20170127Staff to INT 72-91.pdf

KARL T. KLEIN
SEAN COSTELLO
DEPUTY ATTORNEYS GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-0074
[phone]/334-0312
IDAHO BAR NOS. 5156/8743
Street Address for Express Mail:
472 W. WASHINGTON
BOISE, IDAHO 83702-5918
Attorneys for the Commission Staff
,·, .. · . .-·1· r D f'\. L t ... , 1.: C ;
n,-l l j,r" ')7 PM 2• 08 /.I. i / ,.)hi' (. I I •
., .
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.
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) CASE NO. INT-G-16-02
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)
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COMMISSION STAFF'S
RESPONSE TO THE SECOND
PRODUCTION REQUEST OF
INTERMOUNT AIN GAS
COMPANY
___________ )
The Staff of the Idaho Public Utilities Commission, by and through its attorney of record,
Sean Costello, Deputy Attorney General, responds as follows to Intermountain Gas Company's
Second Production Request to Commission Staff.
STAFF'S RESPONSE TO THE SECOND
PRODUCTION REQUEST OF
INTERMOUNTAIN GAS 1 JANUARY 27, 2017
STAFF WITNESS RANDY LOBB WILL BE ABLE TO ANSWER QUESTIONS
ABOUT OR SPONSOR THE ANSWER TO REQUEST NO. 72, BELOW.
REQUEST NO. 72: Please clarify and describe, and provide any workpapers or
analysis, showing how Staff struggled to duplicate the Company customer totals over time and
total annual consumption (Lobb, page 5, lines 15-18).
STAFF RESPONSE NO. 72: See Staffs response to Company Production Request No.
41.
STAFF WITNESS MICHAEL MORRISON WILL BE ABLE TO ANSWER
QUESTIONS ABOUT OR SPONSOR THE ANSWERS TO REQUEST NOS. 73-75,
BELOW.
REQUEST NO. 73: Please provide copies of testimonies filed by Commission Staff,
other than Dr. Morrison, in each rate proceeding within the last 10 years in which Staff has filed
testimony on class cost of service studies.
STAFF RESPONSE NO. 73: See Keith Hessing's direct testimonies in Case Nos.
AVU-E-09-01 , IPC-E-07-08, IPC-E-08-10, and PAC-E-10-07. See Matt Elam's direct testimony
in IPUC Case No. AVU-G-09-01. See Bryan Lanspery's direct testimony in Case No.
PAC-E-07-05. See File Name PR #73 on the CD produced with this response.
STAFF'S RESPONSE TO THE SECOND
PRODUCTION REQUEST OF
INTERMOUNTAIN GAS 2 JANUARY 27, 2017
REQUEST NO. 74: Referring to lines 22-23, on page 5 of Dr. Morrison's direct
testimony, provide a list of utilities and case references where CP allocators were determined
using data for multiple days.
STAFF RESPONSE NO. 74: The use of Coincident Peak, Non-Coincident Peak, and
Average and Peak Demand allocators are described on pages 26 and 27 ofNARUC's 1989 Gas
Distribution Rate Design Manual. For an example of an Idaho regulated gas utility using
multiple peak days to compute its coincident peak allocator, see A VU-G-15-01 (Miller Exhibit
14), and AVU-G-12-07 (Knox, Di).
REQUEST NO. 75: Referring to lines 8-10 on page 28 of Dr. Morrison's direct
testimony, please specifically identify data the Staff was not provided that would have allowed
Staff to "fully evaluate the Company's weather normalization methodology and its mains study."
STAFF RESPONSE NO. 75: Please see Dr. Morrison's response to Company Request
No. 34.
STAFF'S RESPONSE TO THE SECOND
PRODUCTION REQUEST OF
INTERMOUNTAIN GAS 3 JANUARY 27, 2017
STAFF WITNESS DONN ENGLISH WILL BE ABLE TO ANSWER QUESTIONS
ABOUT OR SPONSOR THE ANSWERS TO REQUEST NOS. 76-79, BELOW.
REQUEST NO. 76: In Witness B. Romano's testimony, pg. 2, lines 21-25, she states
"Staff reviewed the Company's proposed Sales and General Advertising Expense to ensure that
they only include expenses that directly benefit the Company customers and are used and useful
in providing safe and reliable utility service." How does Staff determine if any expense directly
benefits the Company's customers? As part of your response, please provide any criteria,
framework, or bright line test that the Staff may use in this regard.
STAFF RESPONSE NO. 76: Expenses related to the procurement, transportation,
distribution and delivery of natural gas to customers are considered to directly benefit customers.
Expenses related to billing customers for natural gas service and promoting safety also directly
benefit customers and are included for recovery from ratepayers.
REQUEST NO. 77: Referencing the question above, are indirect customer benefits
considered in the determination of allowable expenses? If not, why not? Please provide any
Commission orders that Staff may have relied on in responding to this question.
STAFF RESPONSE NO. 77: Staff reviews each expense on a case by case basis. If it
can be demonstrated that there is a substantial indirect benefit to customers, Staff would consider
its inclusion in revenue requirement. Staff relied on the outcome of several cases in determining
its position, and Commission Orders were to have been provided with Production Request No.
50, but were inadvertently omitted, and are attached with this response. See File Name PR #77
on the CD produced with this response.
STAFF'S RESPONSE TO THE SECOND
PRODUCTION REQUEST OF
INTERMOUNTAIN GAS 4 JANUARY 27, 2017
REQUEST NO. 78: Ms. Romano, on page 3, lines 4-12, of her testimony, provided two
examples of allowable advertising expenses incurred by the Company. These two examples
reference the competition that natural gas faces as a heating fuel source. If it is Staff's answer to
Request No. 49 that the Company faces competition, what are the metrics for determining which
advertising expenses are allowable?
STAFF RESPONSE NO. 78: Reasonable expenses for advertising that benefit
customers -for example, advertising that educates customers about safety, billing, or energy
conservation -may be appropriate to include in rates. But it is inappropriate for customers to
pay for advertisements that do not benefit them. Staff generally views advertisements that
merely seek to build load and create revenue for the Company as being in this latter category, and
believes such promotional advertising costs typically should be borne by the shareholders who
benefit from them. In this instance, Ms. Romano took a conservative approach and allowed
certain advertising expenses associated with reminding the ratepayer of the low cost of using
natural gas instead of electricity to heat their home. While these advertisements may benefit
future customers, the extent to which they benefit current customers is attenuated.
REQUEST NO. 79: Please differentiate, from a product marketing perspective, the
difference between promoting the Company's image and promoting the use of natural gas as an
energy source and how they are mutually exclusive?
STAFF RESPONSE NO. 79: Staff objects that the phrase "product marketing
perspective" is ambiguous and would require Staff to speculate about what the Company's
"marketing perspective" might be. Subject to this objection, Staff answers that it does not
differentiate these types of promotions. Staff believes that existing customers should not pay for
advertising that promotes the Company's image, or for advertising that builds load and creates
revenue for the Company.
STAFF 'S RESPONSE TO THE SECOND
PRODUCTION REQUEST OF
INTERMOUNTAIN GAS 5 JANUARY 27, 2017
STAFF WITNESS JOSEPH TERRY WILL BE ABLE TO ANSWER QUESTIONS
ABOUT OR SPONSOR THE ANSWER TO REQUEST NO. 80, BELOW.
REQUEST NO. 80: Please provide documentation in Mr. Terry's testimony, page 10,
lines 19-24 referencing lack of evidence that bank fees are not a recurring expense and that there
were no entries before "this time frame." Is it Mr. Terry's testimony that bank fees are not
ongoing?
STAFF RESPONSE NO. 80: This statement was made in error. There is evidence that
these charges are recurring. After additional investigation, this adjustment will be removed, and
Staffs testimony will be updated to reflect that the charges should be allowed.
STAFF 'S RESPONSE TO THE SECOND
PRODUCTION REQUEST OF
INTERMOUNTAIN GAS 6 JANUARY 27, 2017
STAFF WITNESS DANIEL KLEIN WILL BE ABLE TO ANSWER QUESTIONS
ABOUT OR SPONSOR THE ANSWERS TO REQUEST NOS. 81-91, BELOW.
REQUEST NO. 81: In Daniel Klein's testimony, he makes the recommendation to
eliminate convenience fees and pay station fees for residential customers. Was analysis done to
show the impact to current customer's bills in order to cover the additional cost? If so, please
provide that analysis.
STAFF RESPONSE NO. 81: Staff has not analyzed the impact to current customers'
bills. Staff provided cost estimates for eliminating convenience fees and pay station charges for
residential customers based on Avista's estimated transaction cost for handling convenience fees
and A vista's current actual cost for handling customer payments at pay stations. However, at this
time, Staff does not know what Intermountain Gas' costs would be to eliminate convenience fees
and/or pay station charges or what cost savings the Company would realize as a result of doing
so. Staff also does not know how quickly the Company could implement these changes.
Staff maintains a belief that the Company could eliminate pay station charges for its
customers without significantly impacting base rates. Staff recognizes that the cost of
eliminating convenience fees paid by customers may have a more significant impact on base
rates and require more time to implement. Staff has suggested that the Company request to defer,
for later recovery through rates, the costs associated with eliminating convenience fees and pay
station charges.
STAFF'S RESPONSE TO THE SECOND
PRODUCTION REQUEST OF
INTERMOUNTAIN GAS 7 JANUARY 27, 2017
REQUEST NO. 82: How many complaints has the Idaho PUC received regarding the
convenience fee charged for credit/debit card payments to each of the last three years? How
many were from low-income customers? Unbanked customers? Underbanked customers?
STAFF RESPONSE NO. 82: Staff was able to identify 9 complaints about convenience
fees charged for credit/debit card payments for Intermountain Gas, A vista, Idaho Power and
Rocky Mountain Power: 2014 -3, 2015 -4, 2016 -2. Generally, Staff does not inquire about
customer income or banking preferences when handling complaints. Staff reviewed complaints
about convenience fees and did not find any references to income or banking preferences.
REQUEST NO. 83: Did Mr. Klein or Staff perform analysis comparing the cost of
convenience fees to other acceptable methods of customer payments? If so, please provide that
analysis.
STAFF RESPONSE NO. 83: Yes. See response in File Name PR #83 on the CD
produced with this response.
REQUEST NO. 84: Mr. Klein at page 4 of his testimony uses Avista as an example for
the elimination of convenience fees at a cost per transaction of $1 .50. Did IPUC staff find any
other comparable transaction costs from outside Idaho? If so, please provide that information.
STAFF RESPONSE NO. 84: No. Staff did not research what transaction costs out-of­
state utilities may have incurred.
STAFF'S RESPONSE TO THE SECOND
PRODUCTION REQUEST OF
INTERMOUNTAIN GAS 8 JANUARY 27, 2017
REQUEST NO. 85: On line 13 of page 3 of Mr. Klein's testimony, he uses a payment
transaction number for Intermountain of 144,625 which is 2015 data. What has been the change
in volume for A vista since implementing the free credit/debit card option?
STAFF RESPONSE NO. 85: A vista has not yet implemented its fee free payment
program. Staff thus lacks this information.
REQUEST NO. 86: At page 7 of Mr. Klein's testimony, beginning on line 10, he
correlates the elimination of the convenience fee to a reduction of costs associated with
collection activity. Please provide all documentation that supports this correlation.
STAFF RESPONSE NO. 86: The Company is directed to Avista's Application in Case
No. AVE-E-16-01/AVU-G-16-01 , available at
http://www.puc.idaho.gov/fileroom/cases/gas/A VU/ AVUG 1601/20160113APPLICA TION.PDF.
In the Application, A vista stated:
The more convenient the Company can make it for customers to pay bills, the more it
can benefit all customers. Customers that self-serve, pay on time, and are satisfied
with the options they have are the least expensive to serve, which is a benefit to all
customers. Customers that do not pay on time and end up in the credit collections
cycle drive increased costs, which are paid for by all customers. Lastly, customers
that are not satisfied tend to call Customer Service more frequently. Every call that
comes into the Call Center costs approximately $6 in labor costs alone. This means
that every call that can be avoided leads to savings for all customers. Giving
customers options to pay by the method of their choice without incurring additional
fees will lead to more satisfied customers and ultimately saving for all customers.
See A VU-E-16-01/ A VU-G-16-01 Application page 10, lines 20-23 and page 11 , lines 1-6.
STAFF'S RESPONSE TO THE SECOND
PRODUCTION REQUEST OF
INTERMOUNTAIN GAS 9 JANUARY 27, 2017
REQUEST NO. 87: What has been the trend of reduced arrearage and collection
activity realized by A vista as a result of offering free credit and debit card payment to residential
customer? Are there similar trends for small commercial customers that do not have the free
option available?
STAFF RESPONSE NO. 87: Avista has not yet implemented its fee free program.
Staff thus lacks this information.
STAFF'S RESPONSE TO THE SECOND
PRODUCTION REQUEST OF
INTERMOUNT AIN GAS 10 JANUARY 27, 2017
REQUEST NO. 88: Referencing page 7, line 21 of Mr. Klein's testimony: Was
analysis performed by Staff comparing the cost to process credit/debit card payments versus the
other means of paying the utility bill? (i.e., mailed payments, autopay, third party banks -
CheckFree or Metavante, etc.) If so, please provide that analysis.
STAFF RESPONSE NO. 88: No. Staff does not have the necessary data to perform
analysis oflntermountain Gas' current transaction costs. However, Avista provided cost data in
Case No. AVU-E-16-01/AVU-G-16-0l. The table below contains information from December
2014 to November 2015 for all customer classes:
2
3
4
5
6
7
8
9
10
11
12
13
Avista Cost Customer Payments
Payment Summary -Dec 14 Transaction Fees Paid per Cost per Received from
-Nov 15 Count by Avista Transaction<3l Transaction Customers
Mailed (I) 1,860,702 $523,346 $0.28 $0.00 $619,241,436
Paystation 220,075 $167,320 $0.76 $0.00 $32,952,033
Online Payments (Bank bill
pay, APS, etc ... ) 1,695,148 $107,282 $0.06 $0.00 $323,320,660
ACH -paid with a "My
A vista Account" 809,704 $140,170 $0.17 $0.00 $113,505,583
One-Time Ach -paid without
a "My A vista Account11<2> 18,999 $635 $0.03 $3.50 $5,046,334
Credit Card<2> 154,179 $5,140 $0.03 $3.50 $28,059,241
Pinless Debit<2> 99,636 $3,405 $0.03 $3.50 $16,207,333
Total Payments 4,858,443 $947,299 $1,138,332,620
( I )Mailed payments include all forms of payments received by mail, through drop boxes, and cash or check
payments made in person at Avista's locati.ons where the Company accepts payments. All of these payments
are processed by the Company's remittance department. Costs for processing these payments cannot be
separated as they are processed together within the same department.
(2) This represents the cost for receiving the funds into our bank and any return fees associated with the
payments (Customer pays $3.50 for these transactions)
(3) Avista's cost per transaction includes various components for each method of payment. The following is
included for each payment method: (I) Mailed -labor, supplies, equipment and bank fees, (2) Paystation -
monthly fees to pay station vendor and bank fees, (3) Online Payments -bank fees, (4) ACH with "My Avista
Account" -vendor fees for processing and wire costs for settlement, and (4) One-Time Ach/Credit Card/Pinless
Debit -wire costs for settlement. The cost per transaction for any method does not include technology or Call
Center costs for payments made to a Call Center agent
The Transaction costs incurred by the Company for all payment methods are included in general
administrative expense and the costs for a particular method of payment are not borne
exclusively by those specific customers that use that method of payment.
See AVU-E-16-01/AVU-G-16-0l, Application, page 6, lines 1-17.
STAFF'S RESPONSE TO THE SECOND
PRODUCTION REQUEST OF
INTERMOUNTAIN GAS 11 JANUARY 27, 2017
REQUEST NO. 89: On page 8, line 6, Mr. Klein recommends that "transaction costs
associated with receiving payment for services should be included in base rates." Did Staff make
an adjustment to the Company's base rates to implement this recommendation? If not, why not?
STAFF RESPONSE NO. 89: No. Staff did not make any adjustments to the
Company's base rates in this case to implement this recommendation. See Staff Response to
Production Request No. 81.
REQUEST NO. 90: Mr. Klein at page 8, line 8 states that "In summary, removing the
$1.99 convenience fee will bring the Company's payment practices in line with other Idaho
utilities .... " What other Idaho utilities have removed the convenience fee for credit/debit card
transactions and what impact have they see on their number of transactions and bad debt activity?
What are their costs per transaction?
STAFF RESPONSE NO. 90: The only comparable program is Avista's fee free
payment program. Per Mr. Klein's testimony at page 4, A vista's transaction cost is $1.50. See
Order No. 33494 (Case No. AVU-E-16-01). Avista has not yet implemented the program. Staff
thus lacks the remaining information sought in this request.
STAFF'S RESPONSE TO THE SECOND
PRODUCTION REQUEST OF
INTERMOUNT AIN GAS 12 JANUARY 27, 2017
REQUEST NO. 91: What trends or insights have been identified by Staff in review of
the credit and collection reports submitted by A vista, Idaho Power, and Rocky Mountain Power.
STAFF RESPONSE NO. 91: Information from the Credit Tracking Reports indicates
that as the economy has improved, the number of residential accounts classified as low income
have decreased. The number of low income customers who signed up for the moratorium, had
accounts in arrears or received past due/final notices, made payment arrangements, or were
disconnected for non-pay, decreased.
In northern Idaho, the number of non-low income accounts in arrears and accounts with
moratoriums have increased. An increase in the number of accounts in arrears and accounts with
moratorium protection may be indicative of customers doing somewhat better financially so as to
not qualify for energy assistance but are still struggling financially to meet their financial
obligations.
Staff intends to issue a comprehensive report on the information gathered from A vista,
Idaho Power, and Rocky Mountain Power later this year. Upon receipt of the March 2017
reports, Staff will have sufficient data gathered over the past two years from these three utilities
to allow a meaningful analysis. Receiving information from Intermountain Gas would enable
Staff to get a better perspective on credit and collections activity involving all residential
customers of Idaho's regulated energy utilities.
STAFF'S RESPONSE TO THE SECOND
PRODUCTION REQUEST OF
INTERMOUNTAIN GAS 13 JANUARY 27, 2017
DATED at Boise, Idaho, this t f'"-day of January 2017.
Technical Staff: Randy Lobb/72
Michael Morrison/73-75
Donn English/76-79
Joseph Terry/80
Daniel Klein/81-91
i:umisc/intg16.2 Staff2"d Response to lntermountain Gas
STAFF'S RESPONSE TO THE SECOND
PRODUCTION REQUEST OF
INTERMOUNT AIN GAS
Deputy Attorney General
14 JANUARY 27, 2017
CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS 27TH DAY OF JANUARY 2017,
SERVED THE FOREGOING COMMISSION STAFF'S RESPONSE TO THE
SECOND PRODUCTION REQUEST OF INTERMOUNTAIN GAS COMPANY, IN
CASE NO. INT-G-16-02, BY MAILING A COPY THEREOF, POSTAGE PREPAID, TO
THE FOLLOWING:
MICHAEL P McGRATH
DIR-REGULATORY AFFAIRS
INTERMOUNTAIN GAS CO
PO BOX 7608
BOISE ID 83707
E-MAIL: [e-mail]
BRADMPURDY
ATTORNEY AT LAW
2019 N 17TH STREET
BOISE ID 83 702
E-MAIL: [e-mail]
CHAD M STOKES
TOMMY A BROOKS
CABLE HUSTON LLP
1001 SW 5TH AVE STE 2000
PORTLAND OR 97204-1136
E-MAIL: [e-mail]
[e-mail]
BENJAMIN J OTTO
ID CONSERVATION LEAGUE
710 N 6TH STREET
BOISE ID 83702
E-MAIL: [e-mail]
RONALD L WILLIAMS
WILLIAMS BRADBURY
1015 W HAYS ST
BOISE ID 83702
E-MAIL: [e-mail]
EDWARD A FINKLEA
EXECUTIVE DIRECTOR
NW INDUSTRIAL GAS USERS
545 GRANDVIEW DR
ASHLAND OR 87520
E-MAIL: [e-mail]
ELECTRONIC ONLY
MICHAEL C CREAMER
GIVENS PURSLEY LLP
E-MAIL: [e-mail]
F DIEGO RIV AS
NW ENERGY COALITION
1101 8TH AVENUE
HELENA MT 59601
E-MAIL: [e-mail]
CERTIFICATE OF SERVICE
PETER RICHARDSON
GREGORY MADAMS
RICHARDSON ADAMS PLLC
515 N 27TH STREET
BOISE ID 83702
E-MAIL: [e-mail]
[e-mail]
KEN MILLER
SNAKE RIVER ALLIANCE
PO BOX 1731
BOISE ID 83701
E-MAIL: [e-mail]
LANNY L ZIEMAN
NATALIE A CEPAK
THOMAS A JERNIGAN
EBONY M PAYTON
AFLOA/JA-ULFSC
139 BARNES DR STE 1
TYNDALL AFB FL 32403
E-MAIL: lanny.zieman. l @us.af.mil
[e-mail]
[e-mail]
[e-mail]
SCOTT DALE BLICKENSTAFF
AMALGAMATED SUGAR CO LLC
1951 S SATURN WAY
STE 100
BOISE ID 83709
E-MAIL: [e-mail]
ANDREW J UNSICKER MAJ USAF
AFLOA/JACE-ULFSC
139 BARNES DR STE 1
TYNDALL AFB FL 32403
E-MAIL: [e-mail]
SEC~~
CERTIFICATE OF SERVICE