20030922Reply Comments.pdf

Kelly O. Norwood
Vice-President, Rates and Regulation
1411 E. Mission Avenue
O. Box 3727
Spokane, Washington 99220
Phone: [phone]; Fax: [phone]
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
REPLY COMMENTS
OF THE COMPANY
IN THE MATTER OF THE APPLICATION
OF A VISTA UTILITIES FOR AUTHORITY
TO INCREASE ITS RATES FOR NATURAL
GAS SERVICE.
CASE NO. A VU-03-
In the Commission Staff's comments, they recommend that the Commission
approve no change in the Company s natural gas rates, as compared to the overall
increase of 2.4% proposed by the Company. While the Company is sensitive to concerns
related to additional increases in prices, the Company believes that Commission approval
of the proposed increase of 2.4% is advisable given the most recent projections of natural
gas prices. The weighted average cost of gas (W ACOG) included in the Company
filing is approximately 45 cents per therm, which was the projected average cost of gas
for October 2003 through September 2004 at the time of the filing. As pointed out in
Staff comments on page 4, the Company s projected gas cost for this period has risen to
approximately 48 cents per thermo The Staff's proposal of no rate increase results in a
W ACOG of approximately 43 cents per therm, which is significantly less than recent
projections. These projected gas costs include all hedges executed to date. If the
Company s projected W ACOG had fallen since the date of the PGA filing, the Company
would probably agree with the Staff that no increase in rates is warranted. However, with
the more recent higher projected W ACOG and no signs that natural gas prices will
REPLY COMMENTS OF THE COMPANY SEPTEMBER 19, 2003
decrease substantially over the comIng winter the Company recommends
implementation of the proposed increase.
Implementing the relatively modest increase now may help mitigate a potentially
larger increase in the fall of 2004. If the Company s actual W ACOG over the next year
turns out to be $4.50 (as filed) or higher, not implementing the proposed 2.4% increase
could result in an additional 5% increase in 2004, assuming the W ACOG still needs to be
$4.50 or higher in the 2004 PGA filing. This is because the W ACOG will have to be
increased and the Company will have to recover the additional deferred gas costs for the
difference between $4.50 (Company) and $4.30 (Staff). The Company s most recent gas
cost projections for the winter of 2003-04 exceed $4.50. Therefore, Staff's proposal of
no rate change increases the likelihood of a PGA increase in 2004 and results in
approximately a 5% higher increase in 2004 than if the proposed increase in this filing is
approved. While Staff addresses the issue of rate volatility and price stability, the
Company believes implementing the proposed increase will minimize rate volatility
between 2003 and 2004.
Respectfully submitted this 19th day of September 2003.
A VISTA CORPORATION
BY
~x .....",J
Kelly O. Norwood
Vice President, Rates and Regulation
REPLY COMMENTS OF THE COMPANY SEPTEMBER 19,2003