20230620Technical Hearing Transcript Volume II.pdf

BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF INTERMOUNTAIN )
GAS COMPANY'S APPLICATION FOR )CASE NO.INT-G-22-07
AUTHORITY TO INCREASE ITS RATES )
AND CHARGES FOR NATURAL GAS )SERVICE IN THE STATE OF IDAHO )
BEFORE
COMMISSIONER ERIC ANDERSON (Presiding)
COMMISSIONER EDWARD LODGE
PLACE:Commission Hearing Room
11331 West Chinden Blvd.
Building 8,Suite 201-A
Boise,Idaho
DATE:June 8,2023 ~
VOLUME II -Pages 23 -80
CSB REPORTINGORIGINALCertgiedShorthandReporters
Post Office Box 9774
Boise,Idaho 83707
.Reporter:[e-mail] Constance Bucy,Ph:208-890-5198 CSR
1 A PPE A R A NCES
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3 For the Staff:Claire Sharp
Deputy Attorney General
4 IPUC
11331 W.Chinden Blvd.,
5 Bldg.No.8,Suite 201-A
PO Box 83720
6 Boise,ID 83720-0074
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For Intermountain Gas:Preston N.Carter
8 Givens Pursley LL
601 W.Bannock Street
9 Boise,ID 83702
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For Alliance of Western Chad M.Stokes
11 Energy Consumers:Cable Huston LLP
1455 SW Broadway,Suite 1500
12 Portland,OR 97201
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For Idaho Conservation Brad Heusinkveld.
14 League:Idaho Conservation League
(Of Record)710 N.6th Street
15 Boise,ID 83702
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For City of Boise:Ed Jewell
17 Deputy City Attorney
Boise City Attorney's Office
18 105 N.Capitol Blvd.
PO Box 500
19 Boise,ID 83701-0500
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CSB REPORTING 24 APPEARANCES
208.890.5198
1 I NDEX
2
3 WITNESS EXAMINATION BY PAGE
4 Lori Blattner Mr.Preston (Direct)29(IGC)Prefiled Direct Testimony 31
5
Bradley G.Mullins Mr.Stokes (Direct)41
6 (AWEC)Prefiled Direct Testimony 42
7 Michael Louis Ms.Sharp (Direct)58(Staff)Prefiled Direct Testimony 60
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14 EXH I B I TS
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16 NUMBER DESCRIPTION PAGE
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FOR ALLIANCE OF WESTERN ENERGY CONSUMERS:
18
201.Resume of Bradley Mullins Premarked
19 Admitted 78
20 202.First Production Request Premarked
of AWEC Admitted 78
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FOR THE STAFF:
23
24 101.Proffesional Qualifications Premarked
of Michael Louis Admitted 78
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CSB REPORTING 25 INDEX/EXHIBITS
208.890.5198
1 BOISE,IDAHO,WEDNESDAY,JUNE 8,2023,9:00 A.M.
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4 COMMISSIONER ANDERSON:Good morning.This is
5 the time and place for a technical hearing in
6 INT-G-22-07,further identified as in the matter of
7 Intermountain Gas Company's application for authority to
8 increase its rates and charges for natural gas service in
9 the State of Idaho.
10 This hearing is taking place to consider a
11 general rate case filed with the Commission on
12 December 2nd,2022,seeking authority to increase
13 Intermountain Gas Company's general rates for gas service
14 in Idaho.
15 My name is Commissioner Eric Anderson.I'm the
16 Chair of today's proceeding and I'm joined by
17 Commissioner Ed Lodge and we comprise the Commission in
18 this case and will collectively make a final
19 determination in this matter.
20 For today's proceedings,we have Connie Bucy
21 serving as our court reporter.Please talk slowly,
22 clearly,and into the microphone for her benefit and she
23 will remind us if we don't do it properly.
24 On March 2nd --excuse me,March 30th and 31st,
25 2023,the Company,intervenors,and Staff participated in
CSB REPORTING 26 COLLOQUY
208.890.5198
1 settlement negotiations,which resulted in a proposed
2 settlement.On April 5th,2023,a joint motion was filed
3 notifying the Commission of the proposed settlement and
4 requesting several procedural modifications to the
5 Commission's schedule.
6 On May 4th,2023,the Company filed a proposed
7 stipulation and settlement signed by the Company,Staff,
8 AWEC,and ICL,collectively,called the signing parties.
9 We will begin this morning by taking appearances
10 of the parties,so let's begin with Intermountain Gas
11 Company.
12 MR.CARTER:Sure,this is Preston Carter with
13 Givens Pursley representing Intermountain Gas Company.
14 COMMISSIONER ANDERSON:Welcome.Commission
15 Staff?
16 MS.SHARP:Claire Sharp,Deputy AG.
17 COMMISSIONER ANDERSON:Thank you.Alliance of
18 Western Energy Consumers?
19 MR.STOKES:Good morning,Chad Stokes from
20 Cable Huston for the Alliance of Western Energy
21 Consumers.
22 COMMISSIONER ANDERSON:Welcome,good morning.
23 Idaho Conservation League?The City of Boise?
24 MR.JEWELL:Good morning,my name is Ed Jewell.
25 I'm a Deputy City Attorney for the City of Boise and
CSB REPORTING 27 COLLOQUY208.890.5198
1 joining me today is Will Gale.
2 COMMISSIONER ANDERSON:Welcome.Are there any
3 parties that we've missed for purposes of identification
4 for the record?Seeing none.
5 Are there any preliminary matters that need to
6 come before the Commission,motions or requests?
7 Mr.Preston.
8 MR.CARTER:Not from the Company.
9 COMMISSIONER ANDERSON:Thank you.Seeing none
10 other,we scheduled a single day,which will not take a
11 whole day in the effort,so we're not going to schedule
12 breaks or anything.Everybody knows where the rest rooms
13 are.If you need to get up and go,they're just right
14 down the hall.
15 Before calling the first witness,do the parties
16 intend to present direct and rebuttal testimony to be
17 spread across the record simultaneously?
18 MR.CARTER:Mr.Chair,the Company does not
19 have rebuttal testimony,so we'll spread what testimony
20 we have,which is the direct testimony on the settlement
21 on the record.
22 COMMISSIONER ANDERSON:Thank you.I've been
23 reading my script.I probably didn't need to say
24 rebuttal on that,but thank you for that.
25 MR.CARTER:No problem.
CSB REPORTING 28 COLLOQUY
208.890.5198
1 COMMISSIONER ANDERSON:So with that,we are
2 ready to call our first witness,so let's begin with
3 Intermountain Gas.You can call your first witness.
4 MR.CARTER:Sure,Intermountain Gas calls Lori
5 Blattner.
6
7 LORI BLATTNER,
8 produced as a witness at the instance of the
9 Intermountain Gas Company,having been first duly sworn
10 to tell the truth,was examined and testified as follows:
11
12 DIRECT EXAMINATION
13
14 BY MR.CARTER:
15 Q.Ms.Blattner,will you please state and spell
16 your name for the record?
17 A.Lori Blattner,L-o-r-i B-1-a-t-t-n-e-r.
18 Q.And are you the same Lori Blattner that filed
19 direct testimony in support of the stipulation and
20 settlement in this case?
21 A.Yes.
22 Q.If I asked you the same questions today,would
23 your answers be the same?
24 A.Yes.
25 MR.CARTER:Mr.Chair,I'd ask that
CSB REPORTING 29 BLATTNER (Di)
208.890.5198 Intermountain Gas
1 Ms.Blattner's direct testimony in support of the
2 stipulation and settlement be spread upon the record as
3 if read.
4 COMMISSIONER ANDERSON:Without objection,so
5 done.
6 (The following prefiled direct testimony of
7 Ms.Lori Blattner is spread upon the record.)
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CSB REPORTING 30 BLATTNER (Di)
208.890.5198 Intermountain Gas
1 Q.Please state your name,business address,and
2 present position with Intermountain Gas Company
3 ("Intermountain"or "Company").
4 A.My name is Lori Blattner,and I am the Director
5 of Regulatory Affairs for Intermountain Gas Company and
6 Cascade Natural Gas Corporation.My business address is
7 555 South Cole Road,Boise,ID 83707.
8 Q.Please describe your involvement in this
9 proceeding.
10 A.I have been involved in all aspects of this
11 proceeding.I filed direct testimony to support
12 Intermountain's General Rate Case Application with the
13 Idaho Public Utilities Commission ("Commission")in this
14 matter.I have reviewed the testimony of all Company's
15 witnesses;was deeply involved in the extensive
16 production requests;attended the settlement conferences;
17 and am otherwise familiar with the issues involved in the
18 case.
19 Q.What is the purpose of your testimony?
20 A.The purpose of my testimony is to describe the
21 Stipulation and Settlement ("Settlement")that was signed
22 by parties in the case,to express the Company's support
23 of the Settlement,and to recommend that the Commission
24 approve the Settlement without change.
25 Q.While maintaining confidentiality,please
CSB REPORTING 31 L.BLATTNER DI-1
208.890.5198 Intermountain Gas
1 describe the process that resulted in the Settlement.
2 A.After the Company filed its Application,
3 Commission Staff ("Staff")and Intervenors engaged in
4 extensive discovery,which included well over one-hundred
5 production requests and responses,as well as a series of
6 meetings with Staff during which Staff and the Company
7 discussed questions and issues related to production
8 requests,documents,and other items related to the case.
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CSB REPORTING 32 L.BLATTNER DI-la
208.890.5198 Intermountain Gas
1 The Commission held three public workshops
2 related to the case:one in Pocatello,one in Twin Falls,
3 and one in Boise.Staff and representatives of the
4 Company attended each of these workshops.
5 Towards the end of the discovery process,and
6 after the public workshops,Staff provided notice of two
7 formal settlement conferences.All Parties to the
8 case-which included Staff,Intermountain,the Alliance of
9 Western Energy Consumers ("AWEC"),Idaho Conservation
10 League ("ICL")and the City of Boise ("City")-attended
11 and participated in the settlement conferences,which
12 took place on March 30 and 31,2023.After extensive
13 discussions-the contents of which are confidential-all
14 but one of the Parties agreed to the terms of the
15 Settlement.The Settling Parties finalized and signed the
16 stipulation and settlement agreement ("Settlement")
17 itself at the end of April and early May 2023.
18 Intermountain appreciates the time and effort of Staff
19 and all Parties to reach a settlement in this rate case
20 proceeding.
21 Q.Did all Parties join the Settlement?
22 A.No.The Company,Staff,AWEC,and ICL signed
23 the Settlement.This testimony refers to the parties that
24 have signed the agreement as the "Settling Parties."The
25 term "Parties"includes all parties to the proceeding.
CSB REPORTING 33 L.BLATTNER DI-2
208.890.5198 Intermountain Gas
1 The City did not sign the Settlement,but has agreed not
2 to oppose the Settlement.
3 Q.Please describe the Settlement.
4 A.The Settlement contains several components,
5 each of which is described in the Settlement itself.I
6 would like to touch upon several of the key components of
7 the Settlement.
8 Overall rate increase.The Company sought,in
9 its Application,a margin revenue increase of 10.3%,for
10 an overall revenue increase of 3.2%.The Settlement,if
11 approved
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CSB REPORTING 34 L.BLATTNER DI-2a
208.890.5198 Intermountain Gas
1 by the Commission,would result in margin revenue
2 increase of approximately 2.75%,as illustrated in
3 Exhibit 1 to the Settlement,for an overall revenue
4 increase of 0.73%.
5 Revenue Requirement.The Settlement includes a
6 revenue requirement of $3.05 million.The components of
7 the Revenue Requirement are set forth in paragraph 2 of
8 the Settlement,and include:a return on equity of 9.5%,
9 which is the same as the return on equity approved in
10 2017 in the Company's most recent general rate case;a
11 total rate base of $385,288,577,with certain values of
12 components of rate base delineated in the text and
13 exhibits of the Settlement;and rate case expenses from
14 this rate case and certain remaining items from the 2017
15 rate case,to be amortized over a period of five years.
16 Cost of Service,Rate Design,and Rate Spread.
17 The Settling Parties agreed to accept the class revenue
18 apportionment proposed by the Company in its Application,
19 which is set forth in Exhibit 2 to the Settlement.In
20 broad terms,if approved by the Commission,the revenue
21 requirement will be recovered by increasing the customer
22 charge for residential customers to $8.00,with a
23 decrease to the distribution rate.Customer and demand
24 charges for other customer classes are described in
25 detail in Exhibit 3 to the Settlement.
CSB REPORTING 35 L.BLATTNER DI-3
208.890.5198 Intermountain Gas
1 Billing Determinants and Other Issues.The
2 Settling Parties further agreed that the billing
3 determinants would be as proposed by the Company in its
4 Application and Testimony.Further,the Settling Parties
5 agreed to accept the Company's position,as set forth in
6 the Application and Testimony,related to the Company's
7 proposals on in-person pay station transaction fees and
8 non-utility LNG sales credits.
9 Non-financial components of the Settlement.In
10 addition to the financial aspects of the Settlement,the
11 Company has agreed to meet with Staff before the next
12 rate case to
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CSB REPORTING 36 L.BLATTNER DI-3a
208.890.5198 Intermountain Gas
1 discuss protocols for providing access to certain
2 information related to the Company's affiliates.This
3 will facilitate an efficient transfer of relevant
4 information during the next rate case.
5 In addition,before filing the Company's next
6 rate case,the Company and Staff have agreed to hold a
7 workshop to discuss the methodology for weather
8 normalization to be used in the next general rate case.
9 Finally,the Company has agreed to provide
10 certain information regarding the allocation factors used
11 in allocating costs and expenses from Intermountain's
12 parent company and affiliates during its next general
13 rate case.
14 Q.Do you believe that the Settlement is in the
15 public interest?
16 A.Yes.Each of the components of the Settlement
17 were thoroughly discussed and negotiated during the
18 settlement conferences,with the participation of the
19 Parties,and reflect a variety of different aspects of
20 the Company's customer base.Before the settlement
21 conferences,the Parties had the opportunity to engage
22 in,and did engage in,an extensive discovery process,
23 confirming that the settlement conferences and resulting
24 Settlement were based on all relevant information.
25 In addition,Staff and the Company had the
CSB REPORTING 37 L.BLATTNER DI-4
208.890.5198 Intermountain Gas
1 opportunity to hear from customers during the customer
2 workshops,which were held before the settlement
3 conferences,ensuring that concerns raised by customers
4 were considered during the settlement conferences.
5 All things considered,I believe that the
6 agreement set forth in the Settlement reflects a
7 reasonable compromise of all Parties'positions in the
8 case.Each party had to
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CSB REPORTING 38 L.BLATTNER DI-4a
208.890.5198 Intermountain Gas
1 compromise,but I believe the overall result reflects a
2 just,fair,and reasonable outcome that appropriately
3 balances the needs of the Company,its customers,and the
4 Parties.
5 For these reasons,the Company respectfully
6 requests that the Commission approve the Settlement
7 without change.
8 Q.Does this conclude your testimony?
9 A.Yes.
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CSB REPORTING 39 L.BLATTNER DI-5
208.890.5198 Intermountain Gas
1 (The following proceedings were had in
2 open hearing.)
3 MR.CARTER:Ms.Blattner is now available for
4 cross-examination or questions from the Commission.
5 COMMISSIONER ANDERSON:Thank you.Commission
6 Staff?
7 MS.SHARP:We don't have any questions.
8 COMMISSIONER ANDERSON:Are there any questions
9 from any of the intervenors?Any questions from us?
10 Hearing none,thank you,Ms.Blattner,for your
11 testimony and it will be spread across the record.
12 THE WITNESS:Thank you.
13 (The witness left the stand.)
14 MR.CARTER:The Company doesn't have any
15 further witnesses.
16 COMMISSIONER ANDERSON:No further.Thank you
17 very much.
18 Mr.Stokes,do you have testimony?
19 MR.STOKES:Yes,Your Honor,I'd like to call
20 Brad Mullins to the stand.
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ICSBREPORTING40BLATTNER
208.890.5198 Intermountain Gas
1 BRADLEY G.MULLINS,
2 produced as a witness at the instance of the Alliance of
3 Western Energy Consumers,having been first duly sworn to
4 tell the truth,was examined and testified as follows:
5
6 DIRECT EXAMINATION
7
8 BY MR.STOKES:
9 Q.Good morning.Please state your name and spell
10 your name as well.
11 A.My name is Brad Mullins,spelled M-u-1-1-i-n-s.
12 Q.Are you the same Brad Mullins that filed
13 settlement testimony in this matter?
14 A.I am.
15 Q.If I asked you the same questions today,would
16 your answers be the same?
17 A.They would.
18 Q.Do you have any corrections to your testimony?
19 A.I do not.
20 MR.STOKES:At this point the witness is
21 available for examination --oh,I'd like to enter the
22 testimony in the record.
23 COMMISSIONER ANDERSON:Very well.
24 (The following prefiled direct testimony of
25 Mr.Bradley Mullins is spread upon the record.)
CSB REPORTING 41 MULLINS (Di)
208.890.5198 AWEC
1 I.INTRODUCTION AND SUMMARY
2 Q.PLEASE IDENTIFY THE PARTY ON WHOSE BEHALF
3 YOU ARE TESTIFYING.
4 A.I am testifying on behalf of the Alliance
5 of Western Energy Consumers ("AWEC").AWEC is a
6 non-profit trade association whose members are large
7 energy users in the Western United States,including
8 customers receiving gas sales and transportation services
9 from Intermountain Gas Company ("Intermountain").
10 Q.WHAT IS THE PURPOSE OF YOUR TESTIMONY?
11 A.I discuss AWEC's support for the May 4,
12 2023 Stipulation and Settlement ("Stipulation")entered
13 into by Intermountain,Staff for the Idaho Public
14 Utilities Commission ("Staff"),AWEC,and the Idaho
15 Conservation League (collectively,"Settling Parties").
16 The City of Boise,the only intervenor which is not a
17 party to the Stipulation,has indicated that they do not
18 intend to oppose the Stipulation.The Settling Parties
19 and the City of Boise are collectively referred to herein
20 as ("Parties").
21 Q.PLEASE SUMMARIZE AWEC'S SUPPORT FOR THE
22 STIPULATION.
23 A.The under the terms of the Stipulation,
24 the Settling Parties agreed to increase Intermountain's
25 margin rates by $3,050,000 or 2.75%.The Stipulation
CSB REPORTING 42 B.MULLINS,Di 1
208.890.5198 AWEC
1 represents an $8,287,947 reduction from the $11,337,947
2 revenue requirement increase Intermountain requested in
3 its initial filing.In addition,the Stipulation provides
4 a rate spread recognizing that large volume sales
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CSB REPORTING 43 B.MULLINS,Di la
208.890.5198 AWEC
1 and transportation customers are paying rates in excess
2 of their class cost of service.While the rate spread
3 does not move the large volume sales and transportation
4 rate classes to parity,AWEC supports the gradual move in
5 this case due to overall size of the rate increase,which
6 is relatively small in comparison to Intermountain's
7 filed case.Finally,the Stipulation contains
8 requirements for Intermountain to provide information
9 about intercorporate cost allocations in its next general
10 rate case filing,a provision that AWEC supported.AWEC
11 finds that the Stipulation represents a reasonable
12 comprise of the issues raised in this docket and
13 recommends that the Commission approve the Stipulation.
14 Q.WHAT STANDARD DOES THE COMMISSION APPLY
15 WHEN CONSIDERING A SETTLEMENT?
16 A.The Commission has jurisdiction over this
17 matter under Idaho Code §§61-502 and 61-503,and has the
18 express statutory authority to investigate rates,
19 charges,rules,regulations,practices,and contracts of
20 public utilities and to determine whether they are just,
21 reasonable,preferential or discriminatory,or in
22 violation of any provision of law,and may fix the same
23 by Order.Idaho Code §§61-502 and 61-503.Proponents of
24 a proposed settlement must show "that the settlement is
25 reasonable,in the public interest,or otherwise in
CSB REPORTING 44 B.MULLINS,Di 2
208.890.5198 AWEC
1 accordance with law or regulatory policy."IDAPA
2 31.01.01.275.Notwithstanding,the Commission is not
3 bound by settlement agreements.IDAPA 31.01.01.276.
4 Instead,the Commission "will independently review any
5 settlement proposed to it to determine whether the
6 settlement is just,fair and reasonable,in the public
7 interest,or otherwise in accordance with law or
8 regulatory policy."Id.
9 Q.PLEASE DISCUSS AWEC'S REVIEW OF
10 INTERMOUNTAIN'S FILING.
11 A.AWEC performed a detailed review of
12 Intermountain's revenue requirement and rate spread
13 and rate design.AWEC submitted 95 production requests
14 and reviewed Intermountain's
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CSB REPORTING 45 B.MULLINS,Di 2a
208.890.5198 AWEC
1 responses to Production Requests.AWEC also reviewed
2 Intermountain's responses to the numerous production
3 requests from Staff.AWEC also participated in settlement
4 negotiations.Based on its review of discovery,AWEC
5 prepared a detailed revenue requirement proposal which
6 was provided to settlement participants for consideration
7 in the settlement process.
8 Q.PLEASE DISCUSS THE REVENUE REQUIREMENT
9 CHANGES IN INTERMOUNTAIN'S MARCH 9,2023 UPDATED DIRECT
10 FILINGS.
11 A.In its initial filing,Intermountain
12 requested a $11,337,947 or 10.56%margin rate increase.
13 The initial filing used a historical test period,
14 consistent with the Commission's preferred practice,
15 based on the year ending December 31,2022.The full
16 year of test period results was not available at the time
17 of Intermountain's filing,which occurred on December 1,
18 2022.Accordingly,the revenue requirement in
19 Intermountain's initial filing included forecast data
20 for the fourth quarter of 2022.In AWEC Production
21 Request 02,AWEC requested that Intermountain update its
22 test period results to include actual data for the fourth
23 quarter of 2022.Intermountain responded to AWEC Data
24 Request 02 on February 28,2023,providing updated
25 revenue requirement calculations with the full year of
CSB REPORTING 46 B.MULLINS,Di 3
208.890.5198 AWEC
1 historical data,and later filed Updated Direct Testimony
2 on March 9,2023 incorporating the results of that
3 analysis into its filing.
4 In addition to updating the test period results
5 described above,Intermountain also corrected several
6 errors that AWEC had identified in discovery.In AWEC
7 Production Requests 21 and 23,AWEC identified errors
8 related to Intermountain's calculation of income tax
9 expenses.In its response to AWEC's requests,
10 Intermountain acknowledged its mistake and committed to
11 correcting the error in its Updated Direct Filings.
12 In Intermountain's March 9,2023 Updated Direct
13 Filings,Intermountain included an update of its revenue
14 requirement with actual data for the entire test period.
15 Intermountain also
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CSB REPORTING 47 B.MULLINS,Di 3a208.890.5198 AWEC
1 corrected the above referenced tax expense errors.The
2 result of the March 9,2023 Updated Direct Filings was a
3 proposed revenue requirement of $6,752,224,representing
4 a $4,585,723 reduction from Intermountain's initial
5 filing.Of this reduction,approximately $4,138,315 of
6 the difference in revenue requirement from
7 Intermountain's initial filing was attributable to
8 reduced tax expenses.In response to AWEC Production
9 Request 63,Intermountain confirmed that the reduction to
10 income tax expenses was attributable to the tax expense
11 items identified in AWEC Production Requests 21 and 23.
12 Copies of these requests have been attached as Mullins
13 Exhibit 202.
14 Q.PLEASE GIVE AN OVERVIEW OF THE SETTLEMENT
15 PROCESS.
16 A.The Parties met for settlement conferences
17 on March 30 and 31,2023.In the settlement conferences,
18 the Parties presented their respective positions and
19 proposed adjustments to Intermountain's revenue
20 requirement and Parties discussed the merits of each
21 adjustment.Ultimately,the Settling Parties were unable
22 to reach consensus on all of the individual revenue
23 requirement adjustments that had been proposed.
24 Notwithstanding,the Settling Parties were able to reach
25 a compromise position in which Intermountain would be
CSB REPORTING 48 B.MULLINS,Di 4
208.890.5198 AWEC
1 provided with a $3,050,000 revenue requirement increase,
2 reflecting an overall margin rate increase of
3 approximately 2.75%.Each Settling Party came to this
4 result independently.Other than the items specified in
5 Paragraph 2 of the Stipulation,there was no consensus on
6 the specific adjustments that were made to arrive at this
7 result.Based on AWEC's proposed adjustments and
8 analysis prepared in advance of the settlement
9 conference,however,AWEC found the stipulated level of
10 revenue requirement to be a reasonable result.
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CSB REPORTING 49 B.MULLINS,Di 4a
208.890.5198 AWEC
1 Q.WHY DID AWEC AGREE TO A 9.5%ROE?
2 A.Paragraph 2(a.)of the Stipulation
3 provides Intermountain with a 9.5%return on equity
4 ("ROE").From AWEC's perspective,in the context of the
5 overall Stipulation and taking into consideration the
6 unique factors facing Intermountain,AWEC was willing to
7 accept a 9.5%ROE.AWEC finds that the Stipulation,taken
8 as a whole,results in fair,just and reasonable rates.
9 Q.PLEASE DISCUSS THE RATE SPREAD INCLUDED IN
10 THE STIPULATION.
11 A.The rate spread included in the
12 Stipulation was based on Intermountain's filed case,
13 which provided schedule LV sales and T-4 transportation
14 customers with a rate increase that is 53%of the system
15 average rate increase,or approximately 1.5%.Similarly,
16 the rate spread included in the Stipulation provides T-3
17 interruptible transportation customers with a rate
18 increase that is 25%of the system average rate increase,
19 or approximately 0.7%.Based on the cost of service
20 study contained in Intermountain's March 9,2023 Updated
21 Direct Testimony,Schedules LV and T-4 had parity ratios
22 of 1.38 and 1.37,respectively.By definition,the rates
23 for those schedules would need to be reduced
24 significantly to bring those customer rates in line with
25 their actual cost of service.Schedule T-3
CSB REPORTING 50 B.MULLINS,Di 5
208.890.5198 AWEC
1 transportation customers had an even larger parity ratio
2 of 6.55,meaning that the rates for those customers would
3 need to be reduced by several multiples to reach cost of
4 service rates.In the Stipulation,there was no
5 consensus on the cost-of-service study assumptions and
6 results.Notwithstanding,AWEC was willing to agree to a
7 more gradual shift towards parity,particularly
8 considering the magnitude of the revenue requirement
9 increase in the Stipulation.AWEC recognizes that high
10 energy costs present a challenge for all customers,and
11 in the context of gradualism and the spirit of
12 compromise,
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CSB REPORTING 51 B.MULLINS,Di 5a
208.890.5198 AWEC
1 AWEC was willing to accept Intermountain's proposed rate
2 spread as part of a global settlement.
3 Q.PLEASE EXPLAIN THE SETTLEMENT PROVISIONS
4 SURROUNDING CROSS COMPANY COST ALLOCATIONS.
5 A.One of AWEC's concerns with Intermountain's
6 filed case had to do with cross company cost allocations.
7 Since Intermountain was acquired by MDU Resources ("MDU")
8 in 2008,the amount of costs that have been allocated
9 from Intermountain's corporate parent and between other
10 affiliate utilities have been increasing.MDU and its
11 family of utilities are also becoming increasingly
12 integrated,making it more difficult to segregate costs
13 from one utility to another.While AWEC recognizes that
14 there can be some benefits to integrated operation of
15 certain utility functions,AWEC was concerned with the
16 level of detail supporting the cost allocations that were
17 proposed in revenue requirement.Accordingly,as a
18 provision of the Stipulation,AWEC requested that
19 Intermountain provide further information regarding
20 intercorporate cost allocations in its next general rate
21 case filings.Specifically,AWEC requested that
22 Intermountain file testimony describing the allocation
23 methods,and that Intermountain provide workpapers
24 supporting the allocation factors and the allocated costs
25 in its filing.Accordingly,in Paragraph 5 of the
CSB REPORTING 52 B.MULLINS,Di 6
208.890.5198 AWEC
1 Stipulation,Intermountain agreed to provide more cost
2 allocation information in its next general rate case.
3 This provision of the Stipulation is designed to improve
4 staff and intervenors'ability to review the cost
5 allocation and provide a better understanding of how the
6 intercorporate cost allocations are being performed.
7 Q.PLEASE EXPLAIN WHY THE STIPULATION SATISFIES
8 THE INTERESTS AND CONCERNS OF AWEC.
9 A.Based on its review of Intermountain's filing
10 and through the discovery process,AWEC had issues with
11 the requested ROE,income tax expense,several revenue
12 requirements adjustments,
13 /
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CSB REPORTING 53 B.MULLINS,Di 6a
208.890.5198 AWEC
1 intercompany allocations,and rate spread and rate
2 design.Although the Stipulation does not incorporate
3 all of AWEC's proposed adjustments,it does incorporate
4 many of AWEC adjustments and positions.Accordingly,the
5 overall result is fair and provides a significant benefit
6 to customers.
7 Q.PLEASE EXPLAIN WHY AWEC BELIEVES THE
8 STIPULATION IS IN THE PUBLIC INTEREST.
9 A.AWEC believes the Stipulation is in the public
10 interest and recommends the Commission approve the
11 Stipulation because the best interests of Intermountain's
12 natural gas customers are served by the underlying fair
13 compromise on certain revenue requirement and rate spread
14 and design issues.While the Stipulating Parties may
15 each hold different positions on the individual
16 components of Intermountain's natural gas revenue
17 requirement addressed in the Stipulation,AWEC supports
18 the Stipulation because it decreased the proposed revenue
19 requirement increase by $8,287,947 from Intermountain's
20 initial filing,which results in a revenue requirement
21 increase of $3,050,000.AWEC supports the Stipulation as
22 an overall result that is a fair compromise between
23 Intermountain and its customers.AWEC also finds the
24 Stipulation to be in the public interest as the spread of
25 the gas rate increase is done in a manner to better
CSB REPORTING 54 B.MULLINS,Di 7
208.890.5198 AWEC
1 align rates based on Intermountain's cost of service
2 study.For the reasons set forth above,AWEC believes
3 the Stipulation is in the public interest and should be
4 approved by the Commission.
5 Q.DO YOU HAVE ANY CLOSING REMARKS?
6 A.AWEC appreciates the opportunity to participate
7 in this proceeding.AWEC also appreciates
8 Staff's thorough review of,and attention to,the matters
9 at issue in this proceeding,and Intermountain's
10 willingness to engage in settlement negotiations in good
11 faith in order to reach
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CSB REPORTING 55 B.MULLINS,Di 7a
208.890.5198 AWEC
1 a compromise position that all parties could support.
2 While this Stipulation did not necessarily resolve all
3 the issues that AWEC identified in its review,AWEC found
4 that it represented a reasonable compromise,resulting in
5 just a 2.75%rate increase relative to the 10.56%rate
6 increase included in Intermountain's initial filing.
7 AWEC supports the stipulation as just,fair and
8 reasonable and in the public interest.
9 Q.DOES THIS CONCLUDE YOUR SETTLEMENT TESTIMONY?
10 A.Yes.
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CSB REPORTING 56 B.MULLINS,Di 8
208.890.5198 AWEC
1 (The following proceedings were had in
2 open hearing.)
3 COMMISSIONER ANDERSON:Are there any questions
4 from Staff?
5 MS.SHARP:None.
6 COMMISSIONER ANDERSON:The Company?
7 MR.CARTER:None from the Company.
8 COMMISSIONER ANDERSON:Any of the other
9 intervenors?
10 COMMISSIONER ANDERSON:Without objection,we
11 will spread Mr.Mullins'testimony across the record as
12 if read and I don't believe the Commission has any other
13 questions,so thank you very much for your testimony.
14 THE WITNESS:Thank you.
15 (The witness left the stand.)
16 COMMISSIONER ANDERSON:Mr.Stokes,are there
17 any other witnesses you wish to call?
18 MR.STOKES:No.
19 COMMISSIONER ANDERSON:The Idaho Conservation
20 League,a witness?No.
21 City of Boise?None,and Staff.
22 MS.SHARP:Staff calls Michael Louis.
23 COMMISSIONER ANDERSON:Thank you.
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CSB REPORTING 57 MULLINS
208.890.5198 AWEC
1 MICHAEL LOUIS,
2 produced as a witness at the instance of the Staff,
3 having been first duly sworn to tell the truth,was
4 examined and testified as follows:
5
6 DIRECT EXAMINATION
7
8 BY MS.SHARP:
9 Q.Would you please state and spell your last name
10 for the record?
11 A.My name is Michael Louis.Last name is spelled
12 L-o-u-i-s.
13 Q.And are you the same Michael Louis that filed
14 testimony in support of the proposed settlement?
15 A.I am.
16 Q.Do you have any corrections or modifications to
17 your testimony?
18 A.I have none.
19 Q.And if I were to ask you the same questions
20 today,would your answers be the same?
21 A.They would.
22 MS.SHARP:Mr.Chair,I now move to spread the
23 filed testimony of Michael Louis on the record.
24 COMMISSIONER ANDERSON:Thank you.Without
25 objection,we will spread Mr.Louis'testimony across the
CSB REPORTING 58 LOUIS (Di)
208.890.5198 Staff
1 record as if read.
2 (The following prefiled direct testimony of
3 Mr.Michael Louis is spread upon the record.)
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CSB REPORTING 59 LOUIS (Di)
208.890.5198 Staff
1 Q.Please state your name and business address for
2 the record.
3 A.My name is Michael Louis.My business address
4 is 11331 W.Chinden Blvd.,Ste.201-A,Boise,ID 83714.
5 Q.By whom are you employed and in what capacity?
6 A.I am employed by the Idaho Public Utilities
7 Commission ("Commission")as the Engineering Section
8 Program Manager.
9 Q.What is your educational and professional
10 background?
11 A.Please see a summary of my educational and
12 professional background in Exhibit No.101.
13 Q.What is the purpose of your testimony in this
14 proceeding?
15 A.The purpose of my testimony is to describe the
16 proposed comprehensive Stipulation and Settlement
17 ("Settlement")and explain Staff's support.
18 Q.Please summarize your testimony.
19 A.The proposed Settlement would provide a base
20 rate revenue increase of 2.75%or $3.05 million on June
21 01,2023.1 Based on Staff's comprehensive review of
22
1 On page 9 of the Settlement,it states that the increase in
23 revenue requirement reflects a 2.75%"overall"increase as
illustrated in Exhibit 1 of the Settlement.This percentage and what
24 is reflected in Exhibit 1 is the base rate revenue increase not an
overall increase since an overall increase would include the cost of
25 gas which is in the Company's Purchased Gas Adjustment Rate.
CASE NO.INT-G-22-07 60 LOUIS,M.(Stip)1
05/17/23 STAFF
1 Intermountain Gas Company's ("Company"or
2 "Intermountain")Application,a thorough audit of the
3 Company's books and records resulting in a detailed
4 identification of adjustments to the revenue requirement,
5 an extensive negotiation with the intervening parties in
6 the case,and thoughtful consideration of the alternative
7 to settlement,Staff believes that the proposed
8 Settlement is in the public interest,is fair,just,and
9 reasonable;and should be approved by the Commission.
10 Q.How is your testimony organized?
11 A.My testimony is structured under the following
12 sections:
13 I.Background
14 II.Staff Investigation
15 III.The Settlement Process
16 IV.Staff Support for the Settlement
17 A.Revenue Requirement
18 B.Allocation of the Revenue Requirement
19 C.Rate Design
20 D.Other Terms and Conditions
21 Background
22 Q.Please provide an overview of the Company's
23 Application?
24 A.The Company filed its Application on December
25 1,2022,requesting a $11.3 million increase in base rate
CASE NO.INT-G-22-07 61 LOUIS,M.(Stip)205/17/23 STAFF
1 recovery or an increase of 10.3%.On March 9,2023,the
2 Company filed an amended Application adjusting the
3 increase to $6.8 million or a base rate revenue increase
4 of 6.9%.The Company proposed an overall rate of return
5 ("ROR")of 7.37%and a Return on Equity ("ROE")of 10.3%.
6 The Company's proposed changes were based on a
7 2022 test year,with actuals from January through
8 September 2022 and estimates from October through
9 December 2022,which the Company updated with actuals in
10 early March 2023.
11 The Company proposed movement towards cost of
12 service based on their cost-of-service study ("COSS").
13 As proposed,under-allocated Residential Customers were
14 limited to 125%of the total relative system increase,
15 while the highest over-allocated customers,interruptible
16 Transport Customers,were limited to 25%of the overall
17 system increase.All other customers were proposed to
18 receive the remainder of the increase at 53%.
19 Finally,the Company proposed changes in
20 customer charges,increasing Residential Customer charges
21 from $5.50 to $9.00 and $8.00 for Residential and
22 interruptible Residential Customers,respectively;
23 increasing General Service Customer charges from $9.50 to
24 $15.00 for both General Service and interruptible General
25 Service Customers;and establishing customer charges
CASE NO.INT-G-22-07 62 LOUIS,M.(Stip)305/17/23 STAFF
1 where none currently exist of $150.00 for Large Volume
2 and firm Transport Service Customers and $300.00 for
3 interruptible Transport Customers.The Company also
4 proposed changes in the rate block thresholds for Large
5 Volume Customers reducing them so that they are relevant
6 to historic usage patterns.
7 Q.How was the case processed after the case was
8 filed?
9 A.The Commission issued Notices of Application
10 and Intervention and granted intervenor status to the
11 Alliance of Western Energy Consumers ("AWEC"),the City
12 of Boise,and the Idaho Conservation League ("ICL").The
13 Commission approved a procedural schedule and a
14 settlement conference was held on March 30th and 31st.A
15 comprehensive Settlement was reached by all parties and a
16 motion to approve it was filed with the Commission on
17 April 5,2023.
18 Staff's Investigation
19 Q.Could you please describe Staff's investigation
20 leading up to the settlement conference?
21 A.Yes.Staff's approach prior to the settlement
22 conference was to comprehensively review the Company's
23 filing to identify adjustments to the revenue requirement
24 request and make recommendations for allocation of the
25 revenue requirement and rate design in preparation to
CASE NO.INT-G-22-07 63 LOUIS,M.(Stip)405/17/23 STAFF
1 file testimony for a fully-litigated proceeding.Four
2 auditors,five utility analysts,and one engineer were
3 assigned to the case and submitted over 120 discovery
4 requests to investigate all aspects of the case.Staff
5 performed an on-site audit on January 26 and 27 and on
6 March 1 through the 3rd,and held several electronic
7 meetings with the Company to conduct its investigation.
8 For the revenue requirement,the four auditors
9 reviewed the test year results of operations,O&M
10 expenses,capital budgets and spending,and verified
11 thousands of calculations and assumptions related to
12 labor expenses,incentive plans,employee benefits and
13 pension expenses to ensure an appropriate level of
14 expenditure.In addition,an auditor performed an
15 extensive analysis of the cost of capital and capital
16 structure.
17 In addition to the auditors,four of the
18 utility analysts and the engineer assigned to the case
19 performed an extensive review of capital projects to
20 determine if the projects included for recovery were
21 prudently incurred.They also reviewed several of the
22 miscellaneous proposals included in the filing such as
23 updating the credits for non-utility LNG sales and
24 resolution of in-person pay station transaction fees.
25 One utility analyst was assigned to review the
|CASE NO.INT-G-22-07 64 LOUIS,M.(Stip)505/17/23 STAFF
1 normalization of consumption,cost of service,and rate
2 design.Because of the number of issues related to
3 normalization of consumption and cost of service,the
4 Company and Staff met on several occasions prior to the
5 case being filed to improve what was filed in this case.
6 Staff also worked with the Company to completely redesign
7 the Company's line extension policy that was at issue in
8 the last general rate case so it was no longer an issue
9 in this case.
10 The Settlement Process
11 Q.Can you describe the process used during these
12 settlement negotiations?
13 A.Yes,I can.The Settlement conference was
14 conducted on March 30th and 31st of 2023 with all
15 intervening parties in attendance.Each party described
16 and provided justification for its proposed revenue
17 requirement adjustments,and positions for consumption
18 normalization,cost of service,rate design,or other
19 issues.Questions and discussions occurred prior to
20 adjourning for the day.
21 At the start of the second day meeting,the
22 Company presented their counter proposal for the revenue
23 requirement.Time was given for intervening parties and
24 Staff to evaluate and discuss the proposal.Negotiations
25 continued until the parties reached a compromise on a
CASE NO.INT-G-22-07 65 LOUIS,M.(Stip)605/17/23 STAFF
1 tentative revenue increase of $3.05 million.
2 After an agreement on the revenue requirement
3 was reached,the only two open issues identified from the
4 previous day was the allocation of the revenue
5 requirement and Company proposed changes to customer
6 charges.With consideration of the COSS results,it was
7 agreed that the Company's proposals on movement towards
8 cost of service was reasonable.
9 Regarding changes to customer charges,each
10 party was able to restate their preferences and reasons
11 for their position.After negotiation,small changes
12 were made to the Company's proposal and agreed upon by
13 all parties.
14 Q.Were there other issues discussed during the
15 settlement?
16 A.Yes.Several issues were identified during the
17 discussions that would improve future rate cases.Action
18 items were identified for inclusion in the agreement.
19 Staff's Support for the Settlement
20 Q.How did Staff determine that the overall
21 Settlement was reasonable?
22 A.In every settlement evaluation,Staff and other
23 parties must determine if the agreement provides a better
24 overall outcome than could be expected at hearing.Staff
25 looked at each revenue requirement adjustment and other
CASE NO.INT-G-22-07 66 LOUIS,M.(Stip)7
05/17/23 STAFF
1 issues under consideration and determined that the
2 overall agreement was as good or better than what could
3 be expected by fully litigating the case.All
4 intervening parties to the case,including other customer
5 groups and those representing customers with
6 environmental interests,agreed to support or not oppose
7 the Settlement.
8 In addition,Staff evaluated the issues from
9 the last general rate case (INT-G-16-02)including:
10 inadequately justified rate case expenses from the 2016
11 general rate case,the lack of a load study for
12 determining cost of service,issues related to
13 normalization of consumption,updating the Company's line
14 extension policy,and treatment of in-person payment
15 transaction fees.These issues were addressed through
16 the Company's Application,efforts prior to filing the
17 Application,or as part of the Settlement.
18 Revenue Requirement
19 Q.Please describe the terms of the Settlement
20 agreement regarding the revenue requirement.
21 A.Under the terms of the Settlement,the Company
22 would receive a $3.05 million or 2.75%base rate revenue
23 increase effective on June 01,2023.This represents
24 $8.25 million in total adjustments to the revenue
25 requirement compared to the Company's $11.3 million
CASE NO.INT-G-22-07 67 LOUIS,M.(Stip)805/17/23 STAFF
1 initially proposed increase.The parties agreed to a
2 9.50%return on equity ("ROE"),which is a reduction of
3 80 basis points from the Company's proposed 10.3%ROE.
4 Q.Can you explain why Staff believes the 9.5%ROE
5 is reasonable?
6 A.Yes.Staff believes a ROE of 9.5%is
7 reasonable because it is within the range of
8 reasonableness established by Staff as part of its ROE
9 evaluation.It is consistent with authorized ROEs for
10 other electric and gas utilities operating nationally and
11 in the Northwest.It is also consistent with the
12 Commission's most recent authorization of a 9.5%ROE in
13 Order No.35692,issued March 1,2023,for Gem State
14 Water Company.A 9.5%ROE should allow the Company to
15 maintain its ability to attract new capital from equity
16 markets to finance capital investments to grow and
17 maintain its operations.
18 Q.Other than ROE,can you describe Staff's
19 adjustments to the Company's proposed Revenue Requirement
20 Staff identified through its investigation prior to
21 Settlement?
22 A.Yes.Besides the adjustment for ROE,Staff
23 identified 16 additional Revenue Requirement adjustments.
24 Three of the items were adjustments to rate base while
25 the remaining 13 adjustments were expense related.
CASE NO.INT-G-22-07 68 LOUIS,M.(Stip)9
05/17/23 STAFF
1 The rate base items included assets Staff
2 believed were not used and useful by the end of the test
3 year and infrastructure that should be offset by
4 contributions-in-aid-of-construction payments from
5 customers.
6 The largest expense items included:removal of
7 pay increases beyond the test year;removal of incentive
8 payments for non-executive employees Staff believed were
9 being paid to increase shareholder value rather than for
10 the benefit of customers;removal of several credit card
11 transactions and other miscellaneous expenses;an
12 adjustment for costs of the multi-year corporate Maximo
13 information technology project due to realization of
14 benefits not likely to occur until more of the project is
15 implemented;adjustments for parent company (MDU
16 Resources)expenses and affiliate transactions Staff
17 could not tie to benefits realized by Intermountain's
18 customers;and adjustments to rate case expenses
19 inadequately justified or improperly amortizing over a
20 reasonable period.
21 Q.Why does Staff believe the revenue requirement
22 is reasonable?
23 A.Staff has a good understanding of the
24 adjustments that the Commission typically supports based
25 on experience in past cases and a good understanding of
CASE NO.INT-G-22-07 69 LOUIS,M.(Stip)10
05/17/23 STAFF
1 regulatory cost-of-service principles.Staff assessed
2 the likelihood that each adjustment would be accepted by
3 the Commission and determined a target range it believed
4 would be acceptable for settlement.Only if the proposed
5 revenue requirement in settlement was within that range,
6 Staff would proceed with the settlement and filing with
7 the Commission.Otherwise,Staff would be inclined to
8 walk away from the negotiations and allow the case to go
9 to hearing.
10 Consumption Normalization
11 Q.Does Staff support the Company's normalization
12 of the test year consumption used for billing
13 determinants in rates and normalization of the test year
14 revenue in the revenue requirement included in the
15 Settlement?
16 A.Yes.Staff believes the Company's proposed
17 normalized consumption used in the Settlement is
18 reasonable based on the methods used to weather normalize
19 test year consumption.
20 Q.Was consumption normalization an issue in the
21 last general rate case?
22 A.Yes,it was.There were significant issues
23 Staff identified including issues with the data used in
24 the linear regression model to weather normalize the test
25 year consumption and several issues with the model
CASE NO.INT-G-22-07 70 LOUIS,M.(Stip)1105/17/23 STAFF
1 itself.
2 Q.Were these issues resolved?
3 A.Yes.Staff and the Company met several times
4 between the last rate case and when this case was filed.
5 Almost all of the issues Staff identified were resolved
6 and those improvements were included in the Company's
7 Application.There were a couple of issues in this case
8 that Staff identified in the proposed model to improve
9 its accuracy,but the Company's resulting weather
10 normalized consumption was well within an acceptable
11 level of error.
12 Q.Please characterize these issues in the model.
13 A.Staff identified modifications to the model
14 that would improve its accuracy.Without these
15 modifications,it could push the results to an
16 unacceptable level of error in a future rate case under
17 different circumstances.Staff proposed these items be
18 addressed in a workshop after this case has concluded in
19 preparation for the next general rate case.
20 Allocation of the Revenue Requirement
21 Q.Does Staff support the class allocation of the
22 revenue requirement that is used in the Settlement?
23 A.Yes.Staff believes the Company's proposed
24 movements towards cost of service for the various classes
25 and adopted in the Settlement is reasonable for three
CASE NO.INT-G-22-07 71 LOUIS,M.(Stip)12
05/17/23 STAFF
1 reasons.
2 First the COSS submitted with the Application
3 was based on a recent load study.Lack of a recent load
4 study was the most important reason why the Company's
5 COSS was not used in the previous general rate case.
6 Second,the COSS utilized accepted methods for
7 separating the costs each class of customers cause in the
8 Company's system so that the parties could determine how
9 far each class is from paying their equitable share of
10 the Company's costs based on present rates.
11 Finally,Staff believes that the method,as
12 described earlier in my testimony,struck a good balance
13 of making movements towards each class's cost of service
14 while maintaining the Commission's past values of
15 gradualism when changing rates.
16 Rate Design
17 Q.Does Staff support changes in the rate design
18 included in the Settlement?
19 A.Yes.Staff believes that the increases in the
20 monthly customer charge in customer's bills negotiated
21 and accepted by the parties to the Settlement and the
22 reductions in Large Volume Customer rate block thresholds
23 proposed in the Company's Application also included in
24 the Settlement are reasonable.
25 Q.What changes to the customer charge were
CASE NO.INT-G-22-07 72 LOUIS,M.(Stip)1305/17/23 STAFF
1 included in the Settlement?
2 A.The parties agreed to the increases in the
3 customer charge and establishment of new customer charges
4 included in Company's Application,with the exception of
5 the customer charge for firm Residential Customers.The
6 parties agreed to increase the charge to $8.00 per bill
7 rather than $9.00 as proposed by the Company.
8 Q.Why does Staff support the increase in the
9 customer charges in the Settlement?
10 A.Staff believes the increases in customer
11 charges to be reasonable for several reasons.Customer
12 charges should be based on fixed costs.Concerns
13 regarding reducing the incentive of energy efficiency by
14 decreasing the amount of cost recovered through the
15 volumetric rate are not as relevant in the Company's rate
16 structure as they are in other utility rate structures.
17 The Company's rate structure is bifurcated with all of
18 the short-term variable costs associated with the cost
19 and transportation of gas being recovered through the
20 Purchased Gas Adjustment ("PGA")filing,which are 100%
21 recovered through a volumetric rate.Most of the cost
22 included in the Company's base rates and subject to
23 examination in this case are fixed costs over the short
24 term and do not vary based on the amount of the gas
25 commodity sold.However,customers may not differentiate
CASE NO.INT-G-22-07 73 LOUIS,M.(Stip)1405/17/23 STAFF
1 the price signals of different rates within their utility
2 bills,so there could be some reduction in the incentive
3 to conserve.
4 On the other hand,increasing the customer
5 charge provides the Company with more stable recovery of
6 its fixed costs,which vary little throughout the year.
7 This is especially important for gas utilities which see
8 significant swings in their seasonal revenue streams from
9 winter space heating.Staff believes the modest
10 increases in the customer charge for all customer classes
11 strike a balance.
12 Q.Does Staff support the changes in the Large
13 Volume Customer rate block thresholds?
14 A.Yes.The usage patterns of existing Large
15 Volume Customers make the current rate block thresholds
16 irrelevant since none of the Large Volume Customers
17 approach the threshold amounts in the current rate blocks
18 with the peak amount of gas they consume.Staff believes
19 the new rate block thresholds are reasonable given the
20 class's current usage patterns.
21 Other Terms and Conditions
22 Q.Are there other terms and conditions not
23 already discussed that Staff supports?
24 A.Yes.Additional terms include:1.Company
25 action items to provide access to information on costs
CASE NO.INT-G-22-07 74 LOUIS,M.(Stip)15
05/17/23 STAFF
1 and the allocation of those costs from its parent Company
2 and affiliates prior to the next rate case;2.resolution
3 of issues related to in-person pay station transaction
4 fees;and 3.changes to non-utility LNG Sales credits.
5 Q.Does Staff support the action items related to
6 access to and allocation of corporate affiliate costs
7 included in the Settlement?
8 A.Yes.Through Staff's initial investigation,
9 Staff questioned the allocation of costs from MDU
10 resources and affiliates because of a lack of access to
11 the information.Staff believes these action items
12 should resolve these issues in the next general rate
13 case.
14 Q.Does Staff support the resolution of issues
15 related to in-person pay station transaction fees
16 accepted in the Settlement?
17 A.Yes.The Company proposed to embed in-person
18 payment transaction fees in base rates in this filing and
19 collect deferred fees from October 1,2022,through
20 February 1,2023,through the PGA filing.Staff believes
21 this to be reasonable.
22 Q.Does Staff support the Company's proposal to
23 update the amount of the credit for Liquid Natural Gas
24 ("LNG")off-system sales as reflected in the Settlement?
25 A.Yes.The Company proposed in its Application,
CASE NO.INT-G-22-07 75 LOUIS,M.(Stip)1605/17/23 STAFF
1 and the parties accepted,updating non-utility LNG sales
2 credits.Staff reviewed the workpapers included in the
3 Application and believes the update to the capital credit
4 of $0.03 and O&M credit of $0.04 for every gallon of LNG
5 sold will adequately recover those costs caused by
6 non-utility LNG customers,thus protecting the Company's
7 core customers.
8 Q.Does this conclude your testimony in this
9 proceeding?
10 A.Yes,it does.
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CASE NO.INT-G-22-07 76 LOUIS,M.(Stip)1705/17/23 STAFF
1 (The following proceedings were had in
2 open hearing.)
3 MS.SHARP:I don't have any further questions.
4 The witness is available for cross-examination or further
5 questioning.
6 COMMISSIONER ANDERSON:Are there any questions
7 from any intervenors?
8 MR.CARTER:Not from the Company.
9 COMMISSIONER ANDERSON:Hearing none,thank you,
10 Mr.Louis,very much for your testimony.
11 (The witness left the stand.)
12 COMMISSIONER ANDERSON:Okay,we're moving right
13 along here.Do we have exhibits?
14 Ms.Sharp,do you want me to just go ahead and
15 read them into the record or has that been done already?
16 MS.SHARP:I think the exhibits have been
17 spread on the record as attached to the testimony of the
18 witnesses providing that in support of the record,but we
19 could review what you have --
20 COMMISSIONER ANDERSON:Well --
21 MS.SHARP:--just to make sure.
22 COMMISSIONER ANDERSON:Without objection,
23 Exhibits 1 through 6 are admitted into the record and
24 without objection,Exhibits 201,202 are admitted into
25 the record from Chad Stokes and I believe that exhausts
CSB REPORTING 77 LOUIS208.890.5198 Staff
1 all of them that have to be done.
2 (AWEC Exhibit Nos.201 &202 were admitted into
3 evidence.)
4 COMMISSIONER ANDERSON:And that has exhausted
5 the witness list.Are there any further issues or items
6 that we need to discuss here today?
7 MS.SHARP:None for Staff.
8 MR.CARTER:None from the Company.
9 COMMISSIONER ANDERSON:Okay,very good.Any
10 posthearing briefs or closing statements from any of the
11 parties?
12 MR.CARTER:Not from the Company.
13 COMMISSIONER ANDERSON:Thank you.Have I
14 overlooked anybody here that has any questions at all,
15 because this is going so quickly,I don't know what to
16 do.
17 One thing I would like to say,if I've
18 overlooked the admission of any additional exhibits
19 previously identified in this matter,they are hereby now
20 admitted,and pursuant to Rule 267,any exhibits
21 presented during the hearing without objection are deemed
22 admitted at this time.
23 (All exhibits previously marked for
24 identification were admitted into evidence.)
25 COMMISSIONER ANDERSON:One side note,
CSB REPORTING 78 COLLOQUY
208.890.5198
1 intervenor funding requests Rule 164 allows 14 days to
2 apply for intervenor funding,so if you anticipate
3 needing the full 14 days,are there any parties that need
4 that full 14 days or less than 14 days,I guess?I guess
5 we're fine with 14 days.
6 I appreciate everyone's attendance today.
7 Pursuant to Rule 247,representatives and parties
8 appearing in this proceeding must conduct themselves
9 properly and you've done that today and I always
10 appreciate that and like to make acknowledgments to that.
11 The Commission will consider this record to be
12 fully developed at this time and we will deliberate
13 privately and render a decision as quickly as we possibly
14 can,and with that,then,we are adjourned.
15 (The hearing adjourned at 9:09 a.m.)
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ICSBREPORTING79COLLOQUY
208.890.5198
1 A UTHENT I C A T I ON
2
3
4 This is to certify that the foregoing
5 proceedings held in the matter of Intermountain Gas
6 Company's application for authority to increase its rates
7 and charges for natural gas service in the State of
8 Idaho,commencing at 9:00 a.m.,on Thursday,June 8,
9 2023,at the Commission Hearing Room,11331 West Chinden
10 Blvd.,Building 8,Suite 201-A,Boise,Idaho,is a true
11 and correct transcript of said proceedings and the
12 original thereof for the file of the Commission.
13 Accuracy of all prefiled testimony as
14 originally submitted to the Reporter and incorporated
15 herein at the direction of the Commission is the sole
16 responsibility of the submitting parties.
17
18
CONSTANCE S.BUCY
21 Certified Shorthand Reporter 187
22
23
CONSTANCE S BUCY
2 4 NOTARY PUBUC-STATE OF IDAHO
COMMISSION NUMBER 12995
2 5 MY COMMISSION EXPIRES 9-5-2024
CSB REPORTING 80 AUTHENTICATION208.890.5198