20230714INT to Staff 11 - RNG Access Facilitation Plan Current.pdf

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INTERMOUNTAIN GAS COMPANY
RNG FACILITATION PLAN IMPLEMENTATION
Intermountain received approval from the Idaho Public Utilities Commission (Order No. 34693) to help
facilitate the growth and development of the emerging RNG industry across the Company’s service
territory. Intermountain will do this by providing natural gas as necessary to operate the RNG
production facilities and/or by providing access to its distribution system to allow the producer to move
gas to their end use customer.
Startup
1.Initial inquiries about Renewable Natural Gas (RNG) facilities are directed to the Industrial
Services Manager (ISM). The ISM provides a Biogas Information Sheet to the potential RNG
producer for the potential customer to complete. The Biogas Information Sheet requires specific
project details to be provided to Intermountain, so an Engineering Feasibility Study (EFS) can be
completed based on the details of the project.
2.If, based on the initial information, the potential producer decides to move forward, the ISM will
send out a universal invoice for an EFS to ensure payment is received up front before any work
is completed on the project. Currently the feasibility study fee is $4,500.
3.Engineering Services will assign an engineer to perform an EFS. For additional details regarding
what is included in the feasibility study, please refer to OPS 111 – Design of Renewable Natural
Gas (RNG) Facilities, Section 2. The ISM provides the completed Biogas Information Sheet to that
engineer. The EFS will determine the scope of work required to facilitate the acceptance and
transportation of RNG onto Intermountain Gas Company’s distribution system. For facility
design, please refer to OPS 111 – Design of Renewable Natural Gas (RNG) Facilities, Section 1. It
is critical that the traditional gas service facilities are separate from the RNG Access service as
each service is billed differently.
4.Engineering Services will provide a high-level cost estimate of the scope of work, as determined
by the EFS.
a.Occasionally, some producers decide that if they are going to spend money, they ought
to go ahead and sign a Biomethane Facilities Interconnect Agreement (FIA). In that
event, the deliverables of the EFS would be incorporated into the FIA.
5.The prospective RNG producer reviews the EFS and high-level estimate and decides whether
they will pursue development of the RNG project. Regardless of whether or not the project is
pursued by the prospective RNG producer, the EFS expenses will be charged to the RNG
Business Unit to ensure no expenses are borne by utility customers. For coding of
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expenses/revenues related to the feasibility study, please see below, OPS 111, Section 3.1, and
the RNG Matrix.
Expense: WO #282604, Account Coding 48524.5###.4171
Revenue: Account Coding 48524.4170.2600
6.If the RNG producer decides to move forward with the RNG project, Engineering Services will
refine high level cost estimate and provide the refined cost estimate to the ISM. The ISM will
draft a FIA and negotiate the terms of the agreement with the RNG producer. This will outline
the monthly O&M and Access Fee. The O&M fee will be updated annually via a letter to the
Idaho Public Utilities Commission with updated rates to be effective October 1st every year.
7.The RNG customer must also execute a Sales Agreement if gas supply is required to operate
their facility. The ISM will negotiate this contract with the customer. The Sales Agreement will
be executed and the service line will be installed under Intermountain’s current line extension
policies.
8.All Contribution in Aid of Construction (CIAC) payments need to be grossed-up for income taxes.
The gross-up portion should be coded to 48.4190.1400 with the applicable capital workorder.
This coding will be needed for the universal invoice. Once a CIAC is deposited into IGC’s account,
per the terms of the FIA, and the terms of the FIA are satisfied, the construction of the facilities
identified in the scope of work and the FIA is started. The entire project will be contained within
rate base but offset by a corresponding CIAC. Therefore, no plant related to transportation of
RNG will be included in rate base for recovery from utility customers.
9.During construction and commissioning of the RNG producers’ facility, all costs will be
capitalized to the capital workorder as part of the construction costs by field personnel. The
capital workorder will remain active long enough to ensure that all Commissioning and Startup
costs are charged to the capital workorder, see OPS 111, Section 3.3. The Startup phase ends
after IGC is receiving a continuous flow of pipeline quality RNG.
Ongoing
1.After construction of the RNG facility is complete. Engineering will follow up with a true-up
billing or refund after the final construction, commissioning, and startup costs are in. As
discussed above, the CIAC will be grossed-up to cover the income tax liability generated by the
CIAC payment to ensure utility customers don’t bear the additional income tax burden created
by RNG Producers’ facility construction. The Overhead Loading rate that is effective January 1st
of the current year will be used for RNG projects.
2.Once facilities are operating and placed into service and out of the startup phase, the RNG
customer will be billed a monthly O&M Fee (see OPS 111, Section 3.4), which will be updated
annually, and an Access Fee of $8,000 (see OPS 111, Section 3.5). Please refer to the RNG Matrix
for account coding for the O&M and Access Fees. The monthly billing will be handled by
Revenue Accounting through preparation of a Universal Invoice.
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Effective October 1, 2022, the monthly O&M Fee is $2,300. This is not
applicable to the three RNG producers that have pre-existing agreements.
Extraordinary repairs and adjustments will be billed directly to the RNG producer that caused
them. Extraordinary repairs and adjustments are defined as repairs and adjustments that fall
outside the routine inspection as outlined in OPS 111, Section 3.6.1. Extraordinary expenses
would be extremely rare.
3.The monthly O&M actuals and fee collection will be tracked under the RNG business unit
(48524) which will roll up to the EVP, Business Development and Gas Supply. Expenses may
include meter reading, AC survey, leak survey, odorant, SCADA, portion of regulatory fee
assessment, overhead loading rate, material replacement costs, contractor costs, general
administrative costs, other utility costs – electrical, phone, etc., gas chromatograph (including
calibration gas and helium), etc. Field and administrative personnel are responsible for charging
these expenses to the RNG business unit to ensure no expenses are borne by utility customers.
The accounting department will send RNG revenue and expense numbers to the districts for
their review and approval to make sure things are coded correctly and that nothing is missing.
Regarding the three legacy producers, once the district has reviewed and approved the RNG
expenses, then Revenue Accounting will send an invoice to the legacy producers on a quarterly
basis to recover the costs. For details on how to code time and expenses, please see below.
Please reach out to the Accounting department for additional questions.
Business Unit Object Account Sub Account
Labor: 48524 5110.5199 4171
Odorant: 48524 5300 4171
SCADA: 48524 5613 4171
Contractor Costs: 48524 5211 4171
For additional details on the monthly O&M Fee, please see OPS 111, Section 3.4.
4.As these projects progress over time and need equipment/facilities replaced, each individual
RNG producer will be directly responsible for the expense of that replacement. The additional
expense will be offset by a CIAC (grossed-up for income taxes) that is billed to the RNG Producer
needing new equipment.
5.Repairs will be expensed below the line to the RNG business unit (48524). Repairs are a regular
O&M expense and will be taken into consideration during the annual O&M true up process.
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Regulatory Reporting
1.On an annual basis, Regulatory will file an annual letter with the Idaho Public Utilities
Commission to adjust and true-up the O&M expenses to actuals. The update will true-up the
variance from actual to what was billed, as well as establish a new average O&M fee to cover
the cost of providing service to RNG Producers. The new fee will be calculated each September
based on actual expenses for the September 1st through August 31st time period, effective
October 1st each year.
a.Updated Monthly Maintenance Fee = (Actual RNG Related O&M Expenses/Number
of Producers Creating Expense)/ 12
b.Adjustment Balance = Maintenance Fee – Actual RNG Related Expenses
c.New Monthly Maintenance Fee = Updated Monthly Maintenance Fee +
[(Adjustment Balance/Number of Producers Responsible for Variance)/12]
2.For purposes of computing the gross revenues for the annual regulatory fee assessment for
the Idaho Public Utilities Commission, all revenues generated by the RNG Business Unit
(48524) will be added to the annual filing completed by Accounting. The portion of the fee
generated from the RNG revenue will not impact utility customers and will be charged back to
RNG producers.
Discontinued Service
If an RNG Producer decides to discontinue service the facilities will be evaluated for
abandonment on a case-by-case basis. Regardless of whether or not the facilities on
Intermountain’s side are abandoned, the RNG producer will retain ownership of all pipe and
facilities on the producer’s property. The facilities on their property will be handled by the RNG
producer and therefore at their cost. Intermountain will retain ownership of all pipe in the
public right of way and cut and cap the pipe below the ground at a location of the Company’s
choice. All costs incurred should be below-the-line to the RNG business unit.
1.If it is determined that there is potential for another producer, Intermountain will leave the
facilities in place.
2.If it is determined that the site is to be re-developed, Intermountain will abandon the
facilities. For Intermountain’s facilities, the pipe will be made safe and the SCADA
equipment will be scrubbed. Fixed Asset Accounting will need a Property Retirement Report
for those facilities even though they have a zero cost on the books. This is because of the
book vs tax difference on how property is depreciated. There is no harm done to
Intermountain or its utility customers as the facilities are fully paid for by the RNG
Producer’s CIAC payment(s).