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Idaho Natural Gas Utilities
Idaho’s gas companies are only allowed to earn a profit for delivering natural gas to consumers and not on
the commodity of natural gas itself. Therefore, the customer is only paying what the gas company paid
for the commodity. Idaho regulators normally pass on increases or decreases to customers in the form of
a Purchased Gas Adjustment (PGA).
Idaho is part of the larger, integrated North American natural gas market. With new infrastructure, other
regions now have improved access to the production areas (Rockies, Western Canada) that Idaho depends
on. Consequently, the Northwest will face increased competition for existing natural gas supplies.
In a recent survey (July 2007) conducted by the Northwest Gas Association, 62 percent of respondents
believe that supplies of natural gas are adequate to support the region over the next decade, but almost
seven out of ten believe natural gas prices will increase over the next five years.
The role of natural gas in addressing climate change was addressed in an article by the Northwest Gas
Association: “The region (Northwest) must retain and secure additional access to abundant and diverse
sources of supply as climate change policies increase regional demand for natural gas. It must also ensure
that the associated transmission, storage and distribution infrastructure can grow as necessary.”
Over the last 15 years, more than 90 percent of new electrical generating capacity built in the United
States uses natural gas. And, according to the Energy Information Administration, the increased use of
natural gas has helped reduce the level of greenhouse gas emissions.
U.S. natural gas resources are estimated at 1,258 trillion cubic feet, which, at current usage levels, should
last about 60 years.
Crude oil prices and electricity affect both the demand for and price of natural gas. In the Northwest, a
good portion of electricity is produced using natural gas. Even though natural gas prices have increased
over the past few years, demand continues to increase as well due to the increased price of oil. Natural
gas, as a fuel, should remain competitive over the long run with both electricity generation and oil.
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Individual Utility Statistics
Intermountain Gas Company
Residential Commercial Industrial Transportation Total
Customers 264,204 28,099 9 103 292,415
% of Total 90.35 9.6 0.003 0.035 100
Therms (millions)
192,322 96,973 2,665 213,988 505,948
% of Total 38 19.16 0.527 42.3 100
Revenue (millions) $216,184 $101,710 $2,268 $9,409 $329,571
% of Total 65.6 30.86 0.69 2.85 100
Avista Utilities
Residential Commercial Industrial Transportation Total
Customers 61,812 7,803 99 8 69,722
% of Total 88.65 11.19 0.142 0.011 100
Therms (millions) 43.99 24.88 2.16 44.65 115.68
% of Total 38 21.5 1.87 38.6 100
Revenue (millions) $54.585 $28.461 $2.271 $0.843 $86.16
% of Total 63.35 33.03 2.636 0.978 100
Questar Gas
Residential Commercial Industrial Transportation Total
Customers 1,618 218 1 0 1,837
% of Total 88.1 11.867 0.054 0 100
Therms (millions) 1.172 0.615 0.054 0 1.841
% of Total 63.66 33.406 2.933 0 100.00
Revenue (millions) $1.062 $0.518 $0.039 $0 $1.619
% of Total 62.6 32 2.4 0 100
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Intermountain Gas rates decline 8 percent
Case No. INT-G-07-03, Order No. 30443
September 28, 2007
Rates for customers of Intermountain Gas Company were decreased by 8 percent effective Oct. 1.
Downward pressure on natural gas prices and the company’s effective hedging practices led to a second
consecutive reduction in the company’s annual Purchased Gas Cost Adjustment (PGA).
Residential customers using natural gas for both space and water heating should notice about a $6
reduction in monthly bills and customers using natural gas for just space heating will have an average $4
monthly reduction. Commercial customers will experience an average $29 per month reduction. Industrial
customers who use Intermountain’s delivery service, but do not buy natural gas from the company, will
see about a 9.4 percent increase in delivery costs.
Each year, Intermountain Gas rates are adjusted through a Purchased Gas Cost Adjustment (PGA)
mechanism. The adjustment does not change the base rates paid by customers, but does impact the size of
a surcharge that is adjusted annually to adapt to the always changing costs of buying gas from suppliers
and related transportation and storage expenses. The PGA adjustment takes place yearly, while a rate
case, to adjust base rates, occurs less frequently.
The commission praised the company for taking advantage of its storage options and making favorable
advance gas purchases to protect customers against the volatility of wholesale gas markets. Commission
staff said the company’s ability to lock in prices with forward market purchases saved customers nearly
$1.5 million in the coming year. Further, “Intermountain’s substantial storage capacity has allowed it to
take advantage of lower prices when they have occurred, and makes it less dependent on spot market
purchases during the volatile winter months,” commission staff said.
Customers also benefited from a settlement of a rate case between the Federal Energy Regulatory
Commission and the Northwest Pipeline Corporation, which transports much of Intermountain’s gas
supply to Idaho. The benefit received by customers in that settlement is about $970,000. Another case
between FERC and the Gas Northwest Transmission Corporation is pending before FERC. If FERC
approves an increase that is less than that proposed by the transmission corporation, the PUC reserves the
right to reopen this case and re-evaluate the PGA for possible further reductions.
But on another transmission front, costs increased for Intermountain Gas. Capacity costs have increased
on several Canadian pipelines and there is a tightening of the exchange rates between U.S. and Canadian
currencies. In this PGA, Intermountain also included costs to secure additional liquid storage from
Northwest Pipeline’s Plymouth, Wash. liquid natural gas facility.
Whether the yearly PGA is an increase or a decrease, it does not impact company earnings. Similar to the
electric utilities’ annual Power Cost Adjustment (PCA) process, an increase or decrease in the yearly PGA
goes directly to wholesale suppliers in the event of an increase or to customers in the event of a decrease.
Money collected through the PGA cannot go to salaries, equipment or other needs, but must go directly to
paying for gas supply, transportation and storage. When the cost of purchasing gas is higher than the
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amount customers pay in the current surcharge, the surcharge is increased. When gas supply purchases are
less than that covered in the surcharge, the reduction goes directly to customers.
The company has said it will come before the commission again before the winter heating season if the
company’s forecasted forward prices are significantly less than projected.
Intermountain Gas, which serves about 280,000 customers in its southern Idaho territory, has not had a
change to its base rate since 1985.
Commission adopts Avista decrease in natural gas rates
Case No. AVU-G-07-02, Order No. 30458
November 6, 2007
The Idaho Public Utilities Commission has approved Avista Utilities’ request to decrease customers’
annual Purchased Gas Cost Adjustment (PGA) by an average 4.6 percent effective Nov. 1. Avista serves
about 70,000 households in its northern Idaho territory.
An average resident using about 65 therms per month will get about a $3.65 monthly decrease due to
more stability in wholesale gas prices, increased storage capacity and no supply interruptions caused by
hurricanes.
The commission said Avista’s risk management and hedging policies “have served well to help curb the
negative effects of the dramatic volatility in the natural gas market … and significantly reduced the risk of
paying higher prices. We are confident that the company will continue to take advantage of lower prices
when the opportunity arises.”
Avista’s fixed costs of supplying gas and some variable costs of gas supply are covered in base rates. But
variable costs, such as wholesale market prices for gas, transportation and storage are adjusted yearly
through the PGA. The PGA does not change the base rates paid by customers nor does it impact company
earnings, but it does impact the size of a yearly surcharge or credit to adapt to the always changing costs
of buying gas from suppliers and related transportation and storage expenses. Because those costs have
stabilized, customers get a credit for the second straight year. During those years when there are PGA
surcharges, the money collected from the surcharge does not enhance company earnings but goes directly
to pay wholesale suppliers of natural gas or to providers of storage and pipeline capacity.
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