U-1034-99 Staff Exhibit 103.pdf

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INTRMOUNAIN GAS COMPAN
Selected Statistics
1973 - Test Year
(A)(B)(C)(D)
Actual Return
Return of on Equity Date Case
Common Equity Authorized Authorized Number
1 1973 12.8%
2 1974 10.1%13-13.5%06-26-74 U-I034-38
3 1975 11.5%
4 1976 11. 7%
5 1977 8.1%14.0%10-15-76 U-I034-57
6 1978 0.3%13.75%12-19-71 U-I034-65
7 1979 11.7%14.0%09-30-78 U-I034-69
8 1980 6.7%14.0%08-23-79 U-I034-75
9 1981 6.3%14.0%10-31-80 U-I034-88
10 Test Year 10.5%15.75%12-12-81 U-I034-95
Other Selected Statistics
(A)
9/30/13
(B)(C)
9/30/81 Test Year
11 Gross Margin as a Percent of Revenue 47.1%18.3%19.3%
12 Total Therms Billed 392,895,000 317 ,466 ,000 279, 912 ,000
Average Number of Customers:
13 Residential
14 Commercial Firm15 Industrial & Interruptible
16 Total Customers
72,897
10,577
268
83,742
80,353
12,137
213
92,703
81,431
12,411
210
94,052
Avg. Therms Billed/Customer:
17 Residential
18 Commercial Firm
1,157
7,176
699
5,041
749
5,460
19 Unrestricted Retained Earnings $ 4,433,000 $ 1,883,000 $ 3,127,000
20 Estimated Unrestricted Retained
Earnings September 30, 1982 $ 2,451,000
INTEROUNTAIN GAS COMPAN
CASE NUBER U-I034-99
Staff Exhibit No. 103
Schedule 1
Trueman Henderson
Intermountain Gas Company
Case No. U-1034-99
Exhibit 103
Schedule 2
Page 1 of 4
Witness: Henderson
SECTION A
GENERAL SERVICE PROVISIONS
(Continued)
20. REVENUE STABILIZATION CLAUSE
20.1 Applicability. This Revenue Stabilization Clause applies to all
rate schedules çontained in Second Revised Volume No. 1 of this
IPUC Gas Tariff. It specifies the procedures to be utilized in
adjusting rates applicable under each such rate schedule in order
to reflect changes in the average Gross Margin on a uniform cents
per therm basis for ratemaking purposes for sale and delivery
under such rate schedules.
As used herein, the terms "Gross Margin" shall represent all
those costs included in the total cost of service including the
"cost of capital" but excluding charges recorded in IPUC Account
Nos. 800, 801, 802, 803, 804, 805, 806, 808 and 809 and the City
Franchise Tax charges recorded in IPUC Account No. 408.
20.2 Base Tariff Rates. The Base Tariff Rate Schedule applicable to
each schedule contained in Second Revised Volume No. 1 of this
IPUC Gas Tariff is identified on Sheet No. 3A hereof.
20.3 Currently Effective Tariff Rates. Rates applicable to each rate
schedule contained in Second Revised Volume No. 1 of this IPUC
Gas Tariff shall be the Base Tariff Rates plus a surcharge as
identified on Sheet No. 3A hereof. '
20.4 Changes in Currently Effective Tariff Rates. Rates applicable to
each rate schedule contained in Second Revised Volume No. 1 of
this IPUC Gas Tariff include a surcharge as identified on Sheet
No. 3A. The surcharge shall be adjusted on the Adjustment Dates
identified in Section 20.5 below, for changes in thl Gross Margin
in accordance with the rate adjustment provision hereof to the
end that the Company will be reimbursed for the actual costs.
20.5 Adjustment Date. The Adjustment Date shall be October 1 of each
year. On such date, Company shall, in accordance with the rate
adjustment provisions hereof, increase or decrease the surcharge
applicable to each rate schedule contained in Second Revised
Volume No. 1 of this IPUC Gas Tariff to reflect çhanges in the
average Gross Margin. As so adjusted, the surcharge rate
applicable to each rate schedule will be included on Sheet No. 3A
(Second Revised Volume No.1) hereof as the Currently Effective
Surcharge Rate.
20.6 Amount of Adjustment. The amount of adjustment to be made
effective each Adjustment Date shall consist of the sum of a
Gross Margin Adjustment and Surcharge Adjustment. The Gross
INTERMOUNTAIN GAS COMPANY
CASE NUMBER U-1034-99
Staff Exhibit No. 103
Schedule 2
Page 1 of 4
Trueman Henderson
Intermountain Gas Company
Case No. U-1034-99
Exhibit 103
Schedule 2
Page 2 of 4
Witness: Henderson
Margin Adjustment shall consist of the net change in the
annualized Gross Margin per Therm sold. The procedure for
determining the Gross Margin Adjustment is set forth in
Section 20.7 below.
The Gross Margin Surcharge Adjustment shall consist of an amount
necessary to recover or return the amount accumulated in the
Unrecovered Revenue Stabilization Account including an
appropriate amount of carrying charge. The procedures for
establishing and maintaining the Unrecovered Revenue
Stabilization Account and for determining the Gross Margin
Surcharge Adjustment are set forth in Section 20.8 below.
The Gross Margin Cost Adjustment and the Gross Margin Surcharge
Adjustment shall be applied to all rate schedules contained in
Company's IPUC Gas Tariff, Second Revised Volume No.1.
20.7 Gross Margin Cost Adjustment. The Gross Margin Cost Adjustment
per Therm sold shall be determined by dividing the net change in
the annualized Gross Margin Cost, determined as specified- below,
by the amount of Therms delivered during the 12 months ertding
three months prior to the applicable Adjustment Date.
The amount of net change in the annualized Gross Margin -shall be
calculated as follows:
(a) The amount of net change in the annualized Gross Margin
Cost for the purposes of this Section shall be the ,
difference between the cents per Therm computed under (i)
and (ii) below applied to the total Therms of gas delivered
as defined in Section 20.7(b) below.
(i) The annualized Gross Margin Cost for gas shall be
that determined by the Commission in ils most recent
Order. The average Gross Margin Cost per Therm is
then established by dividing the total Gross Margin
determined by the Commission in the most recent
order, as described above, by the total amount of
Therms delivered as defined in Section 20.7 (b)
below.
(ii) The average Gross Margin Cost per Ttiermapplicable
to the currently effective tariff rates, as set
forth on Sheet No. 3A of Second Revised Volume No. 1
of this IPUC Gas Tariff, and determined in Company's
most recent filing under this Section 20.
(b) Annual Therms to be Utilized: The amount of Therms to be
utilized shall be that delivered as defined in Section 20.7
hereof during the twelve month period ending three months
INTERMOUNTAIN GAS COMPANY
CASE NUMBER U-I034-99
Staff Exhibit No. 103
Schedule 2
Page 2 of 4
Trueman Henderson
Intermountain Gas Company
Case No. U-1034-99
Exhibit 103
Schedule 2
Page 3 of 4
Witness: Henderson
prior to the applicable Adjustment Date; provided, however,
that such quantities shall be subj ect to adjustment by
Company to reflect annualization of new deliveries and
significant changes in takes from existing delivery
connec t ions.
20.8 Gross Margin Surcharge Adjustment. The Gross Margin Surcharge
Adjustment per Therm delivered shall be determined by dividing
the balance in the Unrecovered Gross Margin Cost Account, defined
below, at the end of the latest available month at the time of
the computation being made under the provisions of this Section,
by the amount of Therms estimated to be delivered under rate
schedules identified On Sheet No. 3A in this IPUC Gas Tariff,
Second Revised Volume No. 1 during the twelve billing months that
the Surcharge Adjustment will be in effect.
Beginning as of the date this Gross Margin Cost Adjustment
Provision becomes effective, Company shall establish and maintain
an Unrecovered Revenue Stabilization Account. Entries shall be
made to this account each month as follows: '
(a) A debit entry equal to the difference between the
cumulative actual Gross Margin and the cumulative Minimum
Gross Margin Cost asset forth on Sheet No. 4A (if the
cumulative actual Gross Margin is less than -the cumulative
Minimum Gross Margin Cost) or a credit entry equal to the
difference between the cumulative actual Gross Margin and
the cumulative Maximum Gross Margin Cost as set forth on
Sheet No. 4A (if the cumulative actual Gross Margin .is
greater than the cumulative Maximum Gross Margin Cost).
(b) A Credit entry equal to the Therms delivered during the
month under rate schedules contained in this ilUC Gas
Tariff, Second Revised Volume No. 1 and multiplied by the
Surcharge Adjustment reflected in the rates charged during
the month.
(c) In each month the Unrecovered Revenue Stabilization Account
shall be debited (if the balance in said account is a debit
balance) and shall be credited (if the balance in said
account is a credit balance) for a carrying charge which
shall be determined by multiplying the balance in the
account by 1/12 of the interest rate established for
short-term borrowings as approved in the Company's last
general rate case.
INTERMOUNTAIN GAS COMPANY
CASE NUMBER U-1034-99
Staff Exhibit No. 103
Schedule 2
Page 3 of 4
Trueman Henderson
Intermountain Gas Company
Case No. U-I034~99
Exhibit 103
Schedule 2
Page 4 of 4
Witness: Henderson
SECTION A
GENERA SERVICE PROVISIONS
(Continued)
20.9 Time and Manner of Filing and Related Reports. Company shall
file each adjustment at least 30 days prior to the applicable
Adjustment Date by means of a Revised Sheet No. 3A (Second
Revised Volume No.1). Each such filing shall be accompanied by
a report which shows the derivation of the adjustments to be
applied. Such filing, including the report, shall be posted as
defined by the Idaho Public Utilities Commission.
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INTERMOUNTAIN GAS COMPANY
CASE NUMBER U-1034-99
Staff Exhibit No. 103
Schedule 2
Page 4 of 4
Trueman Henderson
INTERMOUNTAIN GAS COMPAN
Magnitude of Changes
Revenue Stabilization Account
Therms
A. Proposed Gross Margin (Staff Projection)
1;i
;3
,8
Projected Sales
Cost of Gas
Franchise Tax
Proposed Margin
246,180,000
5
-16
Minimum Margin
Maximum Margin
Dollars
$ 147,308,000113,015,000
2,394,000
$ 31,899,000
$ 30,028,-000
$ 32,3312000
B. Assumption #1: (10% Reduction in Residential Sales, 5% Reduction in all Other
Classes)
7
8
9
10
11
12
Proj ected Sales
Cost of Gas
Franchise Tax
Margin Achieved
Minimum Margin
Debit Balance
231 ,377 ,000
Therefore, a reduction in volum of 10% in residential sales
and 5% in all other classes will activate the Revenue Stabili-
zation Account. Assume forecast sales of 231,377,000 therms
and the surcharge would be .274Ç per thermo
$ 137,864,000106,219,000
2,250,000
$ 29,395,000
30,0282000
$ 6332°00
C. Assumption #2: (10% Increase in Residential Sales, 5% Increase in all Other
Classes)
13
14
15
16
17
18
Projected Sales
Cost of Gas
Franchise Tax
Margin Achieved
Maximum Margin
Credi t Balance
260,983,000
Therefore, an assumption #2 increase will activate the Revenue
Stabilization Account. Assume forecast sales of 260,983,000
therms and the Credit would be .794t per thermo
$ 156,752,000
119 ,811 ,000
2,5.38,000
$ 34,403,000
32,331,000
$ 2,0722000
INTRMOUNAIN GAS COMPAN
CASE NUER U-I034-99
Staff Exhibit No. 103
Schedule 3, Page 1 of 2
Trueman Henderson
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INTERMOUNTAIN GAS COMPAN
Magnitude of Changes
Revenue Stabilization Account
Therms Dollars
Proposed Gross Margin (Staff)
1
2
3
4
Proj ected Sales
Cost of Gas
Franchise Tax
Proposed Margin
246,180,000 $ 147,308,000
113,015,000
2,394,000
S 31,899,000
Minimum Margin Calculations: (12%)
5 Operating Income Reduction = Avg.Rate Base x (Weighted Cost of Capital ~ (15.25%-12%) i
6 :: $67,469,000 x (11.853% - 10.481%)
7 = $926,000
8 Margin Reduction :: Operating Income Reduction
Tax Factor
9 = $926,000
.4951
10 = $1,871,000
11 Proposed Margin =$31,899,000
12 Minimum Margin Reduction =$1,871 ,000
13 Minimum Margin =$30,028,000
Maxim~ Margin Calculation:(16%)
14 Operating Income Increase :: $67,469,000 x (12.170% - 11.853%)
15 :: S214,000
16 Margin Increase =S214,000
.4951
17 =$432,000
18 Proposed Margin =$31,899,000
19 Maximum Margin =$32,331,000
20 Therefore, margin below $30,028,000 or above $32,331,000 will activate
Revenue Stabilization Act.
INTEROUNAIN GAS COMPAN
CASE NUBER U-1034-99
Staff Exhibit No. 103
Schedule 3, Page 2 of 2
Trueman Henderson