HomeMy WebLinkAboutgas.pdfIdaho Public Utilities Commission 2013
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Idaho Natural Gas Utilities
Improving economy and increased demand are
leading to higher natural gas prices
The commodity cost of natural gas has
increased over the last year but prices
continue to be at some of the lowest levels
in a decade. The improving economy, a
forecast of more‐normal weather
conditions and storage levels lower than
last year’s have all contributed to higher
prices.
Other factors that may be contributing to
higher prices include increased gas‐fired
electric generation due to aggressive
regulation of carbon emissions from coal
plants; increased demand from natural gas
fleet vehicles; flattening production
compared to 2012; increased demand for
exports of LNG; and increased demand from
gas‐to‐liquid projects.
The Northwest Gas Association (NWGA)
2013 Gas Outlook lists the Boardman,
Oregon and Centralia, Washington coal
plants as examples of two regional coal
plants directly impacted by environmental
regulations. Both plants will close and may
be replaced with natural gas‐fired
generation. The NWGA also believes
natural gas‐fired generation will be
necessary to meet demand and balance
load given the large investments in
intermittent wind resources in Oregon and
Washington.
Heavy duty trucks and fleet vehicles also
add to the demand for natural gas. For
instance, a number of potential customers
approached Intermountain Gas Company
expressing interest in LNG service.
Consequently, in January, Intermountain
Gas Company requested that the
Commission grant authority to sell excess
liquid natural gas (LNG) from its Nampa
facility. In April, the Commission approved
the service allowing the Company to
maximize the facility while maintaining
peak‐use capability for sale service
customers. Now the facility’s off‐loading
capabilities will continue benefiting the
utility’s standard service customers while
also being used to sell LNG to non‐utility
customers at market‐based rates.
Nationally, the Energy Information
Administration (EIA) expects overall natural
gas consumption in 2014 to decrease
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slightly from 70.13 bcf per day in 2013 to
69.60 bcf per day in 2014.1
Industrial consumption is expected to
increase in 2014, but the demand for
natural gas by the other sectors is expected
to decrease. Conversely, the Northwest
Gas Association expects overall demand in
eastern Washington and northern Idaho to
increase during 2013‐2014.2
NWGA expects residential and commercial
consumption to decrease, but industrial and
electric power consumption to increase.
Overall demand in southern Idaho is also
expected to increase during 2013‐2014.
NWGA expects electric power consumption
to stay the same during 2013‐2014, but
increase in the other sectors. The
Northwest Power and Conservation Council
(NPCC) also anticipates slightly higher
demand in 2014 compared to last year, and
consequently, expects slightly higher prices.
North American natural gas resources are
now estimated at 100 years or more of
supply at current consumption rates.
Production continues to increase in spite of
modest economic growth and low natural
gas prices, in part, because natural gas is
oftentimes a byproduct of the more
profitable production of oil and natural gas
liquids (e.g. propane, butane, ethane,
condensate).
Supply in the Northwest is primarily split
between two basins, the Western Canadian
Sedimentary Basin (WCSB) and the U.S.
1 See EIA, Short-Term Energy Outlook, November
2013, US Natural Gas Summary.
2 See Northwest Power Conservation Council,
Seventh Power Plan Fuel Price Forecast, July 2013.
Rocky Mountain Basin. The WCSB includes
the Canadian provinces of B.C. and Alberta
and provides about 60 percent of the
natural gas consumed in the Northwest.
Gas is transported from Canada to
Northwest Pipeline by utilizing capacity on
Gas Transmission Northwest (GTN),
TransCanada’s Foothills Pipeline system
(Foothills), and its Alberta system known as
Nova Gas Transmission (NOVA).
Northwest Pipeline and its shippers, which
included Idaho’s local distribution
companies, settled Northwest Pipeline’s
recent rate case filing resulting in about a 9
percent price increase effective Jan. 1,
2013.
‐‐by Matt Elam
IPUC staff analyst
Idaho Public Utilities Commission 2013
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Individual Utility Idaho Statistics – 9/30/2011 to 9/30/2012
Intermountain Gas Company
Residential Commercial Industrial Transportation Total
Customers 283,228 30,114 11 110 313,463
% of Total 90.35% 9.61% 0.00% 0.04% 100.00%
2011 Customers 280,072 29,836 10 107 310,025
Therms (millions) 202.29 100.97 3.46 277.13 583.85
% of Total 34.65% 17.29% 0.59% 47.47% 100.00%
2011 Therms (millions) 216.00 109.05 2.87 233.70 561.62
Revenue (millions) $162.14 $73.33 $1.80 $8.49 $245.76
% of Total 65.97% 29.84% 0.73% 3.45% 100.00%
2011 Revenue (millions) $184.30 $87.52 $1.64 $8.26 $281.72
Avista Utilities
Residential Commercial Industrial Transportation Total
Customers 66,731 8,489 94 8 75,322
% of Total 88.59% 11.27% 0.12% 0.01% 100.00%
2011 Customers 66,200 8,421 96 8 74,725
Therms (millions) 46.17 26.63 2.29 43.47 118.56
% of Total 38.94% 22.46% 1.93% 36.66% 100.00%
2011 Therms (millions) 48.16 27.92 2.04 45.56 123.68
Revenue (millions) $45.42 $21.75 $1.54 $0.41 $69.12
% of Total 65.71% 31.47% 2.23% 0.59% 100.00%
2011 Revenue (millions) $48.06 $23.57 $1.51 $0.44 $73.58
Questar Gas
Residential Commercial Industrial Transportation Total
Customers 1,773 227 0 0 2,000
% of Total 88.65% 11.35% 0.00% 0.00% 100.00%
2011 Customers 1,767 227 0 0 1,994
Therms (millions) 1.26 0.78 0.00 0.00 2.04
% of Total 61.79% 38.21% 0.00% 0.00% 100.00%
2011 Therms (millions) 1.35 0.81 0.00 0.00 2.17
Revenue (millions) $1.02 $0.53 $0.00 $0.00 $1.54
% of Total 65.94% 34.06% 0.00% 0.00% 100.00%
2011 Revenue (millions) $1.13 $0.58 $0.00 $0.00 $1.71
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Intermountain Gas increase is first in five years
Case No. INT‐G‐13‐05, Order No. 32897
September 25, 2013
For the first time in five years, customers of
Intermountain Gas Company will be
receiving an increase in the variable portion
of rates they pay for natural gas.
The annual Purchased Gas Cost Adjustment
(PGA) mechanism adjusts rates up or down
to account for the always changing costs of
natural gas supply, transportation and
storage.
The Idaho Public Utilities Commission
approved the company’s application to
increase rates an average 4.15 percent
effective Oct. 1.
For a customer who uses natural gas for
space and water heating the increase is
about $1.85 per month and for customers
who use natural gas for space heating only
the average monthly increase is 68 cents.
For commercial customers, the increase is
about $14.18 per month.
The money Intermountain Gas collects for
the surcharge can go only toward meeting
gas supply and related expense. The
surcharge does not increase company
earnings.
It’s the first time since 2008 the PGA has
been an increase. In 2012, the decrease was
7.1 percent; in 2011, 5.3 percent; in 2010,
1.6 percent and in 2009, 22.2 percent. The
PGA surcharge or credit lasts one year and
is updated typically Oct. 1. There can by
other adjustments during the year if costs
change significantly.
The increase this year is primarily due to an
increase in transportation costs billed the
company by the Northwest Pipeline and an
increase in the weighted average cost of
gas. Recent improvements in the economy
and increased use of natural gas‐fired
electric generation have increased demand
and driven up costs for natural gas, despite
increased production from shale gas
reserves. Even with the increase, the PGA
portion of gas rates are still 49 percent
lower than in 2005.
About half of a customer’s monthly bill is
the variable, PGA portion of rates that
change due to wholesale market,
transportation and storage costs.
With the increase effective Oct. 1,
customers who use natural gas for both
space and water heating will pay 73 cents
per therm in April through November and
69.8 cents from December through March.
Of that amount, 37.3 cents is the variable
portion, or weighted average cost of gas.
Intermountain Gas serves about 320,000
customers in 74 communities throughout
southern Idaho.
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Avista’s PGA is about 6.8 percent increase
Case No. AVU‐G‐13‐01, Order No. 32898
Avista Utilities’ residential and small
commercial customers will be paying about
6.8 percent more for natural gas as a result
of adjustments approved by the Idaho
Public Utilities Commission.
The increases in rates, which are effective
Oct. 1, do not increase Avista earnings.
The gas increase is Avista’s annual
Purchased Gas Cost Adjustment (PGA),
which is adjusted up or down at least
annually to reflect that portion of gas rates
that change from year to year, due to
changing market prices and fuel and
transportation costs.
In recent years, lower demand for natural
gas, higher production rates and record
high storage levels, drove prices to the
lowest they’ve been in a decade.
However, for most of 2013, prices began an
upward trend, caused primarily by the late,
colder‐than‐normal winter. Consequently,
Avista must increase that portion of rates
that accounts for variable changes from
33.3 cents per therm to 37.4 cents.
The variable portion of rates accounts for
more than half of the total rate of 63.37
cents per therm paid by Avista natural gas
customers.
To protect customers from wholesale
market swings in gas prices, Avista engages
in “hedging,” or buying gas while prices are
lower and storing it for use during higher‐
priced periods. Avista said it will hedge
about 38 percent of its estimated annual
load requirements for the next PGA year.
Intermountain Gas customers to benefit from
surplus LNG sales
Case No. INT‐G‐13‐02, Order No. 32793
April 22, 2013
Intermountain Gas Company’s liquefied
natural gas facility has more than enough
LNG to meet the needs of its customers so
state regulators have approved a plan
submitted by Intermountain to allow it to
sell the surplus to non‐utility customers and
share the proceeds with customers.
In its application to the Idaho Public Utilities
Commission, Intermountain Gas said it
would share half the revenue it earns with
customers, applying it against the annual
Purchased Gas Cost Adjustment (PGA). The
commission modified that request to allow
a 50‐50 share for sales up to $1.5 million
per year but a 70 percent customer share of
revenues for sales beyond that amount.
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Intermountain Gas, a natural gas
distribution company serving about 315,000
southern Idaho customers, expects to have
excess capacity at its Nampa LNG facility for
the next few years. It proposes to sell that
excess until system growth requires it to
use all its LNG to meet peak‐day needs for
its customers.
Intermountain will use all stored LNG to
first satisfy utility customer demand. It will
assess non‐utility customers 2.5 cents for
each gallon sold to meet any operations
and maintenance costs resulting from non‐
utility sales. The company’s original
application provided for that 2.5‐cent
charge going to the company, but the
commission order directs that amount to be
directed to Intermountain Gas customers
instead. Non‐utility customers will also pay
another 2.5 cents per gallon to meet any
capital expenditures or increased
maintenance costs to the Nampa plant.
Non‐utility customers will be required to
sign a contract protecting utility customers
from financial risk as well as risks to the
company after the LNG is transferred to a
non‐utility customer. Intermountain Gas
will accept all financial risk and will insulate
utility customers from any costs associated
with non‐utility sales by separately
accounting for and tracking all related costs
independent of utility costs. Those results
will be filed quarterly at the commission.
PUC accepts gas utility’s long‐range plan
Case No. INT‐G‐13‐03, Order No. 32855
July 19, 2013
The Idaho Public Utilities Commission
praised southern Idaho’s natural gas utility
for finding nontraditional sources of gas
supply to keep price volatility for its
customers at a minimum.
The commission accepted Intermountain
Gas Company’s Integrated Resource Plan
(IRP), which must be filed every two years.
The plan outlines future structural
improvements that need to be made to get
gas to customers and identifies the sources
from which the company anticipates getting
its natural gas supply.
Traditional sources of natural gas for
Intermountain Gas are from large gas‐
producing regions in Alberta and
northeastern British Columbia and from the
Rockies production basins in Wyoming,
Colorado and Utah. Intermountain’s
traditional supply forecasts predict growing
supplies because of shale gas production.
However, the utility has also been acquiring
natural gas from nontraditional sources
such as fuel oil, coal, wood chips and
propane to reduce natural gas use by the its
industrial customers. The company has also
been using portable liquefied natural gas
equipment in the Rexburg area to meet
growing demand.
Other nontraditional sources of supply
include distribution system capacity
upgrades to improve the ability to flow gas
during periods of peak demand and market
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“hedges,” the practice of buying natural gas
on the market when prices are low and
then storing it for later use when prices are
higher.
“These activities help guard against rate
increases that might otherwise occur should
natural gas prices rise to unusually high
levels,” the commission said. “We
appreciate that the company continues to
look for opportunities to diversify and
protect its customers from market
volatility.”
The commission said Intermountain Gas
needs to make greater efforts to get more
input from the public and key stakeholders
as it prepares its Integrated Resource Plan.
Intermountain conducted two public
meetings in Idaho Falls and Boise. While
mayors, council members and city leaders
were invited to the Idaho Falls meetings,
the company did not appear to notify city
officials of its Boise meeting. Commission
staff said involving local officials in its
western Idaho region is important
particularly because the company plans to
add a nearly 8‐mile Orchard‐Farmway
pipeline loop to its Canyon County lateral.
Except for some regions, Intermountain Gas
is experiencing a reduced rate of growth
due to the economic downturn. Because of
that, the utility expects to meet its peak‐day
loads over the next five years without
significant capital additions.
Two years ago, the company’s IRP showed
capacity deficits on its Idaho Falls and Sun
Valley laterals. Since then, Intermountain
Gas has taken steps to address those
deficits resulting in no projected capacity
deficits in its territory even though it
anticipates annual load growth of about 1
percent.
To meet projected deficits along the Idaho
Falls lateral, which serves cities from
Pocatello to St. Anthony, the company
completed a 16‐inch pipeline loop around
Idaho Falls. That project, completed last
winter, increased the distribution capacity
from 810,000 therms to 990,000 therms.
Seventeen percent of the company’s
customers are served by the approximate
104‐mile Idaho Falls Lateral.
The 2010 plan also showed projected
deficits on the 70‐mile Sun Valley Lateral. In
response, the company installed a
compressor station to boost pressure. The
compressor increased the lateral’s capacity
from 175,000 therms to 204,000 therms.
The Sun Valley Lateral serves 4 percent of
Intermountain Gas’ customers.
The two other major laterals that extend
from the main Williams Northwest pipeline
that follows the Snake River throughout
southern Idaho are the Canyon County and
State Street Laterals. The 16‐mile State
Street lateral serves customers from
Caldwell along State Street into northwest
Boise. Intermountain reports that demand
on the State Street lateral is increasing and
will need monitoring but is not expected to
meet capacity in the next five years.
Fourteen percent of Intermountain Gas
customers are served by the State Street
Lateral.