
Intermountain requests that this matter be processed under Modified Procedure pursuant to
Rules 201-204 of the Commission's Rules of Procedure. Intermountain stands ready for
immediate consideration of this matter.
IX. REQUEST FOR RELIEF
Intermountain respectfully petitions the Idaho Public Utilities Commission as follows:
a. That the commission accept this refiled Application as in compliance with
Order No. 37033;
b. That the Commission approve the proposed revisions to Rate Schedule EE-GS
outlined in this Application, effective October 1, 2026; and
c. For such other relief as the Commission may determine just and proper.
Dated: September 9, 2026
GIVENS PURSLEY LLP
By Is/Preston N. Carter
Preston N. Carter
Givens Pursley LLP
Attorneys for Intermountain Gas Company
APPLICATION PAGE I I OF 12

CERTIFICATE OF SERVICE
I hereby certify that on September 9, 2026, I caused to be served a true and correct copy of
the foregoing document to the person(s) listed below by the method indicated:
Commission Staff Via Electronic Mail
Monica Barrios-Sanchez, Commission Secretary [e-mail]
Idaho Public Utilities Commission [e-mail]
11331 W. Chinden Blvd., Bldg. 8, Suite 201-A
Boise, ID 83714
Preston N. Carter
Preston N. Carter
APPLICATION PAGE 12 OF 12