20161102INT to Staff 120-130.pdf

WILLIAMS · BRADBURY
November 2, 2016
Jean D. Jewell
Commission Secretary
A T T O R N E Y S A T L A W SECEIVED
Idaho Public Utilities Commission
4 72 W. Washington Street
Boise, ID 83 702
RE: IGC Response to Staffs Sixth Request for Production
Case No. INT-G-16-02
Dear Ms. Jewell:
Enclosed for filing with the Commission are one original and three conformed copies of
Intermountain Gas Company's Response to Staffs Sixth Request for Production, and one
CD-ROM that contains the answers and attachments.
Please direct any questions related to the transmittal of this filing to Mike McGrath at
208-377-6168.
Sincerely,
Ronald L. Williams
Attorney at Law
RLW
1015 W. Hays Street -Boise, ID 83702
Phone: [phone] -www.williamsbradbury.com
Ronald L. Williams, ISB No. 3034
Williams Bradbury, P.C.
1015 W. Hays St.
Boise, ID 83 702
Telephone: [phone]
Email: ron@williarnsbradbury .corn
Attorneys for Intermountain Gas Company
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BEFORE THE IDAHO PUBLIC UTILITES COMMISSION
IN THE MATTER OF INTERMOUNTAIN GAS )
COMPANY'S APPLICATION TO CHANGE )
ITS RA TES AND CHARGES FOR NATURAL )
GAS SERVICE )
)
) _________________ )
Case No. INT-G-16-02
RESPONSE OF INTERMOUNTAIN
GAS COMPANY TO SIXTH
PRODUCTION REQUEST OF THE
COMMISSION STAFF
COMES NOW, Intermountain Gas Company, and in response to the Sixth Production
Request of the Commission Staff to Intermountain Gas Company dated October 12, 2016, herewith
submits the following information:
REQUEST NO. 120: On page 5 of her testimony, Ms. Blattner explains that she used a test
year using 6 months of actual data and six months of forecasted data. Please provide the
workpapers, assumptions, and supporting data used to create this forecast. Please explain why
forecast, rather than actual weather data was used.
RESPONSE TO REQUEST NO. 120:
The forecasted therm usage data was developed in the following steps:
1. Intermountain used data from October 2003 -December 2014 to create regression
equations that were used both to weather normalize actual months and to forecast usage in
the forecast months. The regression study was submitted in response to Production Request
No. 27.
RESPONSE OF IGC TO SIXTH PRODUCTION REQUEST OF COMMISSION STAFF Page 1
2. The Company then applied the regression equations to normal heating degree days and
forecast trend to arrive at usage per customer. The file "PR 120 Usage Calculation.xlsx"
provides an illustration of how the regression formulas were applied The resulting usage
forecast can be found in the file "PR 120 Usage per Customer.xlsx" in Excel columns A-G.
3. The regression study is based upon usage per customer data. To calculate usage per
customer, the Company took the total billed usage for the month divided by customers
actually using natural gas to arrive at usage per customer. Customers receiving billing
adjustments and customers that had zero usage for the month were excluded/ram the
divisor. Because the regression equations are used to establish a relationship between
natural gas usage, weather, and other explanatory variables, the Company believed it was
appropriate to remove from the customer total those customers that did not use any natural
gas. As would be expected, during the summer months of June through October, the many
RS-I and GS customers who use natural gas for heating purposes only were removed from
the divisor because their usage during those months was zero.
Since these customers are paying a customer charge year round, however, they are included
in the customer count in Exhibit No. 15 in order to accurately reflect the revenue generated
from the customer charge. To eliminate the confusion of having a customer count to apply to
usage and a separate customer count to apply to the customer charge, Intermountain chose to
adjust the usage in the June through October period to account for these zero usage customers
in the RS-I and GS classes. That calculation is included in this response in the file "PR 120
Usage per Customer.xlsx " on the "RS-I Adj " and "GS Adj" tabs. The resulting usage per
customer that was applied to Exhibit No. 15 forecast customers to generate forecast usage is
listed in Excel columns I through O of the file "PR 120 Usage per Customer.xlsx ".
RESPONSE OF IGC TO SIXTH PRODUCTION REQUEST OF COMMISSION STAFF Page 2
Forecast, or Normal degree days were used to calculate usage in the forecast months of July
through December 2016, because actual weather for those months had not yet occurred when the
case was filed. The process for weather normalizing the months of January through June 2016 is
explained in Production Request No. 121.
Record Holder: Mike McGrath, 208-377-6000
Location: 555 S Cole Rd, Boise, ID 83707
Sponsor/Preparer: Lori Blattner, 208-377-6000
REQUEST NO. 121: Please provide the workpapers, assumptions, and supporting data
used to determine the Company's weather normalized consumption as summarized in Table B.1 of
Ms. Blattner's direct testimony, and used by Company witness Darrington.
RESPONSE TO REQUEST NO. 121:
The process of weather normalizing actual consumption also begins with the regression
equations provided in response to Production Request No. 27. As illustrated in the file "PR 121
Weather Normalization Adjustment.xlsx", the actual degrees for the month are subtracted from the
normal degree days for the month. The heating degree day regression coefficient for the
appropriate month is applied to the change in degree days to calculate the change in usage
resulting from the difference in heating degree days from normal. Finally, that adjustment is
applied to customers to arrive at the total change in usage for the class. The actual therm usage for
the RS-1, RS-2 and GS classes was weather normalized in this manner.
Record Holder: Mike McGrath, 208-377-6000
Location: 555 S Cole Rd, Boise, ID 83707
Sponsor/Preparer: Lori Blattner, 208-377-6000
REQUEST NO. 122: Please provide the accounting entries and related supporting
documentation associated with the Ketchum/Sun Valley Area Hookup. Please include all
components associated with the Hookup including but not limited to the revenues, costs, and rate
RESPONSE OF JGC TO SIXTH PRODUCTION REQUEST OF COMMISSION STAFF Page 3
base amounts. Please correlate this information with the decreased tariff and corresponding refunds
approved in Case No. INT-G-09-01 and Tariff Advice No. 09-02. Please identify specifically
where these costs and revenues are within the Cost-of-Service study.
RESPONSE TO REQUEST NO. 122:
Please see the response to Staff Request No. 119, part of the 5th Production Request.
Record Holder: Mike McGrath, 208-377-6000
Location: 555 S Cole Rd, Boise, ID 83707
Sponsor/Preparer: Ted Dedden, 208-377-6000
REQUEST NO. 123: Please provide a narrative of the line extension process, a copy of
any policies and procedures related to the process, and a list from 2010 through 2016 to date of line
extensions other than the previously referenced Ketchum /Sun Valley Area hookup. For each line
extension, please identify the costs (including documentation underlying those costs), hookup fee
calculated, hookup fee revenue, advances and/or contributions and any other accounts posted.
Please include within your response specifically how these amounts were included within the Cost­
of-Service study.
RESPONSE TO REQUEST NO. 123:
The Staff has agreed to perform a random sample audit in regards to the metrics associated
with this question. Additionally, please refer to the Company 's response to Request No. 101 filed in
the Fourth Production Request by Commission Staff Please see file folder labeled "PR# 123 "for
procedures.
When extension of main is required to serve new customers:
First Year Customers:
Costs are estimated that include main-line, service-line(s) and meter(s)
Estimated annual therm usage is calculated based on customer information
IRR calculations are completed utilizing estimated costs and estimate annual therm usage
RESPONSE OF IGC TO SIXTH PRODUCTION REQUEST OF COMMISSION STAFF Page 4
o if IRR meets or exceeds threshold
• installation is completed at no charge to customer
o if IRR is below threshold
• "Aid to Construction " is calculated using same costs/therm usage
identifying an allowable amount
• "Aid" is difference between the allowable and estimated costs
• "Aid" would need to be advanced by customer prior to installation
New Developments:
o Type A Contract would be signed, giving potential refund of
"aid" based on contract terms
Costs are estimated that include main-line, service-line(s) and meter(s)
Estimated annual therm usage is calculated based on potential new customers in three years
IRR calculations are completed utilizing estimated costs and estimate annual therm usage
o if IRR meets or exceeds threshold
• installation is completed at no charge to Developer
• Type B Contract signed
o Gives Developer three years to meet estimated usage in
calculations
• If actual usage is less than estimate, payment of the
shortfall would be required per terms of contract
o if IRR is below threshold
• 100% of estimated "main-line " costs would be required prior to installation
• Type A Contract would be signed, giving potential refund of "aid"
based on contract terms
RESPONSE OF IGC TO SIXTH PRODUCTION REQUEST OF COMMISSION STAFF Page 5
The actual costs of mains, service lines and meters are included in Rate Base in the
distribution plant section. Any offsets to the construction costs in the form of Customer Advances in
Aid of Construction are included in account 2520.0000 as a Rate Base adjustment.
Record Holder:
Location:
Sponsor/Preparer:
Mike McGrath, 208-377-6000
555 S Cole Rd, Boise, ID 83707
Hart Gilchrist, 208-377-6000
REQUEST NO. 124: Please identify how the interruptible snowmelt provisions are
recorded within the accounting records and Cost-of-Service Study. Please include within your
response the amounts and accounts posted, by year, for 2014 through 2016 to date.
RESPONSE TO REQUEST NO. 124:
The residential (IS-R) and commercial (IS-C) statistics for Snowmelt customers, therms and
revenues are kept within the Company 's CC&B records. When those same records are incorporated
into the Company 's JDE accounting platform, the IS-R statistics are blended into the RS-2 data and
the IS-C statistics are blended into the GS-1 data. In regards to COS treatment, please reference the
Company response to question No. 102 in the Staff's Fourth Production Request. For 2014 data
pertaining to snowmelt customers, therms and revenue see CD file labeled "PR#J 24 JS-R IS-C."
For the same data post 2014, please reference the Company 's response to Request No's 113 & 114
as part of the Staff's Fifth Production Request.
Record Holder:
Location:
Sponsor/Preparer:
Mike McGrath, 208-377-6000
555 S Cole Rd, Boise, ID 83707
Mike McGrath, 208-377-6000
REQUEST NO. 125: Please provide the Zacks Financial and Yahoo Finance! reports that
include the 5-year earnings growth rate estimates for MDU Resources Group.
RESPONSE OF JGC TO SIXTH PRODUCTION REQUEST OF COMMISSION STAFF Page 6
RESPONSE TO REQUEST NO. 125:
Please see CD folder labeled "PR #125" for attachments I and 2 showing the current 5-
year earnings growth rate estimates for MDU Resources Group from Zacks Financial and Yahoo!
Finance.
Record Holder: Mike McGrath, 208-377-6000
Location: 555 S Cole Rd, Boise, ID 83707
Sponsor/Preparer: Dr. J. Stephen Gaske, 508-263-4471
REQUEST NO. 126: Please provide copies of the SNL Financial reports used to determine
the total assets, operating revenue, and operating income for the group of proxy companies listed in
Exhibit 5, Schedule 3. Please provide a copy of the equivalent report for MDU Resources Group.
RESPONSE TO REQUEST NO. 126:
Please see CD file labeled "PR #126-Attachment I " for the requested information. The
requested information was downloaded from SNL Financials web site. According to SNL
Financial, the information reported for total assets, operating revenue, and operating income is
taken from the Form I 0-K reports filed with the United States Securities and Exchange
Commission.
In Exhibit 5, Schedule 3, Dr. Gaske provided information for Intermountain Gas Company
rather than MDU Resources Group because the purpose of his analysis is to establish the
appropriate return on common equity capital for Intermountain Gas Company as if it were a stand­
alone entity raising equity capital in capital markets based on its own individual merits and risks.
Record Holder: Mike McGrath, 208-377-6000
Location: 555 S Cole Rd, Boise, ID 83707
Sponsor/Preparer: Dr. J. Stephen Gaske, 508-263-4471
REQUEST NO. 127: Please provide the Company's studies and bill impact analyses
supporting the proposal to combine the RS-1 and RS-2 residential classes.
RESPONSE OF IGC TO SIXTH PRODUCTION REQUEST OF COMMISSION STAFF Page 7
RESPONSE TO REQUEST NO. 127:
Please see CD file labeled "PR#J 27 RSI RS2 Bill Impact."
Record Holder:
Location:
Sponsor/Preparer:
Mike McGrath, 208-377-6000
555 S Cole Rd, Boise, ID 83707
Lori Blattner, 208-377-6000
REQUEST NO. 128: Please provide studies and analyses showing the relationship
between load factor and usage for GS-1 customers. Please also provide in executable electronic
format 12 months of consumption data for GS-1 customers having a consecutive 12 months of
billing history.
RESPONSE TO REQUEST NO. 128:
Please see CD file labeled "PR#l 28 GS Load Factor Analysis."
Record Holder:
Location:
Sponsor/Preparer:
Mike McGrath, 208-377-6000
555 S Cole Rd, Boise, ID 83707
Lori Blattner, 208-377-6000
REQUEST NO. 129: Please provide detailed installation and retirement records for all
Meter investments and Meter Set Installations.
RESPSONSE TO REQUEST NO. 129:
Please see CD file folder labeled "PR# 129. "
Record Holder:
Location:
Sponsor/Preparer:
Mike McGrath, 208-377-6000
555 S Cole Rd, Boise, ID 83707
Ted Dedden, 208-377-6000
REQUEST NO. 130: Please provide the detailed depreciation schedules with depreciation
rates applied for Depreciation Expenses related to Meters (381-G) and Meter Set Installation
(382-G) for actual and forecasted periods in the 2016 Test Year. Please provide a
reconciliation/proof between depreciation expense and accumulated depreciation for Meters and
Meters Installation during 2015 and 2016.
RESPONSE OF IGC TO SIXTH PRODUCTION REQUEST OF COMMISSION STAFF Page 8
RESPONSE TO REQUEST NO. 130:
Please see CD file labeled "PR #130."
Record Holder:
Location:
Sponsor/Preparer:
Mike McGrath, 208-377-6000
555 S Cole Rd, Boise, ID 83707
Ted Dedden, 208-377-6000
DATED at Boise, Idaho, this 2nd day ofNovember, 2016.
Respectfully submitted,
fJ,4 j iv;0--
Ronald L. Williams
Williams Bradbury, P.C.
Attorneys for Intermountain Gas Company
RESPONSE OF JGC TO SIXTH PRODUCTION REQUEST OF COMMISSION STAFF Page 9
CERTIFICATE OF DELIVERY
I HEREBY CERTIFY that on this 2nd day of November, 2016, I caused to be served a
true and correct copy of the Response of Intermountain Gas Company to Sixth Production
Request of the Commission Staff upon the following individuals in the manner indicated below:
Hand Delivery: ( original and 3 copies)
Jean Jewell
Commission Secretary
Idaho Public Utilities Commission
472 W. Washington Street
Boise, ID 83 720
Michael P. McGrath
Intermountain Gas Company
555 S. Cole Road
Boise, ID 83 707
E-Mail: [e-mail]
Brad M. Purdy
2019 N. 17th Street
Boise, ID 83 702
E-Mail: [e-mail]
Attorney for Community Action
Partnership Association of Idaho (CAP AI)
Benjamin J. Otto
Idaho Conservation League
710 N. 6th Street
Boise, ID 83 702
E-Mail: [e-mail]
F. Diego Rivas
NW Energy Coalition
1101 8th Avenue
Helena, MT 59601
E-Mail: [e-mail]
Edward A. Finklea
Northwest Industrial Gas Users (NWIGU)
545 Grandview Drive
Ashland, OR 97520
E-Mail: [e-mail]
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Attorneys for NWIGU
Electronic service only:
Michael C. Creamer
Givens Pursley LLP
E-Mail: [e-mail]
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Scott Dale Blickenstaff
The Amalgamated Sugar Company LLC
1951 S. Saturn Way, Ste. 100
Boise, ID 83 702
E-Mail: [e-mail]
Peter Richardson
Gregory M. Adams
Richardson Adams, PLLC
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Attorneys for The Amalgamated Sugar
CompanyLLC
Ken Miller
Snake River Alliance
223 N. 61h St., Ste. 317
P.O. Box 1731
Boise, ID 83701
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Ronald L. Williams