2001060128745mod.doc

BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION

IN THE MATTER OF THE APPLICATION OF
INTERMOUNTAIN GAS COMPANY FOR AUTHORITY TO INCREASE ITS RATES FOR SERVICE

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CASE NO. INT-G-01-3

NOTICE OF APPLICATION

NOTICE OF MODIFIED PROCEDURE

NOTICE OF COMMENT DEADLINE

ORDER NO. 28745

On May 25, 2001, Intermountain Gas Company (Intermountain; Company) filed an Application with the Idaho Public Utilities Commission for authority to place into effect new rate schedules that would result in an overall increase of approximately $27.1 million (12.9%) in revenues. Intermountain Gas supplies natural gas to approximately 200,000 customers in southern Idaho. The Company has requested an effective date of July 1, 2001. In this Order the Commission elects to process this filing under Modified Procedure and establishes a written comment deadline.
THE APPLICATION
YOU ARE HEREBY NOTIFIED that the proposed $27.1 million revenue increase reflects the elimination and/or imposition of a number of temporary gas and transportation cost adjustments, surcharges and credits. The Company’s filing also proposes to balance out its Purchased Gas Cost Adjustment (PGA), Account 186. The PGA Account is a deferral mechanism for over-and under-collections and for realized savings on spot market gas purchases.
YOU ARE FURTHER NOTIFIED that the Company alleges that its proposed rate change is necessitated by several factors, including: 1) a net decrease in costs from Intermountain’s natural gas interstate transportation, 2) an updated customer allocation of gas-related costs pursuant to the Company’s PGA provision, and 3) the inclusion of temporary surcharges and credits for one year relating to gas and interstate transportation costs from Intermountain’s deferred gas cost account. The Company’s Application also seeks to eliminate the temporary surcharges and credits included in its current prices during the past twelve months, pursuant to Case No. INT-G-00-1. The net effect of these changes is an overall price increase to Intermountain’s RS-1, RS-2, GS-1, LV-1 and T-1 customers and a decrease to Intermountain’s T-2 customers.
YOU ARE FURTHER NOTIFIED that Intermountain Gas does not seek to change the Weighted Average Cost of Gas (WACOG) of $0.42296 per therm that was approved by the Commission in Case No. INT-G-01-1, Order No. 28578. The Application explains that even though natural gas commodity prices are presently greater than this amount, the Company anticipates that the commodity market should sustain a WAGOG in the range of $0.423 per therm by next summer. The Company bases this prediction on record Rocky Mountain and Western Canadian drilling that has increased natural gas supplies and decreased gas commodity prices.
YOU ARE FURTHER NOTIFIED that Intermountain Gas proposes to allocate deferred gas costs from its PGA Account 186 balance to its customers through a temporary price adjustment effective during the twelve-month period beginning July 1, 2001 and ending June 30, 2002. Since July 1, 2000, Intermountain Gas asserts that it has deferred variable gas costs estimated at $46,766,440 thus far in its PGA Account. The Company proposes to collect this amount via a per therm surcharge.
YOU ARE FURTHER NOTIFIED that the Company proposes to implement the following permanent change and temporary surcharges to its tariff rates for natural gas service and sales:
Permanent Adjustment:
INT-G-00-1 Elimination of Temporary Surcharges/Credits ($14,633,206)
Base Rate Change ($382,418)
Fixed Cost Collection ($1,852,579)
Temporary Surcharges or Credits:
Deferred Gas Costs (Intermountain Gas PGA Account 186)
Variable Cost Collection Adjustment ($262,530)
Uncollected Gas Costs $46,766,440
Market Segmentation ($2,377,070)
Fixed Gas Cost Misc. ($191,946)
YOU ARE FURTHER NOTIFIED that Intermountain’s total requested increase in annual revenue is $27.1 million or 12.9%. If approved, the Company estimates that residential customers (RS-1) using natural gas for space heating only could experience an average monthly billing increase of approximately $4.48 (9%). Residential customers (RS-2) using natural gas for both space and water heating could experience an average monthly increase of $8.70 (13.8%). Commercial customers (GS-1) could experience an average monthly increase of $33.28 (13.1%). Intermountain Gas recommends the following annualized change in rates per customer class:

Customer Class Revenue Proposed
Average Increase $ /Therm Proposed Average Increase % Change Proposed Average Price
$/Therm RS-1 Residential $3,174,693 $0.08603 9.0% $1.03760 RS-2 Residential $13,466,531 $0.11288 13.8% $0.93252 GS-1 General Service $9,332,390 $0.10261 13.1% $0.88326 LV-1 Large Volume * $751,995 $0.19513 36.6% $0.72814
* T-1 tariff price plus the Weighted Average Cost of Gas (WACOG) $0.42296
WACOG = total commodity cost of gas ( total purchase therms

Transportation
Revenue Proposed Average Increase (Decrease)
$ /Therm Proposed
Average Increase (Decrease)
%Change Proposed
Average Price
$/Therm
T-1 Transportation
$356,059
$ 0.00986
10.28%
$0.10575
T-2 Transportation
($14,961)
($0.00063)
(2.10%)
$0.02934
With the exception of the industrial class, IGC proposes to allocate the change in rates to each of its customer classes in accordance with its Purchased Gas Cost Adjustment tariff and approved cost-of-service methodology. (Ref. Case Nos. INT-G-95-1, INT-G-88-2, U-1034-137). Because there are no fixed costs currently recovered in the tail block of Intermountain’s T-1 tariff and because the proposed increase in the T-1 tariff is related to fixed costs (except for TF-1 commodity charge), a cents-per-therm increase is made only to the first two blocks of the T-1 tariff. All three blocks of Intermountain’s proposed T-1 tariff have been adjusted to include Williams Gas Pipelines-West firm transportation TF-1 commodity charge. The proposed increase in the T-2 tariff (except for TF-1 commodity charge) is related to fixed cost and, therefore, a cents-per-therm increase was made only to the T-2 demand charge. The commodity charge component of the T-2 tariff was adjusted to include Williams Gas Pipelines-West firm transportation TF-1 commodity charge.
YOU ARE FURTHER NOTIFIED that the Company’s Application to increase its rates is merely a proposal subject to public review and Commission approval.
YOU ARE FURTHER NOTIFIED that the Commission has jurisdiction over this matter and Intermountain Gas Company, a gas utility, pursuant to the authority and power granted under Title 61 of the Idaho Code and the Commission’s Rules of Procedure, IDAPA 31.01.01.000 et seq.
NOTICE OF MODIFIED PROCEDURE
Intermountain Gas requests that its Application be processed under Modified Procedure, i.e., by written submission rather that by hearing. Reference Commission Rules of Procedure, IDAPA 31.01.01.201-204. The Company has requested an effective date of July 1, 2000.
YOU ARE FURTHER NOTIFIED that the Commission has reviewed the filings of record in Case No. INT-G-01-3. The Commission acknowledges that the rate increase requested is significant. The Commission notes that the annual PGA tracker reflects only those changes in gas costs that are generally recognized as outside the Company’s control. The Commission has preliminarily determined that the public interest may not require a hearing to consider the issues presented in this case, and that the issues raised by the Company’s filing may be processed under Modified Procedure. In so doing, the Commission notes that Modified Procedure and written comment has proven to be an effective means for obtaining public input and participation.
YOU ARE FURTHER NOTIFIED that the Commission will not hold a hearing in this proceeding unless it receives written protests or comments opposing the use of Modified Procedure and stating why Modified Procedure should not be used. Reference IDAPA 31.01.01.203.
YOU ARE FURTHER NOTIFIED that if no protests or comments are received within the deadline, the Commission may consider the matter and enter its Order without a hearing. If protests or comments are filed within the deadline, the Commission will consider them and may set the matter for hearing or may decide the matter and issue its Order on the basis of the written positions before it. Reference IDAPA 31.01.01.204.
NOTICE OF COMMENT DEADLINE
YOU ARE FURTHER NOTIFIED that the deadline for filing written comments or protests with respect to the Application and the use of Modified Procedure in Case No. INTG01-3 is Friday, June 22, 2001. Reference IDAPA 31.01.01.202.02. Persons desiring a hearing must specifically request a hearing in their written protests or comments.
YOU ARE FURTHER NOTIFIED that given the size of the PGA rate increase requested in this case and the rate shock that may result from immediate implementation, comment is specifically solicited from Commission Staff and the Company as to whether the PGA methodology would be compromised by a phase-in of the increase over time. Any phase-in proposals should also be submitted. Related ramifications including fairness and equity should also be addressed.
YOU ARE FURTHER NOTIFIED that written comments concerning this Application must be mailed to the Idaho Public Utilities Commission and the Intermountain Gas Company at the following addresses:

COMMISSION SECRETARY
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-0074

Street Address for Express Mail:

472 W WASHINGTON ST
BOISE, ID 83702-5983 MICHAEL E. HUNTINGTON
VICE PRESIDENT
MARKETING & EXTERNAL AFFAIRS
INTERMOUNTAIN GAS COMPANY
PO BOX 7608
BOISE, ID 83707

MORGAN W. RICHARDS, JR., ESQ.
Moffatt, Thomas, Barrett, Rock & Fields, Chartered
PO BOX 829
BOISE, ID 83701
All comments should contain the case caption and case number shown on the first page of this document.
YOU ARE FURTHER NOTIFIED that the Application in Case No. INT-G-01-3 together with accompanying exhibits and workpapers can be reviewed at the Commission’s office and at the principal office of Intermountain Gas Company during regular business hours. Intermountain Gas Company is located at 555 South Cole Road in Boise, Idaho (377-6000).
O R D E R
In consideration of the foregoing and as more particularly described above, IT IS HEREBY ORDERED that the foregoing schedule be adopted.
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this
day of June 2001.

PAUL KJELLANDER, PRESIDENT

MARSHA H. SMITH, COMMISSIONER

DENNIS S. HANSEN, COMMISSIONER

ATTEST:

Jean D. Jewell
Commission Secretary

O:INTG013_ln

NOTICE OF APPLICATION
NOTICE OF MODIFIED PROCEDURE
NOTICE OF COMMENT DEADLINE
ORDER NO. 28745 6

Office of the Secretary
Service Date
June 1, 2001