20021107_311.pdf

TO:
FROM:
DATE:
RE:
DECISION MEMORANDUM
COMMISSIONER KJELLANDER
COMMISSIONER SMITH
COMMISSIONER HANSEN
JEAN JEWELL
RON LAW
LOU ANN WESTERFIELD
RANDY LOBB
DON HOWELL
TERRI CARLOCK
DAVE SCHUNKE
ALDEN HOLM
MICHAEL FUSS
TONY A CLARK
BEV BARKER
GENE FADNESS
WORKING FILE
LISA NORDSTROM
NOVEMBER 5, 2002
IN THE MATTER OF THE APPLICATION OF INTERMOUNTAIN GAS
COMPANY TO INCREASE ITS COMPOSITE DEPRECIATION RATE. CASE
NO. INT-02-
Intennountain Gas Company s current composite depreciation rate of 3.71 % was approved
by the Commission in Case No. INT-99-, Order No. 28311 dated March 29, 2000. At that time, the
Commission found that "the Company s depreciation rates and methodology should be revisited in three
years." Order No. 28311 at
In compliance with this Order, Intennountain Gas Company filed an Application on October
, 2002, requesting authority to increase its composite depreciation rate from 3.71% (3.93% when
weighted by 9/30/01 assets) to 4.08%. The Company stated that this 0.15% increase is necessary in
order to accrue the proper dollars over the remaining service life of the Company s property. If
approved, the higher rate would increase Intermountain s annual depreciation accrual and decrease
Intennountain s ratebase by $428 482 annually. Although the Company s depreciation expense would
increase under its proposal the present Application does not request a related increase in customer rates
DECISION MEMORANDUM
Based on an updated depreciation study by ADS Consultants , the Company concludes that
the current rate is under-depreciating its assets. A four-page summary of the depreciation study was
included with the Company s Application. The complete depreciation study with workpapers, which the
Company states are voluminous, is available for inspection at Intermountain s general business office
which is located at 555 South Cole Road, Boise, Idaho (208-377-6097).
Based upon Intennountain s books and records as of September 30, 2001 , the updated
depreciation study detennined that the original cost of depreciable property increased from
$234 093 752 to $280 990 082 during the three-year period.Likewise, the accumulated reserve
increased from $116,479 251 to $143 992,182. The current study would require an annual depreciation
and amortization expense accrual of $11 ,462 932 for the remaining life of the Company s property.
The study also discussed special circumstances pertaining to Intermountain s recovery rates.
In this study, Intennountain s planned deployment of electronic meter reading equipment and the
recovery of the associated investment were addressed by establishing unique depreciation parameters
and rates for that investment. The study also discussed the service life and estimated removal cost of the
Company s LNG facilities.
Intennountain Gas Company requests that its Application be processed pursuant to the
Commission s Rules of Procedure, i., by written submission rather than by hearing. Commission
Rules of Procedure, IDAPA 31.01.01.201-204. The Company asks that the increase to the annual
composite depreciation rate and amortizations be made effective at the beginning of the Company
fiscal year, October 1 , 2002.
STAFF RECOMMENDATION
Staff has no objection to Modified Procedure but recommends a comment deadline be set in
mid-January to pennit sufficient time to obtain responses to production requests (fonnal and/or
infonnal), as well as allow adequate time to review and audit the underlying depreciation study
perfonned by ADS Consultants.
COMMISSION DECISION
Does the Commission wish to process this case pursuant to Modified Procedure with the
extended comment period recommended by Staff?
1.~2~
M:INTGO204 In
DECISION MEMORANDUM