140903_INTPGA.pdf

Case No. INT-G-14-01, Order No. 33099
Contact: Gene Fadness [phone], 890-2712
www.puc.idaho.gov

Intermountain Gas seeks 2.64% increase
in variable portion of natural gas rates

BOISE (Sept. 3, 2014) – The Idaho Public Utilities Commission is accepting comments through
September 17 on an Intermountain Gas Company proposal to increase rates about 2.64% as
part of the company’s annual Purchase Gas Cost Adjustment (PGA).

Each year on Oct. 1, rates for Intermountain Gas’s 331,000 customers in 74 southern Idaho
communities go up or down depending on annual changes to the company’s costs to buy
natural gas from its suppliers, including transportation and storage costs.

This is the second straight year the PGA has been an increase, following five years of decreases.
The 2013 increase of 4.15% was preceded by decreases of 7.1% in 2012; 5.3% in 2011; 1.6% in
2010 and 22.2% in 2009. If this year’s proposed increase is approved, the PGA is still 50% lower
than it was in 2005 when natural gas prices were at unprecedented highs.

Despite increased production from shale reserves in North America, Intermountain Gas claims
there was an increase in demand for natural gas due to a rebounding economy and increased
use of natural gas for electric generation. Last year’s cold weather in the eastern United States
put upward pressure on prices and put a significant dent in natural gas storage levels. Also, the
company faced increased transportation costs from Williams Northwest Pipeline, the company
that owns Intermountain’s major transportation pipeline.

If the company’s application is approved, residential customers who use natural gas for both
space and water heating will see an average increase of $1.89 per month while those who use
natural gas only for space heating would see an increase of $1.40 per month. While the
surcharge would collect $6.7 million, it cannot be used to increase earnings for Intermountain
Gas. All the money collected in the surcharge is kept in a deferred account audited by the
commission and can go only toward paying down expense related to providing natural gas
supply to customers.

To offset the size of this year’s PGA, the company proposes passing through to customers a
$3.9 million increase in revenue as a result of providing its pipeline capacity to other wholesale
gas marketers or natural gas companies.

The variable portion of gas rates covered by the PGA would increase from about 37.3 cents per
therm to about 39.5 cents per therm. The PGA represents a significant portion of the total per
therm price paid by customers, about 72.6 cents in the winter and 76 cents in the summer for
customers who use natural gas for space and water heating. The amount above the PGA
portion covers the fixed costs of providing service to customers that don’t change from year to
year as does the PGA.

The commission is processing this case through written comment. However, if customers
request that commission staff conduct a workshop or if numerous public comments are
received, one or more workshops may be scheduled.

Comments are accepted via e-mail by accessing the commission’s Website at
www.puc.idaho.gov and clicking on "Case Comment Form,” under the “Gas” heading. Fill in the
case number (INT-G-14-01) and enter your comments. Comments can also be mailed to P.O.
Box 83720, Boise, ID 83720-0074 or faxed to [phone].

A full text of the company’s application and supporting exhibits, along with other documents
related to this case, is available on the commission’s Web site. Click on “Open Cases” under the
“Gas” heading and scroll down to the above case number.

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