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Home My WebLink AboutU-1034-99 Exhibit 8 Kennedy.pdfI I I I I I I I I I I I I I I I I I I I I I Intermountain Gas Company Case No. U-I034-99 Exhibit 8 Schedule 1 Witness: Kennedy INTERMOUNTAIN GAS COMPAN PROCEDURE FOR PREPARING COST OF SERVICE IPUC CASE NO. U-I034-99 A. Classify Total Cost of Service 1. Functionalize Cost of Service a. Allocate all adjustments to individual expense accounts (1) Wages on direct labor (2) Non-payroll on functional distribution of costs adjusted (3) Assign specific adjustments to account adjusted 2. Classify Production Functional Expenses a. Assign demand charges on Northwest Pipeline Rate Schedule ODL to fixed annual supply cost. b. Assign demand charges on Northwest Pipeline Rate Schedule SGS and all charges on Northwest Pipeline Rate Schedule LS to fixed seasonal supply cost. c. Assign all other expenses to Variable cost category. 3. Classify Natural Gas Storage Functional Expenses a. Assign all expenses to Fixed Supply cost. 4. Classify Transmission Functional Expenses a. Assign all expenses to Fixed Common cost. 5. Classify Distribution Functional Expenses a. Equivalent Two Inch Main Factor Using the plant inventory for distribution mains, (Account 376) first cal~ulate the total replacement cost using current construction cost for each specific size and kind of main; secondly, calculate the two inch equivalent current cost for all mains using either the current construction cost for a two inch main or the current construction cost for each specific size and kind whichever unit price is less; thirdly, express the two inch equivalent SCHEDULE 1 PAGE 1 I I I I I I I I I I I I I I I I I I I I I I SCHEDULE 1 PAGE 2 cost for all mains as a percentage to the replacement cost determined in the first step. b.Equivalent Three Quarter Inch Service Factor Using the plant inventory for services (Account 380) first calculate the total replacement cost using current construction cost for each specific size and kind; secondly, calculate the three quarter inch equivalent current cost for all services using either the current construction cost of three quarter inch steel service or the current construction cost for each specific size and kind, whichever price is less; thirdly, express the three quarter inch equivalent cost for all mains as a percentage to the replacement cost determined in the first step. c.Equivalent Standard Meter Factor Using the plant inventory for meters, (Account 381) first calculate the total replacement cost current purchase price for each specific size and kind of meter; secondly, calculate the residential standard meter (ALI75) equivalent current cost for all meters using either the current purchase price for a model AL175 meter or the current purchase price for each specific size and kind whichever unit price is less; thirdly, express the residential standard meter equivalent cost for all meters as a percentage to the replacement cost determined in the first step. d.Equivalent Industrial Meter Factor Using the plant inventory for meters, (Account 385) first calculate the total rep) acement cost using current purchase price for each specific size and kind of meter; secondly, calculate the residential standard meter (AL175) equivalent current cost for all meters using either the current purchase price for each specific size and kind, whichever unit price is less; thirdly, express the residential standard meter equivalent cost for all meters as a percentage to the replacement cost determined in the first step. e.Distribution Plant Factor Using the original cost for all distribution plant at September 30, 1981 as classified between the Customer cost and Fixed cost categories, express the total customer cost as a percentage to the total cost for distribution plant. (1) Classify distribution plant between Customer cost- and Fixed cost categories by the following assignment: I I I I I I I I I I I I I I I I I I I I I I Asset Acct. 374 375 376 378 380 381 382 383 384 385 386 387 SCHEDULE 1 PAGE 3 Name Land & Land Rights Structures and Improvements Mains Measuring and Regulating Station Equipment - General Services Meters Meter Installation House Regulators House RegulatorInstallations Industrial Measuring Other Property on Customers' Premises Other Equipment Procedure Assign to Customer Common cost category. Allocate between Customer Common cost category and Common Fixed cost category using equivalent two inch main factor. Same as Account 375 Assign to Common Fixed cost Allocate between Customer Common cost category and Common Fixed cost category using equivalent three quarter inch service factor. Allocate between Customer Group I cost category and Group I Fixed cost category using equivalent standard meter factor. Same as Account 381. Same as Account 381. Same as Account 381. . Allocate between Customer Group II cost category and Group II Fixed cost category using equivalent industrial meter factor. Assign to Common Fixed cost category. Assign to Common Fixed cost category f. Assign and allocate individual distribution operating expense accounts between Customer Group I, Customer Group II, Cus tomer Common, Fixed Group I, Fixed Group I I, Fixed Common and Variable cost categories by the following procedure: I I I I I I I I I I I I I I I I I I I I I I Expense Account 874 875 876 878 879 880 881 Asset Acct. 870 SCHEDULE 1 PAGE 4 Name Mains and Services Measuring and Regulating Station Expenses - General Measuring and Regulating Station Expenses - Industrial Meter and House Regulator Expenses Customer Installation Expenses Other Expenses Rent Name Operation Supervision and Engineering Procedure Assign payroll to Fixed Common, nonpayroll costs to Variable. Same as Account 874. Assign to Variable cost. Assign payroll to Fixed Group I, nonpayroll to Variable cost. Allocate between Customer Common cost and Fixed Common cost using distribution plant factor determined in paragraph A.5e above. Assign payroll to Fixed Common cost, nonpayroll to Variablecost. Same as Account 879. Procedure Allocate payroll between Variable cost, Customer cost and Fixed cost using the relative classification of payroll included in expense accounts 871 through 881. Allocate nonpayroll expenses between Variable cost, Customer cost and Fixed cost using the relative classification of nonlabor payroll expenses included in expense accounts 871 through 881. Assign and allocate individual distribution maintenance expense accounts between Customer Group I , Customer Group II, Customer Common, Fixed Group I, Fixed Group IT and Fixed Common cost categories by the following procedure: g. I I I I I I I I I I I I I I I I I I I I I I Expense Account 887 889 890 892 893 894 895 SCHEDULE 1 PAGE 5 Name Maintenance of Mains Maintenance of Measuring and Regulating Station Equipment - General Maintenance of Measuring and Regulating Station Equipment - Industrial Maintenance of Service Maintenance of Meters and House Regulators Maintenance of Other Equi.pment Maintenance Supervision and Engineering Procedure Allocate between Customer Common cost and Fixed Common cost nsing equivalent two inch main factor determined in paragraph A.5a above. Same as Account 887. Allocate between Customer Group II and Fixed Group II using equivalent industrial meter factor determined in paragraph A.5d above. Allocate between Customer Comnion and Fixed Common cost using equivalent three quarter inch service factor determined in paragraph A.5b above. Allocate between Customer Group I and Fixed Group I cost using equivalent standard meter factor determined in paragraph A.5c above. Assign to Fixed Common cost. Allocate payroll between Customer cost and Fixed cost using the relative classification of payroll included in expense accounts 886 through 894. Allocate nonpayroll expenses between Customer cost and Fixedcost using the relative classification of nonlabor payroll expenses included in expense accounts 886 through 894. 6.Classify Customer Accounts Functional Expenses a. Assign and allocate individual customer accounts expense accounts between Customer Common. Fixed Common and Variable cost categories by the following procedures: I I I I I I I I I I I I I I I I I I I I I I Expense Account 902 903 904 901 SCHEDULE 1 PAGE 6 Name Procedure Meter Reading Expenses Assign payroll to Customer Common cost. Assign nonpayroll expenses to Fixed Common cost. Assign to Customer Common cost.Customer Records and Collection Expenses Uncollectible Accounts Supervision Assign to Variable cost. Allocate between Customer Common cost and Fixed Common cost using the relative classification of all expenses included in expense accounts 902 and 903. 7.Classify Customer Service and Informational Functional Expenses a. Total Gas Plant Factor Using the original cost for all gas plant at September 30, 1981, as classified between the Customer cost and Fixed cost categories express the total customer cost as a percentage to the total cost for all gas plant. (1) Assign natural gas storage plant and transmission plant to the Fixed cost categories. (2) Use the classification for distribution plant as outlined in paragraph A.5e above. (3) Using the original cost for storage, transmission and distribution plant as classified between the Customer cost and Fixed cost categories express the total customer cost as a percentage to the total cost for the combined storage, transmisflion and distribution plant. Apply this percentage to allocate all general plant and the intangible plant cost recorded in asset accounts 302 and 303 between Customer Common cost and Fixed COIITon cost. (4) Assign ïntangible plant recorded in asset account 301 (organization) to the Customer Common cost category. (5) Allocate gas plant adjustment, Account 116, on gross plant factor excluding storage plant. b. Using the total gas plant factor determined in paragraph A.7a above allocate all customer service and informational functional expenses between Customer Common cost anò Fixed Common costs. 8.Classify Sales Functional Expenses a. System Load Factor Using the average daily sales in therms and the design peak daily sales in therms express the average daily sales as apercentage to the design peak daily sales. I I I I I I I I I I I I I I I I I I I I I I b. Allocate individual sales expense accounts between customer Common, fixed Common and Variable cost categories~ first using the System Load Factor to determine the proportion assigned to Variable cost and secondly, using the Total Gas Factor to determine the allocation for the nonvariable cost between customer Common and fixed Common cost. 9. Classify Administrative and General Functional Expenses a. Administrative Allocation Factor Using the total production operation and maintenance expenses classified as Variable and the total operation and maintenance expenses excluding administrative and general expenses, express those Variable expenses as a percentage to the total expenses excluding administrative and general expenses. . b. Classify labor expense for all expense accounts 804 through .916 between Customer Group I, Customer Group II, Customer Common, Fix.ed Group I, Fixed Group II, Fixed Common and Variable cost categories by the same procedures outlined for each expense account in paragraphs A2, 3, 4, 5, 6, 7 and 8. Express the labor expense as classified to each cost category as a percentage to the total labor expense included in expense accounts 804 and 916. c. Assign and allocate the administrative and general expenses between Customer Group I, Customer Group II, Customer Common, Fixed Group I, Fixed Group II, Fixed Common, Fixed Supply and Variable cost categories using the following procedure: SCHEDULE 1 PAGE 7 I I I I I I I I I I I I I I I I I I I I I I Account 920 921 922 923 924 925 926 928 930 931 932 SCHEDULE 1 PAGE 8 Name Administrative and General Expense Office Supplies and Expenses Administrative Expenses Transferred Outside Services Employed Property Insurance Injuries and Damages Employee Pensions and Benefits Regulatory Commission Expenses General Expenses Rents Maintenance of General Plant Procedure First assign a portion to Variable cost using the Administrative Allocation Factor; secondly, allocate the remaining cost to all cost categories using the Total Gas Plant Factor as separated between Customer Group I, Customer Group II, Customer Common, Fixed Group I, Fixed Group II, Fixed Common, Fixed Supply cost categories. Same as Account 920. Same as Account 920. Allocate between Customer Group I, Customer Group II, Customer Common, Fixed Group I, Fixed Group II, Fixed Common, and Fixed Supply cost categories using the percentage relationship between these cost categories for the Total Gas Plant Factor. Same as Account 923. Allocate cost to all cost categories using the percentage relationships between these cost categories for the total labor expenses as determined in paragraph A.9b above. Same as Account 925. Allocate between all cost categories using the percentage relationship between these cost categories as determined for the total cost ofservice as classified. Same as Account 920. Same as Account 920. Same as Account 920. 10.Classify Depreciation and Amortization Expenses a. Allocate total expense to functional plant groups using the relative charges for FY1981 appearing on page 545 IPUC Annual Report. b. Assign and allocate the depreciation expense by functional totals to the Customer Group I, Customer Group II, Customer Common, Fixed Group I, Fixed Group II, Fixed Common and Fixed Cost categories using the following procedure: I I I I I I ~ I I I I I I I I I I I I I I I Functional Group Procedure General Allocate between Customer and Fixed Cost using the relative classification for intangible plant at September 30, 1981 as classified in A.7a. Assign to Fixed Seasonal Supply cost. Assign to Fixed Common cost. Allocate between Customer Group I, Customer Group II, Customer Common, Fixed Group I, Fixed Group II, and Fixed Common cost categories using the relative classification in A.5e for distribution plant at September 30, 1981. Allocate between Customer Common and Fixed Common cost categories using the relative classification for tangible general plant at September 30, 1981. Intangible Storage Transmission Distribution 11. Classify Taxes Other Than Income a.Assign and allocate the tax expense by type to the Customer Group I, Customer Group II, Customer Common, Fixed Group I, Fixed Group II, Fixed Common, Fixed Supply and Variable cost categories using the following procedure: Tax Type Procedure Corporate Taxes Same as Account 925. Same as Account 928. Allocate on net plant in service as classifieà in paragraph A.llc. Assign to Customer Common cost. Payroll Taxes City Franchise Taxes Ad Valorem Taxes b. Assign and allocate the depreciation and amortization reserves by functional total at September 30, 1981 as adjusted for reserve applicable to asset Account 116 to the Customer Group I, Customer Group II, Customer Common, Fixed Group I, Fixed Group II, Fixed Common and Fixed Supply cost categories using the following procedure: (1) Allocate reserve applicable to asset Account 116 on gross plant factor excluding storage plant. SCHEDULE 1 PAGE 9 I I I I I I I I I I I I I I I I I I I I I I Functional Type Procedure General Allocate on cost of intangible plant as classified between Customer and Fixed cost categories. Assign to Fixed Supply cost. Assign to Fixed Common cost. Allocate on cost of distribution plant as classified to the Customer Group I, Customer Group II, Customer Common, Fixed Group I, Fixed Group II, and Fixed Common cost ca tegories . Allocate on cost of general plant as classified between Customer Common and Fixed Common cost categories. Intangible Storage TransmissionDistribution c.Net Plant Factor Using the original cost for all plant as classified in paragraph A. 7 a, and subtracting the depreciation and amortization reserves as classified in paragraph A.llb express the resulting net plant for each cost category as a percentage to the total net plant. 12. Classify Income Taxes a. Rate Base Factor Using the net plant as classified in paragraph A.l1c assign and allocate the deferred contributions, materials and supplies, liquid natural gas inventory and cash working capital less the franchise tax accrued to the customer Group I, Customer Group II, Customer Common, Fixed Group I, Fixed Group II, Fixed Common, Fixed Supply and Variable cost categories using the following procedure: Rate Base Component Procedure LNG Inventory Franchise Tax Accrued Assign to Fixed Common cost category. Allocate to cost categories using the gross plant factor excluding intangible plant. Assign to Fixed Supply cost category. Same as Account 928. Deferred Contribution Material & Supplies 13. Classify Return a. Allocate the return to the Customer Group I, Customer Group II, Customer Common, Fixed Group I, Fixed Group II, Fixed Common, Fixed Supply and Variable cost categories using the Rate Base Factor determined in paragraph A.12a. SCHEDULE 1 PAGE 10 I I I I I I I I I I I I I I I I I I I I I I B. Cost Responsibility Allocation Factors 1. Weighted Annual Bills a. Determine meter size for all customers issued bills on Rate Schedule RS-l, RS-2, GS-l, LV-I, WP-l, S-1 and P-l from meter inventory records. b. For any customer whose service under Rate Schedules LV-I, S-1 and P-1 is rendered through one or more meters allocate bills issued to that customer between rate schedules on relative contract demand. For example, if customer contracts 10,000 therms LV-I, 10,000 therms S-1 and 10,000 therms P-1, the 9 bills issued March through November are split 50-50 to LV-l and S-I. Likewise the three bills issued December through February are split 50-50 to LV-l and P-l. c. Classify the customers issued bills on Rate Schedule RS-1, RS-2, GS-l and WP-l whose meter cost is recorded in asset account 381. Identify as Group I Customers. d. Classify customers issued bills on Rate Schedules GS-l, LV-I, WP-l, P-l and S-1 whose meter cost is recorded in asset account 385. Identify as Group II Customers. e. For any customer whose service is rendered through two or more meters whose costs are recorded in both asset accounts 381 and 385, allocate bills issued to that customer between Group I and Group II on relative current price for meters used by that customer. For example, if a customer has two meters, one for Group I with a current price of $200 and one for Group II with a current price of $800, the twelve bills issued are split 200/1000 to Group I and 800/1000 to Group II. f. Develop current unit price from manufacturers for aii meters whose costs are recorded in Accounts 381 and 385. g. Using the inventory records and actual current price calculate the average meter price per customer bill issued for all customer groups including rate schedule groups and cost Groups I and II. h. Calculate weighting factor using average meter price per customer bill issued by group divided by the average meter price per customer bill issued for residential customers served on Rate Schedule RS-l and RS-2 whichever is least. i. Multiply annual bills by group by weighting factor. j. Express the weighted annual bills for each rate schedule as a percentage to the weighted bills for all customers. SCHEDULE 1 PAGE 11 I I I I I I I I I I I I I I I I I I I I I I k. Express the weighted annual bills for each rate schedule in cost Group I as a percentage to the weighted bills for all customers in cost Group I. I. Express the weighted annual bills for each rate schedule in cost Group II as a percentage to the weighted bills for all customers in cost Group II. 2.Demand Cost Factor - Coincidental Peak a. Estimate design day demand by groups, including rate schedule and cost groups. 3.Variable Cost Factor a. Calculate average daily sale for each Customer Group including rate schedule and cost groups. 4.Average and Excess Demand Factor. a. Estimate non-coincidental demand. (1) Use coincidental demand in paragraph B.2a for customers on Rate Schedules RS-l, RS-2 and GS-l. (2) Estimate peak for WP-l group based on maximum monthlysales. (3) Use contract demands for customers served under LV-I, P-l and S-I. Estimate peak on P-l to be 33.33% contract and peak on S-1 to be 66.67% contract. b. Subtract average daily demand for non-coincidental demand for each Customer Group including rate schedule and cost group. c. Express the excess demand for each rate schedule in cost Group I as a percentage to the excess demand for all customers in cost Group I. d. Express the excess demand for each rate schedule in cost Group II as a' percentage to the excess demand for all customers in cost Group II. e. Express the excess demand for each rate schedule as a percentage to the excess demand for all customers. f. Calculate the average and excess demand factors for Group I using the load factor on system peak day for customers in Group I. g. Calculate the average and excess demand factor for Group II using the load factor on system peak day for customers in Group II. SCHEDULE 1 PAGE 12 I I I I I I I I I I I I I I I I I I I I I I h. Calculate the average and excess demand factor for all customers using the load factor on system peak day for all customers. C. Allocate Classified Costs to Rate Schedule. 1. Allocate Variable cost using Variable cost factor. 2. Allocate customer Common costs on weighted bills to all rate schedules. 3. Allocate Customer group I costs on weighted bills for group I. 4. Allocate Customer group II costs on weighted bills for group II. 5. Allocate Fixed Supply and Common costs on average and excess demand factor to all rate schedules. 6. Allocate Fixed group I costs on average and excess demand factor for group I. 7. Allocate Fixed Group II costs on average and excess demand factor for group II. 8. Allocate franchise tax revenue like Account 928. 9. Allocate other revenues on distribution plant factor. SCHEDULE 1 PAGE 13 - - - - - - - - - - - - - - - - - - - - - -