20210326INT to Staff 1-8.pdf

Preston N. Carter, ISB No. 8462
Givens Pursley LLP
601 W. Bannock St.
Boise,Idaho 83702
Telephone: [phone]
Facsimile: (208) 388-1 300
prestoncarter@ givenspursley.com
Attorneys for Intermountain Gas Company
BEFORE TIIE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF INTERMOUNTAIN
GAS COMPAI{Y'S APPLICATION FOR
APPROVAL TO CHANGE DEPRECIATION
AND AMORTIZATION RATES
CASE NO.INT.G-21.0I
RESPONSE OF INTERMOUNTAIN
GAS COMPAI\IY TO FIRST
PRODUCTION REQUEST OF THE
COMMISSION STAFF
Intermountain Gas Company, in response to the First Production Request of the Idaho
Public Utilities Commission Staffto Intermountain Gas Company dated March 12,2021, submits
the information below.
In addition to the responses provided below, the Company notes that the software utilized
in the depreciation and amortization study by Concentric is proprietary and produces all outputs
in pdf formatwhich can be converted to Microsoft Word but is not convertible to Microsoft Excel.
For a detailed description of the calculation produced in the software, please refer to Attochment
l_Calculation Explanation. If required, the Company can affange a meeting between the
Commission Staffand Concentric to provide further explanation.
REQUEST NO. 1: Please provide the table for ExhibitNo. I - SUMMARY OF
APPROVED AND PROPOSED DEPRECIATION AND AMORTIZATION RATES.
RESPONSE TO REQUEST NO. 1:
The table in Exhibit No. I - Summary of Approved and Proposed Depreciation and
Amortization rates is provided in file PR#l_.lfuhibit No. I - Summary of Approved and Proposed
Rates.
RsspoNsn oF INTERMoLTNTAIN Ges CotweNv ro FIRsr
PRopucrroN RBeuBsr oF TI{E CovnatsstoN Srerr - Pacr I
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Record Holder:LoriBlattner-208-377-6015
Sponsor/Preparer: KimUkestad. 701-222-7771
Location:555 S Cole Rd . ID 83707
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PRopucuoN Reeupsr oF TrrE CovrurssroN Smrr'- Pacp 2
REQUEST NO. 2: Please provide Table l, pages l-3 for Exhibit No. 2, Section 5 -
RESULT OF STUDY. Please provide all supporting workpapers that reflect the derivation and
calculation of the amounts contained in Table l.
RESPONSE TO REQUEST NO.2:
Table 1, pages l-3 of Exhibit No. 2, Section 5 - Results of Study is provided in file
PR#2_Intermountain 2020 Depreciation Tables. Table I is a summary of the detailed
calculations presented in Section 8 - Detailed Depreciation Calculations of Exhibit No. 2. A
Microsoft Word version of Section 8 can be found in flrle PR#2 Section 8 - Intermtn_ALG_RL.
ln addition, the following is an explanation of each column of the tables provided in Section 8:
o Year: represents the install date.
o Original Cost: represents the Plant in Service by install date.
o Calculated Accumulated Depreciation: represents the theoretical amount of
depreciation required at the study date based on the Iowa curve, net salvage, and life
estimates. The formulas for this calculation can be found in various textbooks including
Iowa Bulletin 125, published in 1967 by Harold A. Cowles.
o Allocated Actual Booked Amount: represents an allocation of the actual amount of
booked accumulated depreciation, allocated to each vintage based on each vintage
theoretical accumulated depreciation.
o Accumulated Depreciation Factor: represents the percentage of the allocated booked
amount of the original cost, adjusted for net salvage.
o Net Book Value: represents the original cost adjusted for net salvage, less the allocated
actual booked amount.
o ALG Remaining Life: represents the remaining life as determined by the Iowa curve.
Iowa curves are further described in Response to Request No. 3.
o Annual Accrual: represents the net book value divided by the remaining life.
o Average Age: represents the actual age of the vintage at the study date.
Record Lori Blattner 208-177-6015
Sponsor/Preparer:Kim Ukestad.701-222-777r
Location: 555 S Cole Rd. Boise. lD 83707
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REQUEST NO.3: Please provide all tables for ExhibitNo.2, Section 6 -
RETIREMENT RATE ANALYSIS.
RESPONSE TO REQUEST NO.3:
A Microsoft Word version of the tables and charts in Exhibit No. 2, Section 6 -
Retirement Rate Analysis is provided in file PR#j_$ection 6 - Intermtn_Graph_Batch report.
Exhibit No. 2, Section 9 - Estimation of Survivor Curves provides further explanation on the
development of survivor curves, Iowa type curve history, and the Retirement Rate method of
analysis.
Record Holder: Lori Blattner.208-377-6015
SponsorlPreparer: KimUkestad. 701-222-7771Location: 555 S Cole Rd-rD 83707
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REQUEST NO. 4: Please provide all charts for Exhibit No. 2, Section 6 -
RETIREMENT RATE ANALYSIS.
RESPONSE TO REQUEST NO.4:
Please see the Response to Request No. 3 above for an explanation and file provided for
the charts in Exhibit No. 2, Section 6 - Retirement Rate Analysis.
Record Holder: Lori Blattrrer.208-377-6015
Kitn I Tlre<fqd 70 IJD-7771
Location: 555 S Cole Rd. Boise.ID 83707
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REQUEST NO. 5: Please provide all tables for Exhibit No. 2, Section 7 - NET
SALVAGE CALCULATIONS.
RESPONSE TO REQUEST NO.5:
The tables for Exhibit No. 2, Section 7 - Net Salvage Calculations are provided in file
P R#5 _f alv age Tab le s _Intermtn _r eport.
The estimates of net salvage were based primarily on the professional judgment of
Concentric, based in part on historical data, discussion with Company management, and aligned
with other Montana Dakota Utility subsidiaries. The analysis of historic net salvage activity
considered gross salvage and cost of removal as recorded to the depreciation reserve account net
salvages as a percentage of the cost of plant retired are calculated for each plant component on
both three-year and five-year moving average basis, as well as an overall historic basis.
The net salvage percentages estimated is usually determined using the "Traditional
Approach" for net salvage estimation. When a utility retires plant, the plant may be: (1) sold to a
third party; (2) reused by the utility for additional service; (3) abandoned in place; or (4)
physically removed. In the circumstances where the plant is sold or re-used, a salvage proceeds
(or positive salvage amount) is normally recognized. In circumstances where the plant is
abandoned in place or physically removed, a cost of removal expenditure (or negative salvage) is
incurred. The net of these estimated gross salvage proceeds and the estimated costs of removal
are expressed as a percentage of the account's original cost to determine a net salvage
percentage. In the circumstances where the salvage proceeds exceed the costs of retirement, a
net positive salvage percentage exists. In the circumstances where the costs of removal exceed
the salvage proceeds, a net negative salvage as a percentage of the original cost is the result.
The estimation of the net salvage as a percentage of original cost as developed using the
traditional approach, includes the following five steps:
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1. The annual retirement, gross salvage and cost of removal transactions for the period of
analysis is extracted from the plant accounting systems.
2. A net salvage amount (gross salvage proceeds less cost of retirement) is calculated for
each historic year. Additionally, anet salvage amount is also calculated for each historic
three-year rolling band and the most recent five-year rolling band.
3. The net salvage amount determined above is compared to the original booked costs
retired for each period in the manner described, which results in a net salvage percentage
of original costs retired for each year, in addition to three-year rolling bands and the most
recent five-year rolling band. The annual, the three-year rolling averages, the five-year
rolling average net salvage percentages, life to date rolling averages are analyzed to
determine a reasonable estimated net salvage percentage. At this point the net salvage
percentage is based purely upon statistical analysis.
4. Each account is then compared to the net salvage percentage currently approved,
compared to other Montana Dakota Utility subsidiaries, and discussed with Company
engineering staff. Based on the statistical analysis, the review of current net salvage
percentages, and with the professional judgment of Concentric, a net salvage percentage
is determined for each account.
5. The net salvage percentage is then used in the depreciation rate calculations in the study.
Record Holder: Lori Blattner. 208-377-6015
Kim Ilkestad-701-222-7771
Location: 555 S Cole Rd. Boise.ID 83707
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REQUEST NO. 6: Please provide all tables for Exhibit No. 2, Section 8 - DETAILED
DEPRECIATION CALCULATIONS.
RESPONSE TO REQUEST NO. 6:
Please see the Response to Request No. 2 above for an explanation and file provided for
the tables in Exhibit No. 2, Section 8 - Detailed Depreciation Calculations.
Record Holder: Lori Blatfrrer. 208-377-6015
Sponsor/Preparer: KimUkestad. 70I-222-7771
Location: 555 S Cole Rd. Boise.ID 83707
RgspoNsp oF INTERMoUNTATN Ges CorweNv ro FrRsr
PRopucuoN REeUEST oF THE ComrrsstoN Srarr - P,qce I
REQUEST NO. 7: Please provide all tables for ExhibitNo. 3 - LNG PLANT
ACCOI.]NT DETAIL.
RESPONSE TO REQUEST NO. 7:
The tables for Exhibit No. 3 - LNG Plant Account Detail are provided in file
PR#7 Exhibit No. 3 - LNG Plant Account Detail.
Record I.nd Ellqftncr )08,-777-6015
Sponsor/Preparer: KimUkestad. 701-222-7771
Location: 555 S Cole Rd. Boise. lD 83707
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REQUEST NO. 8: Please provide all work papers for the general accounts -390,391,
392.I,392.2,393,394,396, and397 - in Exhibit No. 2, including all calculations and
assumptions used to determine salvage values.
RESPONSE TO REQUEST NO. E:
The explanations and files provided in Response to Request Nos. 2, 3, and 5 above are
applicable to the information provided in Exhibit No. 2 regarding the Company's general
accounts 390, 39 l, 392.1, 392.2, 393, 394, 396, and 397, including the calculations and
assumptions used to determine salvage values.
Record Holder: Lori Blattner.208-377-6015
Sponsor/Preparer:Kim Ukestad.701-222-7771
Location: 555 S Cole Rd. Boise.ID 83707
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PRooucrtou Rrqursr oF TUE Corr,nraIssIoN Srarp - Pecp 10
DATED: March 26,2021
GIVENS PURSLEY LLP
,P
Preston N. Carter
Attorneys for Intermountain Gas Company
RsspoNsp oF INTERMoT.TNTAIN Gas CotweNv ro FIRsr
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CERTIFICATE OF SERVICE
I certi$ that on March 26,2021, a true and correct copy of INTERMOUNTAIN GAS
COMPANY'S RESPONSE TO FIRST PRODUCTION REQUEST OF THE COMMISSION
STAFF was served upon all parties of record in this proceeding via electronic mail as indicated
below:
Commission Staff
Jan Noriyuki, Commission Secretary
Idaho Public Utilities Commission
11331 W. Chinden Blvd., Bldg. 8, Suite 201-A
Boise,lD 83714
Via Electronic Mail
j an.noriyuki@puc. idaho. gov
Dayn Hardie
Deputy Attorney General
Idaho Public Utilities Commission
11331 W. Chinden Blvd., Bldg. 8, Suite 201-4'
Boise,ID 83714
[e-mail]
dokBltM
Lori A. Blattner
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