20160916PR #13 Batch #1356010.pdf

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Explanation *
,Reoor-ds+--1-----~ I ... . .......... .
1-0 ~@i-A<,co0ormrmber-_J
0 48.1087 .-
[] 48.1088 "
0 48.1012,
D 48.1860.2500
0 48.1082 '
D 48.2300.1000
[]
V
Iools
la
/12-15 ARO Establishment
A:~,nt ~, Remark i-1 74:42a,16foo [12-15ARO-Establishment
74,428,701.00:'12-15 ARO Establishment t/ 18,208,107.00 ':2-15 ARO Establishment
J:_1/ 51,767,503.00, 12-15ARO Establishment
14,726,372.00° 12-15ARO Establishment
65,249,238.oo:' 12-15 ARO Establishment
!00048
Account
Description
Gas Accum Prov Non ARO
Gas Accum Prov ARO
Natural Gas Plant
Regulatory Asset -ARO
Acc. Prov. tor Depr. ~ Gas
ARO Liability -Non Curre
http://erp.mdu.com: 84/j de/E 1 Menu. maf?j deowpBackButtonProtect=PROTECTED
0Model
G/LDate
Ledger Type
Remaining Amount
Posted Receipt
Code Number r-
Page 1 of 1
Gyltellskog, Nicole L (JPD900J
:>.:sign Out
DPercent
r1m112015·--·
ffl(J.)f11
1/8/2016
'
lntermountain Gas Company
Gas Mains and Services ARO Calculation
As of November 30, 2015 (AJ (BJ (C) (DJ
New ARO Setup-FERC Basis
Consumer Price Index
FERC Account
IGC Services
IGC Mains
Total
ARC
Asset
k.// 1012
112,203,656
3/ 6,004,450
18,208,106
Assumptions
Credit Adjusted Risk-Free Rate (Obligations>15 Years)
Credit Adjusted Risk-Free Rate (Obligations<15 Years)
Accum
Reserve
1082
(3,123,325)
(1,603 047)
(4,726,372)
IGC Services Average Service Life in Years Per Depreciation Study
GC Mains Average Service Life in Years Per De~reciation Study
Main Removal Costs (Per Foot)
Method Cost Estimated%
Cut and Cap $ 2.93 95%
Removal $ 0.50 5%
100%
Service Line Removal Costs (Each)
Method Cost Estimated%
Cut and Cap $ 400.00 95%
Removal $ 500.00 5%
100%
ARO Regulatory
Liability Asset
2300 1823 I . (40,851,674J 31,771,343
(24 397,563) 19,996,160
(65,249,238) 51,767,503 \
Iowa
Curve
3.1%
5.6%
3.9%
so R4
58 R4
Weighted Cost
$ 2.78
$ 0.03
$ 2.81
Weighted Cost
$ 380.00
$ 25.00
$ 405.00
(EJ
FERC Basis
Net Actual ARO Cost of
Amount Removal Balance*
,1087
-:f / (27,493,169)
-I (46,935,532)
-(74,428,701)
Max Curve Adjusted
Life Maximum Life
152% 76
152% 88
(AJ (BJ (C) Net of (DJ and (EJ
Balance Sheet Presentation-GAAP Basis
Utility Accumulated Other Other
Plant Depreciation Liabilities Assets**
12,203,656 (3,123,325) (40,851,674J 4,278,174
I 6,004,450 I (1,603,047) l (24,397,563) I (26,939,372)
\! 18,208,106 I / (4,126,312) , / (65,249,238) 1 / (22,661,198)
I ,ti I .
* This balance represents the current actual amount of cost of removal
depreciation expense taken net of actual cost of removal expenditures
as of 11-30-15
The balance is currently included in the 1087 account and
would be transferred to a new 1088 account so that the
amount to be reclassified can be easily indentified on the trial balance.
** For GAAP purposes the 1088 account COR reserve and the 1860account
regulatory asset would be reported as a net position on the balance
sheet. This net position represents the net amount from customers
(Liability Position).
i/
lntermountain Gas Company
Asset Retirement Obiligation Calculations-Mains $ 2.81 Per Foot To Retire Per Distribution Engineering
As of November 30, 2015 -}( 88 Maximum Life ,o\ Planned >f:.
R .r Retirement credit Value at Accum. Regulatory
et1rement or Months Date of Estimate Obligation Obligation Adjusted Obligation Reserve at ARO Liability Asset at
Date Based Calculation Settlement Until Obilgation Obligation to Settle Inflation Future Value of Beginning Life in Risk Free Date (ARC Calculation at Calculation Calculation
Vintage on Max Life Date Date Settlement Footage Estimate Estimate Months Factor Obligation Date Months Rate Asset) Date Date Date
12/31/2007 12/31/2095 12/31/2015 12/31/2095 960 1,251,447.00 $ 3,514,689 12/31/2015 960 3.1% $ 41,835,832 12/31/2007 1056 5.6% $306,425 ($27,857) ($479,110) $200,542
12/31/2008 12/31/2096 12/31/2015 12/31/2096 972 1,212,654.00 $ 3,405,739 12/31/2015 972 3.1% $ 41,813,702 12/31/2008 1056 5.6% $306,262 ($24,362) ($452,836) $170,936
12/31/2009 12/31/2097 12/31/2015 12/31/2097 984 156,359.00 $ 439,134 12/31/2015 984 3.1% $ 5,560,968 12/31/2009 1056 5.6% $40,731 ($2,777) ($56,952) $18,998
12/31/2010 12/31/2098 12/31/2015 12/31/2098 996 132,797.00 $ 372,960 12/31/2015 996 3.1% $ 4,871,487 12/31/2010 1056 5.6% $35,681 ($2,027) ($47,180) $13,526
12/31/2011 12/31/2099 12/31/2015 12/31/2099 1008 109,064.00 $ 306,306 12/31/2015 1008 3.1% $ 4,126,677 12/31/2011 1056 5.6% $30,226 ($1,374) ($37,795) $8,943
12/31/2012 12/31/2100 12/31/2015 12/31/2100 1020 289,619.00 $ 813,395 12/31/2015 1020 3.1% $ 11,302,951 12/31/2012 1056 5.6% $82,788 ($2,822) ($97,895) $17,929
12/31/2013 12/31/2101 12/31/2015 12/31/2101 1032 442,626.00 $ 1,243,115 12/31/2015 1032 3.1% $ 17,817,529 12/31/2013 1056 5.6% $130,504 ($2,966) ($145,932) $18,394
12/31/2014 12/31/2102 12/31/2015 12/31/2102 1044 396,270.00 $ 1,112,924 12/31/2015 1044 3.1% $ 16,453,092 12/31/2014 1056 5.6% $120,510 ($1,369) ($127,434) $8,294
12/31/2015 12/31/2103 12/31/2015 12/31/2103 1056 128,919.00 $ 362,069 12/31/2015 1056 3.1% $ 5,521,016 12/31/2015 1056 5.6% $40,438 $0 ($40,438) $0
(p/33, 754,794.00 $ 94,800,339 $ 676,121,561 $6,004,450 ($1,603,047) ($24,397,563) $19,996,160
lntermountain Gas Company
Asset Retirement Obiligatlon Calculations-Services $ 405.00 Per Line To Retire Per Distribution Engineering
As of November 30, 2015 76 Maximum Life
Planned r Retirement \0 \ r 1t Credit Value at Accum. Regulatory
Retirement or Months Date of Estimate Obligation Obligation Adjusted Obligation Reserve at ARO Liability Asset at
Date Based Calculation Settlement Until Count of Obilgation Obligation to Settle Inflation Future Value of Beginning Life in Risk Free Date (ARC Calculation at Calculation Calculation
Vintage on Max Life Date Date Settlement Services Estimate Estimate Months Factor Obligation Date Months Rate Asset) Date Date Date
12/31/2000 12/31/2076 12/31/2015 12/31/2076 732 11,851 $ 4,799,655 12/31/2015 732 3.1% $ 31,725,022 12/31/2000 912 5.6% $454,301 ($89,665) ($1,050,275) $685,638
12/31/2001 12/31/2077 12/31/2015 12/31/2077 744 11,741 $ 4,755,105 12/31/2015 744 3.1% $ 32,418,864 12/31/2001 912 5.6% $464,237 ($85,517) ($1,014,927) $636,207
12/31/2002 12/31/2078 12/31/2015 12/31/2078 756 10,670 $ 4,321,350 12/31/2015 756 3.1% $ 30,388,054 12/31/2002 912 5.6% $435,156 ($74,435) ($899,655) $538,933
12/31/2003 12/31/2079 12/31/2015 12/31/2079 768 12,727 $ 5,154,435 12/31/2015 768 3.1% $ 37,386,110 12/31/2003 912 5.6% $535,368 ($84,532) ($1,046,693) $595,857
12/31/2004 12/31/2080 12/31/2015 12/31/2080 780 11,815 $ 4,785,075 12/31/2015 780 3.1% $ 35,798,409 12/31/2004 912 5.6% $512,632 ($74,197) ($947,783) $509,348
12/31/2005 12/31/2081 12/31/2015 12/31/2081 792 14,763 $ 5,979,015 12/31/2015 792 3.1% $ 46,137,111 12/31/2005 912 5.6% $660,682 ($86,932) ($1,155,132) $581,382
12/31/2006 12/31/2082 12/31/2015 12/31/2082 804 13,836 $ 5,603,580 12/31/2015 804 3.1% $ 44,599,716 12/31/2006 912 5.6% $638,667 ($75,632) ($1,055,965) $492,930
12/31/2007 12/31/2083 12/31/2015 12/31/2083 816 9,732 $ 3,941,460 12/31/2015 816 3.1% $ 32,357,087 12/31/2007 912 5.6% $463,353 ($48,774) ($724,474) $309,896
12/31/2008 12/31/2084 12/31/2015 12/31/2084 828 7,073 $ 2,864,565 12/31/2015 828 3.1% $ 24,255,863 12/31/2008 912 5.6% $347,343 ($31,992) ($513,578) $198,227
12/31/2009 12/31/2085 12/31/2015 12/31/2085 840 2,634 $ 1,066,770 12/31/2015 840 3.1% $ 9,316,968 12/31/2009 912 5.6% $133,419 ($10,533) ($186,552) $63,666
12/31/2010 12/31/2086 12/31/2015 12/31/2086 852 2,943 $ 1,191,915 12/31/2015 852 3.1% $ 10,737,295 12/31/2010 912 5.6% $153,758 ($10,116) ($203,309) $59,667
12/31/2011 12/31/2087 12/31/2015 12/31/2087 864 2,454 $ 993,870 12/31/2015 864 3.1% $ 9,234,746 12/31/2011 912 5.6% $132,241 ($6,960) ($165,357} $40,076
12/31/2012 12/31/2088 12/31/2015 12/31/2088 876 3,360 $ 1,360,800 12/31/2015 876 3.1% $ 13,041,737 12/31/2012 912 5.6% $186,757 ($7,372} ($220,836} $41,450
12/31/2013 12/31/2089 12/31/2015 12/31/2089 888 5,939 $ 2,405,295 12/31/2015 888 3.1% $ 23,776,901 12/31/2013 912 5.6% $340,485 ($8,960} ($380,737} $49,213
12/31/2014 12/31/2090 12/31/2015 12/31/2090 900 5,558 $ 2,250,990 12/31/2015 900 3.1% $ 22,951,244 12/31/2014 912 5.6% $328,661 ($4,324} ($347,546) $23,209
12/31/2015 12/31/2091 12/31/2015 12/31/2091 912 4,755 $ 1,925,775 12/31/2015 912 3.1% $ 20,252,749 12/31/2015 912 5.6% $290,019 $0 ($290,019} $0 6/ 340,159 $ 137,764,395 $ 773,237,547 $12,203,656 ($3,123,325} ($40,851,674) $31,771,9
1-7-
+)
description description vintage quantity cost
380-G-Services 1 1/4 In. Steel Service 1960 64 13,984.54
380-G-Services 2 In. Steel Service 1960 31 18,315.23
380-G-Services 3/4 In. Steel Service 1960 3,453 3,548 430,656.27
380-G-Services 1 1/4 In. Steel Service 1959 49 72,820.02
380-G-Services 2 In. Steel Service 1959 110 74,534.80
380-G-Services 3/4 In. Steel Service 1959 16,688 16,847 2,893,359.62
340,159 340,159 144,070,222.38
M:\Dept\Account\ARO Asset Retirement Obligation\lGC Gas Dist ARO using Retirement Curves.xlsx I I
description
376-G-Mains
376-G-Mains
376-G-Mains
376-G-Mains
376-G-Mains
376-G-Mains
376-G-Mains
description
2 In. Steel Main
3 1/2 In. Steel Main
3 In. Steel Main
3/4 In. Steel Main
4 In. Steel Main
6 In. Steel Main
8 In. Steel Main
vintage quantity
1959 1,836,006
1959 57,700
1959 1,078
1959 1,087
1959 479,872
1959 114,420
1959 54,368
cost
5,188,847.81
299,215.83
382,128.83
2,202.66
2,551,692.17
944,541.05
3,509,568 614,516.88
33,754,797.3 33,754,794 222,589,810.64
M:\Dept\Account\ARO Asset Retirement Obligation\lGC Gas Dist ARO using Retirement Curves.xlsx
COR Reserve Balances and Activity by GL Account
Starting Month: 11/2015
MDU Utilities Groups Ending Month: 11/2015
e o 00 S
Company
GLAccount Cost of Transfers and
Depr. Group Beginning Reserve Provision Removal Adjustments Ending Reserve
AA-Financial
00048-lntermountain Gas Co.
1087
IGC-360-G-Land & Land Rights $0.00 $0.00 $0.00 $0.00 $0.00
D,Q,,,· -D"'i:? ~wr\·:::. IGC-361-G-Struct. & Imp NAMPA $1,545,797.77 $892.70 $0.00 $0.00 $1,546,690.47 \CJ')r" ( t) uj
IGC-361-G-Struct. & Imp REXBURG $78,325.79 $1,269.97 $0.00 $0.00 $79,595.76
IGC-362-G-Gas Holders-Nampa $36,898.51 $724.43 $0.00 $0.00 $37,622.94
IGC-362-G-Gas Holders-Rexburg $60,367.04 $1,170.52 $0.00 $0.00 $61,537.56 ~(\)\I 'L.o,~
IGC-363-G-Compressor Eq. Nampa $22,813.14 $1,393.20 $0.00 $0.00 $24,206.34
IGC-363-G-Liquefaction Eq. -LNG $3,505.50 $411.52 $0.00 $0.00 $3,917.02
IGC-363-G-Measure & Reg Eq. Nampa $268.22 $20.58 $0.00 $0.00 $288.80
IGC-363-G-Purification Eq. Nampa $105,976.14 $2,029.22 $0.00 $0.00 $108,005.36
IGC-363-G-Purification Eq. Rexburg $66,199.44 $1,283.60 $0.00 $0.00 $67,483.04
IGC-363-G-Vaporizing Eq. Nampa $386.78 $134.86 $0.00 $0.00 $521.64
IGC-365-G-Land and Land Rights $0.00 $0.00 $0.00 $0.00 $0.00
IGC-366-G-Structures $642.18 $19.29 $0.00 $0.00 $661.47
IGC-367-G-Mains $12,003,470.90 $43,820.76 $0.00 $0.00 ~j]p""' /f IGC-368-G-Com pressor Station $3,539.22 $0.00 $0.00 $0.00 $3,539.22
IGC-370-G-Communication Equip $13,436.00 $0.00 $0.00 $0.00 $13,436.00
IGC-374-G-Land and Land Rights $0.00 $0.00 $0.00 $0.00 $0.00
IGC-375-G-Structures & Improvement $945.47 $0.16 $0.00 $0.00 $945.63
IGC-376-G-Mains $34,800,020.32 $98,678.08 ($11,142.01) $683.68 ~o:qb
IGC-376-G-Mains Eastern Energy $0.00 $0.00 $0.00 $0.00 ~
IGC-378-G-Meas./Reg ($4,676.17) $3,026.32 ($1,002.00) $0.00 ($2,651.85)
IGC-378-G-Meas./Reg Eastern Energy $0.00 $0.00 $0.00 $0.00 $0.00
IGC-380-G-Services $27,386,519.24 $107,333.42 $0.00 ($683.68) Ci~-93,166~·9aJ \ (>I) "'"'-~·,,_,_ .. -~
IGC-381-G-ERT Units ($237,074.58) $0.00 $0.00 $0.00 ($237,074.58)
IGC-381-G-Meters ($1.70) $0.00 $0.00 $0.00 ($1.70)
IGC-382-G-ERT Installation ($119,787.90) $0.00 $0.00 $0.00 ($119,787.90)
IGC-382-G-Meter Set Installation $0.00 $0.00 $0.00 $0.00 $0.00
IGC-383-G-Service Regulators $0.00 $0.00 $0.00 $0.00 $0.00
IGC-384-G-Regulator Installation $0.00 $0.00 $0.00 $0.00 $0.00
IGC-385-G-lndustrial Meas. & Reg St ($274,316.27) $1,163.36 ($2,243.71) $0.00 ($275,396.62)
IGC-389-G-Land & Land Rights $0.00 $0.00 $0.00 $0.00 $0.00
Page 1 of 2 Depr -1085 COR 01/08/2016
COR Reserve Balances and Activity by GL Account
Starting Month: 11/2015
MDU Utilities Groups Ending Month: 11/2015
e o 00 S
Company
GLAccount Cost of Transfers and
Depr. Group Beginning Reserve Provision Removal Adjustments Ending Reserve
AA-Financial
00048-lntermountain Gas Co.
1087
IGC-390-G-Structures & Improvement ($7,655.29) $0.00 $0.00 $0.00 ($7,655.29)
IGC-391-G-Office Furn & Equip $0.00 $0.00 $0.00 $0.00 $0.00
IGC-392-G-Trailers $0.47 $0.00 $0.00 $0.00 $0.47
IGC-392-G-Transportation Equip ($20,300.02) $0.00 $0.00 $0.00 ($20,300.02)
IGC-393-G-Stores Equip $0.00 $0.00 $0.00 $0.00 $0.00
IGC-394-G-Tools,Shop,Garage Equip ($39.63) $0.00 $0.00 $0.00 ($39.63)
IGC-395-G-Laboratory Equip $0.00 $0.00 $0.00 $0.00 $0.00
IGC-396-G-Power Operated Equip $0.00 $0.00 $0.00 $0.00 $0.00
IGC-397-G-Communication Equip $0.00 $0.00 $0.00 $0.00 $0.00
IGC-398-G-Miscellaneous Equip $0.00 $0.00 $0.00 $0.00 $0.00
IGC-INVALID-Natural Gas [G] $0.00 $0.00 $0.00 $0.00 $0.00
GI Account Code Subtotal: $75,465,260.57 $263,371.99 ($14,387.72) $0.00 $75,714,244.84
1112
IGC-301-G-Organization $0.00 $0.00 $0.00 $0.00 $0.00
IGC-302-G-Franchises $0.00 $0.00 $0.00 $0.00 $0.00
IGC-303-G-Misc. Intangible Plant $0.00 $0.00 $0.00 $0.00 $0.00
GI Account Code Subtotal: $0.00 $0.00 $0.00 $0.00 $0.00
Company Subtotal: $75,465,260.57 $263,371.99 ($14,387.72) $0.00 $75,714,244.84
Grand Total: $75,465,260.57 $263,371.99 ($14,387.72) $0.00 $75,714,244.84 ,)
Page 2 of 2 Depr -1085 COR 01/08/2016
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!-Reeords,-+---+-----~ 1 .. -· ., • •. ---"f
l-0·-~~;~n-,1--------t:~:li Of
l 0
/c1
48.1087
Account Description
Gas Accum Prov Non ARO
Total Object Account 1087
fZJ Select I Skip To
lntermountain Gas
General Ledger
General Ledger
General Ledger Period
Balance
468,659.12-
468,659.12-
http://erp.mdu.com: 84/jde/E lMenu.maf?jdeowpBackButtonProtect=PROTECTED
General Ledger Balance
75, 714,244.84-
JO 175,714,244.84·
0 Period I Date
Thru Date
Type/Subledger
Page 1 of 1
Gyllenskog, Nicole L (JP0900)
::('Sign Out
~2131/2015
1/8/2016
Assumptions for Asset Retirement Obligations (incurred during 2015 or
upward revisions to previous estimates)
1) Inflation -The inflation factor is based on information from the Energy Information
Administration. At this time it is recommended the 3 .1 P,ercent inflation rate be used by
all businesses. o/ i' if/
2) Market risk premium -MDU Resources Group, Inc. is a diversified natural resource
company and is not in the high tech industry or significantly in the manufacturing
industry. In addition, the industries where asset retirement obligations are recorded are
mature industries. Thus, it appears reasonable to use a market risk premium of zero
percent.
3) Credit-adjusted risk-free rate-Based upon Moody's U.S. Intermediate-Term
Corporate Bonds on 11/18/15 it would appear reasonable that all companies except
Montana-Dakota Utilities Co., Great Plains Natural Gas Co., Cascade Natural Gas Co.
and Intermountain Gas Co. would use a credit-adjusted risk-free rate of 3.8% for
obligations between one and fifteen years (assuming a Baa rating). Montana-Dakota
Utilities Co., Great Plains Natural Gas Co., Cascade Natural Gas Co. and Intermountain
Gas Co. would use a credit-adjusted risk-free rate of3.9% for obligations between one
and fifteen years (assuming a Baa rating). Based upon Moody's U.S. Long-Term
Corporate Bonds on 11/23/15 it would appear reasonable that all companies except
Montana-Dakota Utilities Co., Great Plains Natural Gas Co., Cascade Natural Gas Corp.
and Intermountain Gas Co. would use a credit-adjusted risk-free rate of 5.4% for
obligations beyond fifteen years (assuming a Baa rating). Montana-Dakota Utilities Co.,
Great Plains Natural Gas Co., Cascade Natural Gas Co. and Intermountain Gas Co.
would use a credit adjusted risk-free rate of 5.6% (assuming a Baa rating).
?:/ ~ t-1.
F:\CA \Research\SF AS 143 Asset Retirement Obligations\SF AS 143 Assumption Memos\SF AS 143
AssumpNovl5.docx
From:
Sent:
To:
Subject:
, Nicole
Shelton, Rick
Friday, January 08, 2016 12:57 PM
Gyllenskog, Nicole
FW: Asset Retirement Obligations
Attachments: Copy of Copy of MDU-GPNG Gas Dist ARO using Retirement Curves (2).xlsx
From: Jerry Weinert [mailto:[e-mail]]
Sent: Tuesday, December 15, 2015 2:06 PM
To: Shelton, Rick
Cc: McGrath, Mike
Subject: RE: Asset Retirement Obligations
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Rick,
Here's your spreadsheet with the service lives and maximum lives. I've included transmission mains in green.
I my humble opinion if IGC does not have the "legal obligation" to remove this plant there is no asset retirement obligation.
Jerry
From: Shelton, Rick [mailto:[e-mail]]
Sent: Tuesday, December 15, 2015 2:51 PM
To: Jerry Weinert
Cc: McGrath, Mike
Subject: Asset Retirement Obligations
Jerry,
Here is a copy of the worksheet that was developed by MDU and we are using as a template to calculate our ARO.
1
Iowa Max Curve Adjusted
Assumptions Curve Life Maximum Life
Consumer Price Index 3.1%
Credit Adjusted Risk-Free Rate (Obligations>lS Years) 5.6%
Credit Adjusted Risk-Free Rate (Obligations<lS Years) 3.9%
IGC Services Average Service Life in Years Per Depreciation Study 50 R4 152% 76
IGC Mains Average Service Life in Years Per Depreciation Study 58 R4 152% 88 ~, ) IGC Transmission Mains Average Service Life in Years Per Depreciation Stud· 49 -ss -180% 88 • ..