20030127Supplemental Report.pdf

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LISA D. NORDSTROM
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-0074
[phone]
IDAHO BAR NO. 5733
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UTILITIES CO/"lt"IISSION
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Street Address for Express Mail:
472 W. WASHINGTON
BOISE, IDAHO 83702-5983
Attorney for the Commission Staff
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE INVESTIGATION
INTO THE PURCHASE GAS ADJUSTMENT
(PGA) MECHANISM AND THE NATURAL GAS)PURCHASING POLICIES OF
INTERMOUNTAIN GAS COMPANY.
CASE NO. INT-Ol-
SUPPLEMENTAL REPORT OF
THE COMMISSION STAFF
COMES NOW the Staff ofthe Idaho Public Utilities Commission, by and through its
Attorney of record, Lisa D. Nordstrom, Deputy Attorney General, submits the following
supplemental report to the Staff Report "Investigation into Intermountain Gas Company
Natural Gas Purchase Policies and the Purchase Gas Cost Adjustment Mechanism dated May 22
2001.
Staff Investigation Update
On January 21 2003 , the Commission asked Staff to update the Staff Report filed May
, 2001 . In that report, Staff provided the results of its investigation of the gas purchasing
practices of Intermountain Gas Company (Company) and a review of the Purchased Gas Cost
Adjustment Mechanism (PGA). Included in the report were seven recommendations. On June
, 200 I , the Company filed reply comments in general agreement with Staff s recommendations.
1 Staffs report
, "
Investigation into Intermountain Gas Company s Natural Gas Purchase Policies and the Purchase
Gas Cost Adjustment Mechanism , was initiated by Commission Order No. 28632.
SUPPLEMENTAL REPORT JANUARY 24 2003
Listed below are each of Staff s original recommendations and a brief analysis of the current
situation.
Recommendation #1:Maintain the existing purchase gas cost adjustment mechanism.
Current Situation: Staff continues to recommend that the current purchase gas cost adjustment
mechanism be used.
Recommendation #2:Improve documentation and increase communication between the
Company, the Commission, and Staff. At a minimum the Company should retain the following
information:
- All graphs, visuals and charts used in discussions to make gas procurement and hedging
decisions;
- Articles, letters, memos, reports, notes, etc. detailing the current gas market and/or
projections;
- Summary of risk management meetings between IGI and Intermountain; and
- Written decisions resulting from each risk management meeting that are signed by a
corporate officer.
Current Situation: Intermountain Gas has maintained all these items for Staff review. In the
past year improved communication efforts enabled Staff and the Company to uncover
questionable capacity release activity by the Company s current marketer, IGI Resources. Staff
believes the issues are resolved on a going-forward basis but will continue to monitor the
situation.
Recommendation #3:Staff will also review the initial documentation retained in the next
several months to informally discuss the process and make additional recommendations for the
Company to consider.
Current Situation: Staff has reviewed the documentation retained by the Company during the
last two PGA periods. The Company has worked well with Staff during those periods to
improve the documentation regarding the Company s purchase decisions.
Recommendation #4:The Company should document and report all new contracting
arrangements and initiate a bidding process for new gas contracts as existing contracts expire.
SUPPLEMENTAL REPORT JANUARY 24, 2003
Current Situation: The Company has documented and reported all its new gas purchase
agreements. These purchases were bid and the lowest bidder that met the requirements was
given the contract. The Company has kept the documents used in selecting a provider.
Recommendation #5:The Company should be directed to file its required Integrated Resource
Plan immediately and provide additional annual updates in addition to the required biannual
filing.
Current Situation: The Company filed its 2002 Natural Gas Integrated Resource Plan on April
2002. The Commission accepted and acknowledged the Company s 2002 IRP filing on
September 9 2002.
Recommendation #6:The Company should be directed to provide to Staff the most complete
current information and services for the following:
- A complete statement of qualifications for IGI Resources;
- A complete list of the services that IGI Resources provides to Intermountain Gas
Company;
- A complete list of other available services offered by IGI Resources not currently
utilized by Intermountain Gas Company; and
- A complete list of services and qualifications the Company finds necessary in a
marketing service provider.
Current Situation: The three-year term of the Procurement, Asset Management and
Administrative Service Agreement between IGI Resources and Intermountain Gas will be
completed on March 31 , 2003. Even though the contract includes annual extension language and
a 12-month termination notification requirement, the completion of the 3-year primary contract
provides the Company a realistic opportunity to investigate other marketer alternatives.
While the Company has provided some of the requested information in the past, Staff
believes that the Company should use this opportunity to provide updated information plus any
other information from IGI or its competitors that the Company will use to evaluate contract
renewal options.
Recommendation #7:The Company should investigate all conservation opportunities and
develop cost-effective programs that could be offered to customers.
SUPPLEMENTAL REPORT JANUARY 24, 2003
- A deadline should be set prior to the 2001-02 heating season to institute demand side
management programs that will offer cost-effective measures to all customer classes.
Current Situation: Because natural gas prices have declined considerably since the initiation of
the investigation, the cost/benefit considerations are now substantially different. While Staff
recognizes that cost-effective opportunities will be more difficult to identify, we continue to
believe that demand side management is an important aspect of natural gas service. Staff
encourages the Company to diligently investigate conservation opportunities and report on the
investigations in the ongoing IRP process.
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Respectively submitted at Boise, Idaho, this day of January 2003.
Lisa D. Nordstro
Deputy Attorney
Technical Staff: Alden Holm
Michael Fuss
LN :jo:i:/umisc/comments/intgOl.l1nahmfuss supp comments
SUPPLEMENTAL REPORT JANUARY 24, 2003
CERTIFICATE OF SERVICE
HEREBY CERTIFY THAT I HAVE THIS 27TH DAY OF JANUARY 2003
SERVED THE FOREGOING SUPPLEMENTAL REPORT OF THE COMMISSION
STAFF, IN CASE NO. INT-Ol-, BY MAILING A COpy THEREOF, POSTAGE
PREP AID, TO THE FOLLOWING:
MICHAEL E HUNTINGTON
VP GOVERNMENTAL AFFAIRS
INTERMOUNTAIN GAS COMPANY
PO BOX 7608
BOISE ID 83707
MORGAN W RICHARDS JR
MOFFATT THOMAS ET AL
PO BOX 829
BOISE ID 83701-0829
MIKE McGRATH
INTERMOUNT AIN GAS COMPANY
PO BOX 7608
BOISE, ID 83707
CERTIFICATE OF SERVICE