20170120NWIGU to INT 1-10.pdf

Chad M. Stokes (OSB No. 004007)
Tommy A. Brooks (OSB No. 076071)
Cable Huston LLP
1001 SW Fifth Ave., Suite 2000
Portland, OR 97204-1136
Telephone: [phone]
Facsimile: [phone]
[e-mail]
[e-mail]
Michael C. Creamer (ISB No. 4030)(Local Counsel)
Givens Pursley LLP
601 W. Bam1ock St.
Boise, ID 83702
Telephone: [phone]
Facsimile: (208) -388-1300
[e-mail]
Attorneys for Northwest Industrial Gas Users
BEFORE THE IDAHO PUBLIC UTILITIES 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
NORTHWEST INDUSTRIAL GAS
USERS' RESPONSE TO FIRST
PRODUCTION REQUEST OF
INTERMOUNTAIN GAS
COMPANY
COMES NOW, Northwest Industrial Gas Users, and in response to the First Production
Request oflntermountain Gas Company dated December 30, 2016, submits the following
responses: (
REQUEST NO. 1. Please provide copies of the documents cited in the following
footnotes found in the direct testimony of Michael Gorman, (Di): 14, 16, 17, 18, 21, 22, 27, 28,
29,30,31,32,34,35,36,37,38,42,52,and59.
NWIGU'S RESPONSES TO IGC FIRST PRODUCTION REQUEST Page 1
26678.885\4820-5 l 08-0768. v2
RESPONSE TO REQUEST NO. 1:
Please see Mr. Gorman's workpapers provided with these responses. Confidential
workpapers and documents will be provided on a separate CD and provided only to those parties
that have signed the Protective Agreement.
REQUEST NO. 2. Referencing Michael P. Gorman, Exhibit Nos. 301 , 302, 303, 304,
305,3 06,307,308,309,310,311,312,313,314,315,316,317, and 318.
a) Please provide an Excel copy with formulas intact of each of the cited exhibits.
b) Please provide copies of all supporting data and workpapers used in developing each of
the cited exhibits.
RESPONSE TO REQUEST NO. 2:
a) Please see Mr. Gorman's workpapers provided with these responses. Confidential
workpapers and documents will be provided on a separate CD and provided only to
those parties that have signed the Protective Agreement.
b) Please see Mr. Gorman's workpapers provided with these responses. Confidential
workpapers and documents will be provided on a separate CD and provided only to
those parties that have signed the Protective Agreement.
REQUEST NO. 3. At page 29, lines 13 through page 30, line 4, Mr. Gorman quotes
an article from Fitch Ratings that was published on September 21, 2015. Please explain the
relevance of this article for purposes of setting the forward-looking cost of equity for
Intermountain Gas Company in 2017.
RESPONSE TO REQUEST NO. 3:
At the time Mr. Gorman performed his analysis, this was the most recent report from
Fitch Rating Service concerning the regulated utility industry that was available to Mr. Gorman.
NWIGU'S RESPONSES TO IGC FIRST PRODUCTION REQUEST Page 2
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As he described in his testimony, he used this document to get a sense of market participants'
assessment of the investment risk characteristics of regulated utility investments.
REQUEST NO. 4. At page 31, lines 8 through page 32, line 20, Mr. Gorman cites an
EEJ report regarding electric utility stock prices in 2015, Federal Reserve policy in 2015, capital
spending for electric utilities, and earnings growth rates for electric utilities. Please explain the
relevance of this article, given that it pertains to electric utilities and that much of the information
is for 2015.
RESPONSE TO REQUEST NO. 4:
While Mr. Gorman understands JGC is a gas distribution company, his testimony
assessed the market participants' assessments and the investment risk ofregulated utility
companies including both electric and gas utility operations. This information was used by Mr.
Gorman to gather information concerning the market's assessment ofregulated utility investment
risk generally, which was then used, in part, by Mr. Gorman to assess the market's assessment of
risk of investing in local gas distribution retail utility companies.
REQUEST NO. 5. At page 51, line 24 tlu·ough page 52, line 2, Mr. Gorman states that
he has used a long-term growth rate of 4.25 percent in his multi-stage DCF analysis. Please
reconcile this figure with Table 7 on page 50, which shows the Blue Chip nominal GDP growth
rate as 4.30%.
RESPONSE TO REQUEST NO. 5:
The 4.25% and the 4.3% are the same number derived from the same source. However,
the number provided in Table 7 was row1ded to one decimal point, where the number used in
Mr. German's DCF study was based on two decimal points.
NWJGU'S RESPONSES TO JGC FIRST PRODUCTION REQUEST Page 3
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REQUEST NO. 6. Regarding Mr. Gorman's testimony, page 53, line 25, through page
54, line 1, please confirm that the risk premium in Exhibit No. 312 is based on natural gas
distribution companies.
RESPONSE TO REQUEST NO. 6:
Mr. Gorman confirms that the risk premitm1 in Exhibit No. 312 is based on natural gas
distribution companies.
REQUEST NO. 7. Please specify the time period covered by the projected risk-free
rate of 3.40%. Michael P. Gorman, page 60, lines 5-6.
RESPONSE TO REQUEST NO. 7:
Blue Chip Financial Forecasts' projected Treasury bond yield of 3.40% was two years
into the future out through Ql 2018.
REQUEST NO. 8. Why did Mr. Gorman base his ROE recommendation for
Intermow1tain Gas Company on a "general assessment of the current investment risk
characteristics of the electric utility industry"? Michael P. Gorman, page 64, lines 14-18.
RESPONSE TO REQUEST NO. 8:
This is typographical error. The testimony will be revised to read "electric and gas utility
industry."
REQUEST NO. 9. Please provide the analysis used to support the conclusion that
interest rates during the 1980s were more volatile than in today's marketplace. Michael P.
Gorman, page 76, lines 1-2.
RESPONSE TO REQUEST NO. 9:
Please see findings of Duff & Phelps' 2016 SBBI Yearbook at 6-9, provided in electronic
form as Attachment 9.
NWIGU'S RESPONSES TO IGC FIRST PRODUCTION REQUEST Page 4
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REQUEST NO. 10. Please provide the yield on 30-year Treasury bonds as of
December 30, 2016. Michael P. Gorman, page 76, lines 21-22.
RESPONSE TO REQUEST NO. 10
The yield quoted in the December 1, 2016 Blue Chip Financial Forecasts on 30-year
Treasury bonds was 2.28%. This document is included in Mr. Gorman's workpapers. Mr.
Gorman did not refer to the December 30, 2016 Treasury bond yield in his testimony; however,
he did provide current Treasury bond yield data on his Exhibit No. 315, page 1.
DATED in Portland, Oregon this I~ .fl..day of January 2017.
Respectfully submitted,
~
Chad M. Stokes, OSB No. 004007
Tommy A. Brooks, OSB No. 076071
Cable Huston, LLP
1001 SW Fifth Ave., Suite 2000
Portland, OR 97204-1136
Telephone: [phone]
Facsimile: [phone]
E-Mail: [e-mail]
[e-mail]
Of Attorneys for
Northwest Industrial Gas Users
NWIGU'S RESPONSES TO IGC FIRST PRODUCTION REQUEST Page 5
26678.885\4820-5 l 08-0768. v2
CERTIFICATE OF SERVICE
I CERTIFY that on this January 19, 2017, I served the foregoing Northwest Industrial
Gas Users Responses to IGC's First Production Request upon all parties of record in this
proceeding via electronic mail pursuant to the Amended Notice of Parties.
Karl Klein
Sean Costello
Idaho Public Utilities Commission
427 W Washington
PO Box 83720
Boise, ID 83720-0074
[e-mail]
[e-mail]
Scott Dale Blickenstaff
Amalgamated Sugar Co LLC
1951 S Saturn Way Ste 100
Boise, ID 83 702
[e-mail]
Ronald L. Williams
Williams Bradbury, P.C.
1015 W. Hays Street
Boise, ID 83702
[e-mail]
Benjamin Otto
Idaho Conservation League
710 N 6111 Street
Boise, ID 83702
[e-mail]
Michael P. McGrath
Director, Regulatory Affairs
Intermountain Gas Company
PO Box 7608
Boise, ID 83707
[e-mail]
Peter J. Richardson
Gregory M. Adams
Richardson Adams, PLLC
515 N 27111 Street
Boise, ID 83702
[e-mail]
gre [e-mail] m
Michael C. Creamer
Givens Pursley, LLP
601 West Bannock Street
Boise, ID 83702
[e-mail]
Andrew Unsicker
Lanny L. Zieman
Natalie A. Cepak
Thomas A. Jernigan
Ebony M. Payton
139 Barnes Dr Suite 1
Tyndall AFB, GL 32403
[e-mail]
Lanny.zieman. [e-mail]
[e-mail]
[e-mail]
[e-mail]
Brad M. Purdy
2019 N 17th Street
Boise, ID 93702
[e-mail]
F. Diego Rivas
NW Energy Coalition
1101 gth Avenue
Helena, MT 59601
[e-mail]
Dated in Portland, Oregon, this 19th d-~-of_· -"--n-u-ar-·y_2_0_1_7. __________ _
Chad M. Stokes, OSB No. 004007
Tommy A. Brooks, OSB No. 076071
Cable Huston LLP
1001 SW Fifth Ave., Suite 2000
Portland, OR 97204-1136
Telephone: [phone]
E-Mail: [e-mail]
[e-mail]
Of Attorneys for
Northwest Industrial Gas Users