20260915Staff Comments.pdf

RECEIVED
September 15, 2026
ERIKA K. MELANSON IDAHO PUBLIC
DEPUTY ATTORNEY GENERAL UTILITIES COMMISSION
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83702
[phone]
IDAHO BAR NO. 11560
Attorney for the Commission Staff
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF INTERMOUNTAIN )
GAS COMPANY'S APPLICATION TO ) CASE NO. INT-G-26-04
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, Erika K. Melanson, Deputy Attorney
General, submits the following comments.
BACKGROUND
On August 7,2026,Intermountain Gas Company("Company")applied to the Commission
requesting authority to implement proposed rate schedules, effective October 1, 2026, decreasing
its annualized revenues by $11,055,662, due to changes in the Company's gas related costs
("Application").
The Company's rates include two components: a base-rate component and a gas-related
cost component, referred to as the Purchased Gas Cost Adjustment ("PGA"). The base-rate
component is intended to recover the Company's fixed costs of serving customers and generally
remains unchanged between general rate cases. The PGA is a Commission-approved mechanism
that adjusts rates upward or downward to reflect changes in the Company's costs of purchasing
natural gas from suppliers,including transportation,storage,and other related costs. The Company
defers these costs to its PGA account and subsequently passes them through to customers through
corresponding increases or decreases in rates.
STAFF COMMENTS 1 SEPTEMBER 15, 2026

In Order No. 26109, the Commission approved the Company's use of temporary pricing
for certain rate schedules to be determined through a PGA based on gas-related costs. The
Company's current temporary prices related to the cost of gas were approved in Order No. 36771
and are effective from October 1, 2025, through September 30, 2026.
The Company proposes adjustments to its gas-related costs that would be passed through
to its various customer classes. Application at 4. These adjustments reflect changes in firm
transportation costs, a lower Weighted Average Cost of Gas ("WACOG"), updated allocation of
purchased gas costs pursuant to the Company's PGA,temporary surcharges and credits associated
with deferred gas costs, benefits from the Company's management of storage and firm
transportation capacity, and benefits from the sale of liquefied natural gas. Id.
The Company also proposes removing the temporary surcharges and credits included in
customer rates over the past year under Case No. INT-G-25-04. Id. If approved, the changes
would lower prices for the RS, GS-1, IS-R, IS-C, and LV-1 customer classes while increasing
prices for the T-3 and T-4 classes. Id.
The Company proposes a WACOG of $0.24034 per therm, compared with the current
WACOG of $0.28734 per therm, representing a decrease of approximately $21.6 million.
Application at 6.
STAFF ANALYSIS
Staff examined the Company's Application, exhibits, workpapers, and responses to
Production Requests and confirmed that: (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
proposed WACOG is reasonable. Staff recommends that the Commission approve the Company's
Application. Table No. 1 below summarizes the impact of the proposed changes on each customer
class.
STAFF COMMENTS 2 SEPTEMBER 15, 2026

Table No. 1: Summary of Proposed Rates
Average Average
Change in Class Change in Average Price
Customer Class: Revenue $/Therm %Change $/Therm
RS Residential ($6,950,746) ($0.02314) -3.25% $0.68855
GS-1 General Service ($3,639,987) ($0.02512) -4.25% $0.56630
LV-1 Large volume ($672,697) ($0.04569) -11.32% $0.35802
T-3 Transportation(Volumetric) $7,410 $0.00026 1.75% $0.01513
T-4 Transportation(Volumetric) - - - $0.01286
T-4 Demand Charge $200,358 $0.01059 3.27% $0.33457
TOTAL ($11,055,662) ($0.01333) -3.49% $0.36812
Overall, the Company's proposal would decrease annual revenue by approximately
$11,055,662, as detailed in Table No. 2 below.
Table No. 2 Proposed Changes to Annual Revenue
Deferrals:
INT-G-25-04 Temporaries Reversed $ 39,588,370
Additional INT-G-26-04 Temporary Credits and Charges
Fixed Deferred Gas Costs ($ 30,256,326)
Variable Deferred Gas Costs $4,134,649
Lost and Unaccounted for Gas ($ 792,526)
LNG Sales Credit ($ 784,506)
Total Additional Temporary Credits and Surcharges (27,698,709)
Total Deferrals $ 11,889,661
Fixed Cost Changes:
NWP Full Rate Reservation $ 7,980,979
NWP Discounted Reservation ($ 8,004,862)
Upstream Full Rate $ 797,998
Upstream Discounted ($ 1,531,140)
SGS-217 and LS-217 $29,085
Other Storage Costs $ 9,000
Total Fixed Cost Changes ($ 718,940)
Changes in WACOG ($21,620,233)
Reallocation and True-Up of Fixed Costs ($ 605,167)
Total Base Rate Price Changes ($22,944,340)
Total Annual Price Change ($ 11,054,679)
Total Annual Price Change (Exh.No 1) ($ 11,055,662)
Differences due to rounding $ 983
STAFF COMMENTS 3 SEPTEMBER 15, 2026

The Company reversed $39,588,370 in temporary credits and surcharges from the prior
PGA,Case No. INT-G-25-04. The temporary credits and surcharges proposed in the current PGA,
Case No. INT-G-26-04, include fixed deferred gas costs, variable deferred gas costs, lost and
unaccounted-for gas, and liquefied natural gas ("LNG") sales credits. These temporary
adjustments result in a $27,698,709 credit. Application Exhibit No. 1. When combined with the
reversal of the prior-year temporary credits and surcharges, the Company's total deferrals increase
annual revenues by $11,889,661. Id.
The Company also proposes changes to fixed gas-related costs and commodity costs.
Changes to transportation and storage demand charges result in a$718,940 decrease in fixed costs.
Id. In addition, the Company proposes a $21,620,233 decrease in its WACOG and a $605,167
decrease related to the reallocation of fixed costs. Together, these adjustments result in a
$22,944,340 decrease in PGA base rate prices.' Id.
The $11,889,661 increase from total deferrals, combined with the $22,944,340 decrease in
PGA base rate prices, results in an annual revenue decrease of$11,054,679. Id. After accounting
for a $983 rounding difference, the total annual revenue decrease is $11,055,662, as shown in
Table No. 2. Id.
Weighted Average Cost of Gas
The WACOG is the Company's average variable cost to purchase and transport natural gas
to meet customers' estimated annual requirements. The components of the WACOG include
volumetric interstate transportation costs, city gate costs, IGI Resources administration fees, and
Gas Technology Institute charges. The proposed WACOG is $0.24034 per therm, a 16.4%
decrease from the current WACOG of $0.28734 per therm. Chart No. I below shows the
Company's WACOG over the previous 10 years.
'Note:the PGA base rate is not associated with base rates set in a general rate case.
STAFF COMMENTS 4 SEPTEMBER 15, 2026

Chart No. 1: WACOG (Per Therm)
IGC PGA WACOG ($/Therm)
0.600
0.500
0.400
E
L
s 0.300
H
0.200
0.100
0.000
$0.260 $0.227 $0.209 $0.217 $0.260 $0.424 $0.392 $0.528 $0.305 $0.268 $0.287 $0.240
2017 2018 2019 2020 2021 2022* 2022* 2022 2023 2024 2025 2026
Year *Out of cycle adjustment
Market Fundamentals & Price Analysis
The Company states that the winter period from November 2025 through March 2026 was
unusually warm across Southern Idaho. The West also experienced unusually warm weather,
which contributed to a significant decline in both current and forward natural gas prices. The
Company states that warmer weather, increased natural gas production, and increased storage
injections contributed to lower natural gas prices. Application at 6-7.
Staff also examined forecasts to compare current market expectations with the
NYMEX/NGX futures prices used in the Company's analysis. Specifically, Staff reviewed
forecasts from the Energy Information Administration ("EIA").2 The EIA Short-Term Energy
Natural Gas Outlook3 states:
Natural gas trade
We expect U.S. liquefied natural gas (LNG) exports in the third quarter of 2026
(3Q26)to average 16.5 billion cubic feet per day(Bcf/d),down 0.2 Bcf/d compared
with last month's forecast. In July, international prices rose to levels last reached in
early April,as LNG vessel traffic through the Strait of Hormuz slowed considerably
after strikes on vessels resumed on July 7. Maintenance at Freeport LNG began on
July 10 and is expected to be completed in late August, affecting 2.0 Bcf/d of
2 EIA website Homepage-U.S.Energy Information Administration(EIA)(last visited Sep 1,2026).
3 EIA STEO https://www.eia.gov/outlooks/steo/pdf/steo_full.pdf(last visited Sep 1,2026).
STAFF COMMENTS 5 SEPTEMBER 15, 2026

nominal export capacity in the short-term. However, even with Freeport fully
operational, exports would remain limited due to slow growth in additional export
capacity despite U.S. price spreads to Europe and Asia remaining elevated due
to ongoing disruptions.
Maintenance at Freeport and other LNG export terminals have reduced feedgas
demand on the Gulf Coast in June and July. Reduced demand has helped boost
storage inventories in the South Central region to 5% above the five-year average
(2021-2025) as of the week ending July 31, compared with inventories that were
almost equal to the five-year average during the week ending May 29, according to
our Weekly Natural Gas Storage Report.
Natural gas prices and storage
We expect the Henry Hub spot price to average $2.87 per million British thermal
units (MMBtu), in 3Q26, down 50 cents compared with last month's forecast. Our
lower price forecast reflects reduced LNG feedgas demand and record natural gas
production,which we expect will leave natural gas inventories at their highest level
heading into winter since 2016. We expect Henry Hub prices to rise gradually in
the coming months but remain relatively low because inventories are well above
the five-year average. Futures prices show a similar pattern,with contracts through
September 2026 remaining below$3.00/MMBtu.
In this forecast,we expect natural gas inventories to be a record 3,985 billion cubic
feet(Bcf)at the end of October 2026,which is an increase of 19 Bcf compared with
the July STEO and 5%above the five-year average.With high storage heading into
winter, we expect the Henry Hub spot price will remain below $3.00/MMBtu until
November and average $3.03/MMBtu over the remaining five months of the year,
nearly 50 cents/MMBtu lower than last month's forecast.
Based on its review of the Company's projected natural gas costs and comparison with the
EIA forecast, Staff believes the Company's proposed WACOG of $0.24034 per therm is
reasonable.
Purchasing
The Company continues to utilize index or spot purchases, allowing it to take advantage of
market prices to meet short-term supply needs. Staff reviewed the Company's natural gas
purchases during the PGA period by examining a four-month sample of invoices. Staff confirmed
that the natural gas purchases reconciled to the amounts reported in the monthly deferrals.
STAFF COMMENTS 6 SEPTEMBER 15, 2026

Transportation and Storage
The Company delivers domestically produced natural gas to its city gates through
Northwest Pipeline. The Company also delivers natural gas from Canada using pipeline capacity
on GTN, the Foothills Pipeline system, and NOVA.
The Company states that its management of natural gas storage assets is expected to
provide customer savings of approximately $7.8 million. Application at 6. The Company also
proposes an overall increase of approximately$38,085 in storage-related costs due to an increased
Northwest Pipeline delivery rate and higher transportation costs to the Rexburg LNG facility. Id.
Typically, natural gas is added to storage during the summer season when prices are generally
lower than in the winter. The Company purchases gas for storage as needed to meet winter peak
demand and to hedge against or mitigate exposure to higher winter prices. Id. Staff reviewed the
Company's Risk Management Policy and related practices and believes that the Company's
approach to natural gas storage and hedging is reasonable and consistent with its risk management
objectives.
Pipeline Capacity
The Company holds excess pipeline capacity to meet periods of increased demand. The
Company mitigates the cost of holding excess capacity by releasing available capacity into the
market, with the resulting revenues credited to customers through the PGA. This year, the
Company released firm transportation capacity on Northwest Pipeline, its upstream pipelines, as
well as capacity associated with Clay Basin storage. Application at 8; Exhibit No. 8. The
Company proposes to credit forecasted capacity release revenue of$15,668,956 to customers over
the coming PGA year, compared to the $17,036,079 credited to customers in the prior PGA year.
Workpaper No. 5. The Company's historical capacity release revenues are shown in Chart No. 2
below.
STAFF COMMENTS 7 SEPTEMBER 15, 2026

Chart No. 2: Historical Capacity Releases
IGC Historical Transportation Capacity Releases
$20,000,000
$15,000,000
$10,000,000
$5,000,000
2017 2018 2019 2020 2021 2022 2023 2024 2025 2026
Seriesl $3,940, $5,453, $7,125, $6,410, $6,351, $6,629, $5,740, $9,056, $17,481 $15,668
Liquefied Natural Gas Storage
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 Stipulation and Settlement authorizing a $0.03 per gallon credit for capital
improvements and$0.04 per gallon credit for operations and maintenance expenses. The approved
sales credit rates were used to calculate the 2026 LNG sales benefits.
Historical LNG benefits included in the PGA are shown in Chart No. 3 below. The
Company proposes to credit customers $784,506 for their share of the LNG sales revenues.
Application at 10. Staff reviewed the Company's non-utility LNG sales and verified that the
proposed credit to customers was calculated correctly.
Chart No. 3 LNG Sales Ratepayer Benefits
IGC Historical LNG Benefit
$1,600,000
$1,400,000
$1,200,000
$1,000,000
$800,000
5600,000
$400,000
$200,000
$0 2016 PGA 2017 PGA 2018 PGA 2019 PGA 2020 PGA 2021 PGA 2022 PGA 2023 PGA 2024 PGA 2025 PGA 2026 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 $784,506
STAFF COMMENTS 8 SEPTEMBER 15, 2026

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 each city gate and the volume of gas billed to customers
at the meter. In this PGA,the Company's LAUF Gas rate included in the Application is-0.2588%,
indicating found gas. During Staff s on-site audit, Staff determined that the formula used to
calculate LAUF Gas had not been updated as directed in Order No. 37108, which requires the
Company to use the PHMSA-prescribed formula for all LAUF calculations. After discussing the
issue with Staff,the Company agreed that the corrected LAUF Gas rate is -0.2582%and indicated
that future LAUF Gas calculations will comply with Order No. 37108.
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 is $616,120, with $462,090 credited to core customers and $154,030 credited to
industrial customers. Including interest and the prior PGA balance, the total estimated deferred
LAUF Gas credit as of September 30, 2026, is $792,526. Workpaper No. 5.
The Company charges a Line Break Rate to parties responsible for damage to the
distribution system that causes a gas leak. The Company proposes to decrease the rate from
$0.49122 per therm to $0.44101 per therm. Exhibit No. 2, Page 2. The Line Break Rate includes
the WACOG of$0.24034 per therm and a Gas Transportation Cost of$0.20067 per therm. Id.
Staff confirmed that the Company calculated the proposed Line Break Rate consistent with Order
No. 33139.
Gas Quality
During its review, Staff identified concerns regarding the quality of natural gas received
by the Company and the potential impact to the Company's assets. Staff requested gas quality
testing results from the Company through Production Request Nos. 6 and 7. The testing results
provided by the Company were prepared by Northwest Pipeline LLC ("NWP"),rather than by the
Company. The Company indicated that the testing is performed at the point of injection into NWP.
During Staff s on-site audit, the Company explained that it believes the monthly average test
results provided by NWP for each tested constituent demonstrate that the natural gas received by
the Company meets pipeline quality standards. Staff reviewed the test results and identified
STAFF COMMENTS 9 SEPTEMBER 15, 2026

questions regarding certain results that require additional review. Staff will continue to evaluate
the gas quality information and discuss its concerns with the Company.
Staff also reviewed whether gas quality may be contributing to damage at certain Company
facilities. During the on-site audit, the Company discussed with Staff at least two city gate
locations where regulator station equipment has experienced damage that the Company associates
with the natural gas received from NWT. The Company indicated that these locations require
additional parts and maintenance, which may also affect the useful lives of the assets. The
Company confirmed that it has increased the maintenance and inspection frequency at the locations
with known issues. Staff believes additional review is necessary to determine the extent of the
issue and its potential effect on maintenance costs and asset lives. No costs associated with the
identified equipment damage or increased maintenance are being recovered in this PGA. Staff
will evaluate these concerns, including any associated costs and potential effects on assets, in the
Company's next general rate case or other appropriate proceeding. Accordingly, Staff s concerns
regarding gas quality do not affect its recommendation regarding the Company's proposed PGA
rates in this case.
PGA Reporting
In Order No. 34797, the Commission revised the Company's Deferred Gas Balances
reporting requirement from monthly to quarterly and directed the Company to promptly notify the
Commission if an interim filing is needed. Staff believes quarterly reporting remains reasonable
because it provides sufficient information to monitor deferred gas cost trends while reducing
administrative burden. Staff recommends that the Commission approve the Company's request to
maintain the Deferred Gas Cost Balance, LNG Sales Cost Benefit Analysis, and WACOG reports
at a quarterly frequency.
PGA Filing Timeline
Historically,the Company has filed its annual PGA Application during the first two weeks
of August and requested an effective date of October 1. Staff has experienced challenges
completing its review within this timeframe. The limited review period is further constrained
because the Company has indicated that it cannot provide Staff with a method to select invoice
samples in advance of the audit; thus, Staff performs invoice verification during an on-site audit.
STAFF COMMENTS 10 SEPTEMBER 15, 2026

This further reduces the time available for Staff to review the Company's natural gas purchases
and complete its audit before the requested effective date. Other utilities, such as Avista
Corporation, file annual PGA applications by July 31 and request an effective date of November
1, providing a longer period for Staff s review. Staff recommends that the Commission order the
Company to work with Staff to evaluate its annual PGA filing timeline and identify options that
provide sufficient time for Staff to complete its review.
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 billing
statements mailed to customers from August 10,2026,through September 9, 2026. For customers
enrolled in paperless billing, the notice was e-mailed on August 10, separately from the monthly
billing statement.
The Commission set a comment deadline of September 15, 2026. As of September 15,
2026, no customer comments had been submitted to the Commission. Customers in the later part
of the billing cycle may not have received their notices or had adequate time to submit comments
before the comment deadline. Staff believes that customers should have the opportunity to file
comments and have those comments considered by the Commission. Staff recommends that the
Commission consider late-filed customer comments.
STAFF RECOMMENDATION
After examining the Company's Application, natural gas purchases, and deferral activity
for the year, Staff recommends that the Commission:
1. approve an annual revenue decrease of$11,055,662, as shown in Table No. 2;
2. approve the proposed WACOG of$0.24034 per therm;
3. 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;
4. approve the Company's request to maintain the Deferred Gas Cost Balance,LNG Sales
Cost Benefit Analysis, and WACOG reports at a quarterly frequency;
STAFF COMMENTS 11 SEPTEMBER 15, 2026

5. order the Company to work with Staff to evaluate its annual PGA filing timeline and
identify options that provide sufficient time for Staff to complete its review; and
6. consider late-filed comments from customers.
Respectfully submitted this 15th day of September 2026.
01
Erika K. Melanson
Deputy Attorney General
Technical Staff. Ty Johnson, Vicki Stephens, Curtis Thaden
I:\Utility\UMISC\COMMENTS\INT-G-26-04 Comments.docx
STAFF COMMENTS 12 SEPTEMBER 15, 2026

CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS 15th DAY OF SEPTEMBER 2026,
SERVED THE FOREGOING COMMENTS OF THE COMMISSION STAFF , IN CASE
NO. INT-G-26-04, BY E-MAILING A COPY THEREOF, TO THE FOLLOWING:
MICHAEL PARVINEN 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: michael.parvinen(&cn cg com E-MAIL: prestoncarterk_i�pursley.com
igcre ug latorykint ag s.com mem(crs_i�pursle.
stephaniewkgivenspursle,
PATRICIA JORDAN, ECRETARY
CERTIFICATE OF SERVICE