PUC Shunke Direct.pdf

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CERTIFICATE OF SERVICE
I HEREBY CERTIFY that I have this 22nd day of September, 1980, served
the foregoing documents, Prepared Testimony and Exhibits of Lynn Anderson
and Dave Schunke, upon all parties of record in this proceeding by
mailing a copy thereof, properly addressed with postage prepaid, to thefollowing:
Walter Smith, Acting President
Intermountain Gas Company
P.O. Box 7608
Boise, ID 83707
Eugene C. Thomas & Tom N. Amrose, Esqs.
Moffatt, Thomas, Barrett & Blanton
P. O. Box 829
Boise, ID 83701
FMC Corporation
P. O. Box 4111
Pocatello, ID 83201
Robert L. Mil Is
FMC Corporation
200 Market Street
Philadelphia, PA 19173
N. Randy Smith
J. R. Simplot Company
P. O. Box 27
Boise, ID 83707
Dan L. Poole, Esq.
Elam, Burke, Evans, Boyd & Koontz
P.O. Box 1559
Boise, ID 83707
Beker Industries
Gary Greer, Manager
P. O. Box 37
Conda, ID 83230
Harold C. Miles
Idaho Consumer Affairs, Inc.
106 North Sixth Avenue Street
3 Pioneer Building
Boise, ID 83702
S. Michael Southcombe, Esq.
Clemons, Cosho & Humphrey
1110 Bank of Idaho Building
Boise, ID 83702
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CERTIFICATE OF SERVICE
I HEREBY CERTIFY that I have this 22nd day of September, 1980,
served the foregoing documents, Prepared Testimony and Exhibits
of Robert Smith and Terri Carlock, upon all parties of record
in this proceeding by mailing a copy thereof, properly addressedwi th postage prepaid, to the fol lowing:
Walter Smith, Acting President
Intermountain Gas Company
P.O. Box 7608
Boise, ID 83707
,dJ".Iøf ~-, /~~t:
l9J1 Y;~/(Ó ø,Eugene C. Thomas & Tom N. Ambrose, Esqs.
Moffatt, Thomas, Barrett & Blanton
P. O. Box 829
Boise, ID 83701
FMC CorporationP.O. Box 4 ILL
Pocatello, ID 82301
Robert L. Mills
FMC Corporation
200 Market Street
Philadelphia, PA 19173
N. Randy Smi th
J. R. Simplot Company
P. O. Box 27
Boise, ID 83707
Dan L. Poole, Esq.
Elam, Burke, Evans, Boyd & Koontz
P. O. Box 1559
Boise, ID 83707
Beker Industries
Gary Greer, Manager
P. O. Box 37
Conda, ID 83230
Harold C. Miles
Idaho Consumer Affairs, Inc.
106 North Sixth Avenue St.3 Pioneer Building
Boise, ID 83702
$. Michael Southcombe, Esq.
Clemons, Cosho & .Humphrey
1110 Bank of Idaho Building
Boise, ID 83702
~Lg~~nda Brown
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DIRECT TESTIMONY OF DAVID E. SCHUNKE
INTERMOUNT AIN GAS COMPANY
CASE NO. U-1034-88
4 Q. Please state your name and business address .for the record.
5 A. My name is Davìd E. Schunke and my business address is 472 West
6 Washington Street, Boise, Idaho.
7 Q . By whom are you employed and in what capacity?
8 A. I am employed by the Idaho Public Utilties Commission as a Public
9 Utities Engieer, and have been so employed since December 1979.
10 Q. What is your educational and experience background?
11 A. I received my Bachelor of Science Degree in Civi Engieerig at
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Montana State University in 1972. Since then, I have worked in
various capacities, includig Cost and Materias Engineer with Morrison
Knudsen Co., Inc. As a consultig engieer with Stevens, Thompson
& Runyan (STRAAM Engieers), I was Pröìect Engieer on numerOus
water utilty proìects includig: the design of the Moscos, Idaho
Water Treatment Plant, water systems appraisals for Boise, Idaho
and Klamath Fals, Oregon ,and water system analysis for Klamath
Fals, Oregon and Coeur d'Alene, Idaho. I also worked extensively
on the design for water supply and ditribution for Heyburn State
Park, Idaho and a- maìor irrigation project in Grandvìew, Idaho. I
have worked as proìectengieer in the design of a variety of other
civil projects including: waste water treatment and collection, sanitary
ladfil, roads and streets, storm water collection and drainage,
buildigs, concrete structures, foundations, subdivisions, flood
control, and water impounding structures.
27 Q. What is the purpose of your testimony in this proceedig?
28 A. I wil be discussing IGC's rate design and its impact on the various
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customer classes and its relation to cost-of - service , conservation,
and revenue stabilty.
What are the proposed changes for the residential class?
There are several significant changes proposed for the residenti
rates, both for RS-l and RS-2. In order to reverse the present
trend of increasing summer disconnects, the Company has proposed
to reduce the minimum monthly bil to $3.00, which would not include
the cost of any therms. It is supposed that by this change, fewer
customers wi elect to disconnect during the non-heating season..
In addition, a continuous service credit of $L.OOper month for
all customers having 13 or more months of continuous service at the
same location has been proposed by t)ie Company in order to reinforce
the incentive to maitain year-round service. Some of the detais
regardig the implementation of this program are not clear. It is my
recommendation that all customers be alowed to receive the credit
independent of their past record, and that the credit would contiue
until a customer made a seasonal disconnect. At that time, the cus-
tomer would loose their credit until they had re-established 13 months
continuous service.
Staff Exhibit No. _(DES-1) ilustrates the effect of the pro-
posed change on residential RS-1 customers at various consumption
levels. This .Exhibit compares the present rate with the Company
proposed rate, showing the percentage increase in going to the new
rate. Separate tabulation was made for the witer and sumer
rates, as well as the months of October and November since the
proposed tarif for these months wi be included under the summer
rates rather than the witer rate. The overal effect to this customer
class is a 12.3% increase.
2 SCHUNKE
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One can see from this Exhibit that the customers wi experience
the greatest percentage increase in rates at 10 therms of consumption.
Smal volume customers using gas for back-up heat may be encouraged
to switch to electricity. Customers under the proposed summer rate
wi have reduced bils if their consumption is near zero. As their
consumption increases, the percentage increase rises rapidly to a
maxium of 36.8% at 10 therms of consumption, then gradualy reduces
as consumption becomes greater. There is actualy a percentage
decrease for witer customers who consume a very large volume. I
concur with the Company in their expectation that customers wi be
encouraged to extinguish their pilot lights or convert to an electronic
igntion. This wi result in some conservation and customers wi
not be paying for something they are not gettig. However, there
may be a fairly large number of elderly customers unable to extiguish
their pilot and they would require assistance in order to avoid
having to pay $6 to $8 per month during the summer. Perhaps a
bil stuffer informg these people of the potential savings in exti-
guishing the pilot would help, along with information on the pilot
service avaible through IGC.
The sumer commodity charge is 28.4% higher than the witer
commodity charge under the proposed rates. This wi have the
effect of reducing the average space heating customers maxium
witer bils and increasing their off-season heating bils. This has
the effect of leveliing monthly payments somewhat over the years,
but should have little or no effect on the annual bil of the average
customer. However, customers with a uniform usage throughout the
year or a relatively high sumer usage wi experience a greater in-
crease in their annual bil. Staff Exhibit No. _(DES-2) is a
3 SCHUNKE
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graph of the changes proposed by the Company for the RS-1 schedule.
Staff Exhibit No. _(DES-3) examines the effect of the Company
proposed rates on a typical water heating customer. This Exhibit
shows that the annual percentage increase from the current to the
Company proposed rate is 31. 71%. Other customers with smal. appli-
ances, which have a uniform annual use, would be affected similariy.
An unfortunate effect of the higher summer rate is that year-round
customers, who actually have a lower cost of service becaiise they do
not contribute toward the need for gas storage on the utilty system,
and are charged more per therm than witer peaking space heating
customers. This fact, along with the recent changes in IGC'slie
extension policy wil definitely discourage new customers of this
type, and may force some existing ones to alternate fuels.
The RS- 2 tarif also has a 154: per therm higher sumer rate and
non-seasonal users would be affected in the same way that non-
seasonal RS-1 users would be. But, the incidence of such customers
on the RS-2 schedule in smal since customers generaly wi have
some space heating who qualy for that rate.
One of the most obvioiis advantages of the RS-2 rate is to en-
courage multiple use of gas appliances. I have prepared Staff
Exhibit No. _ (DES-4) to ilustrate the effect on space heating
customers, on the RS-1 rate, addig a gas water heater and going
to the RS-2 schedule as proposed by the Company. Column (b) of
that Exhibit lists the therm consumption and Columns (c) and (d)
show the rate for that monthly consumption under the present and
proposed RS-1 rates. Column (e) lists thetherms consumed with
the addition of a water heater and Columns (f) and (g) show the
present and proposed RS-2 rate respectively. Column (h) indicates
4 SCHUNKE
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5 SCHUNKE
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1 The negative effect on uniform use customers which was discussed
2 for RS-1 customers also occurs in this Schedule as ilustrated in
3 Staff Exhibit No. _ (DES-7). A typical space heating customer
4 might experience a 4.54% decrease, while a uniform use customer
5 might have a 6.57% increase.
6 Q. What are the Company proposed changes in the GS-2 rate class?
7 A. The Company has proposed a seasonal diferential of 47.323 cents
8 per therm summer and 45.263 cents per therm winter with a customer
9 charge of $110 in the witer months (December through March), and
10 no customer charge in the summer months. The overall effect is an
11 increase of 3.3%. These changes are shown graphicaly in Staff
12 Exhibit No. _(DES-8).
13 Q. What changes are proposed by the Company for the WP-l rate class?
14 A. There is a 17.4% increase proposed for WP-1 customers. This would
15 raise the cost per therm from its present level of 43.524 cents to
16 51.111 cents. Staff Exhibit No. (DES-9) ilustrates this change.
17 Q. Would you please discuss the rate changes proposed by the Company
18 for S-1 and P-l.
19 A. The Company has proposed for S-1 customers an increase in the
20 demand and commodity charge of 16% and 10.82% respectively. A
21 10.82% increase was also proposed for the P-1 commodity charge.
22 Q. What effect does the Company proposed increase have on the LV-1
23 customers?
24 A. There is no change proposed in the commodity charge with an 8.9%
25 increase proposed for the demand charge. This has the net effect
26 of a 0.4% increase for an average cost per therm of 42.44 cents.
27 This rate is only slightly more than the rate avaiable to Becker
28 Industries (based on the most current information avaible to the
6 SCHUNKE
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1 Commission Staff).
2 Q. Do you have any general comments on the rate design as proposed
3 by the Company?
4 A. Yes. The Staff has reìected the 6.5% downward adìustment in sales
5 and feels the rates should be adjusted accordigly. Furtherore, I
6 do not agree with the Company's allocation of the rate increase.
7 The Company's rate design results in a uniform rate of return from
8 all customer classes. However, in this Commission's recent Order
9 No. 14859, the cost of service study was weighed along with the
10 other effects that a specific rate design would have on the individual
11 classes of customers and the following conclusion was reached, "we
12 find the Company's approach of adìusting the rates to reflect the
13 trends in the cost of service rather than the actual costs themselves
14 a reasonable and practical approach. By followig that approach and
15 applying 25% of the increase on the basis of the deficiency following
16 from the cost of service to a class, and 75% on a uniform percentage
17 basis to all classes...."
18 If this approach were to be used in this case, one-third of the
19 increase would be computed on the basis of cost of service, and
20 two-thirds on a uniform percentage basis to al classes.
21 This approach seems to be particularly applicable in light of the
22 pendig October tracker application, Case No. U -1034-90 that wil
23 uniformly reduce the gas rates an amount greater than this proposed
24 increase.
25 In the event that this procedure would result in an unacceptable
26 rate to the LV~1 customers, perhaps a greater percentage of the
27 rate increase could he based on cost of service.
28 Q. Does that conclude your diect testimony?
7 SCHUNKE
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1 A.Yes, ìt does.
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