ON29042.pdf

Office of the Secretary
Service Date
June 3, 2002
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION OF
INTERMOUNTAIN GAS COMPANY FOR
AUTHORITY TO DECREASE ITS RATES FORSERVICE. CASE NO. INT -02-
NOTICE OF APPLICATION
NOTICE OF MODIFIED
PROCEDURE
NOTICE OF COMMENT
DEADLINE
ORDER NO. 29042
On May 23 , 2002, Intermountain Gas Company (Intermountain, Company) filed its
annual Purchased Gas Cost Adjustment (PGA) Application (Application) with the Commission
for authority to place into effect new rate schedules that will decrease its annualized revenues by
$52.5 million. The PGA account is a deferral mechanism for over-and under-collections and for
realized savings on spot market gas purchases. If its Application is approved, Intermountain
states that customer rates will decrease on average by 24%. The Application also proposes an
over-collection of $8.2 million (an additional 4.7%) to promote rate stability. Intermountain Gas
supplies natural gas to approximately 200 000 customers in southern Idaho. The Company has
requested an effective date of July I , 2002. In this Order the Commission processes this filing
under Modified Procedure and establishes a written comment deadline.
THE APPLICATION
YOU ARE HEREBY NOTIFIED that Intermountain Gas seeks to pass through to
each of its customer classes a $52.5 million revenue decrease in gas-related costs resulting from:
1) a net decrease in costs for Intermountain s natural gas interstate transportation, 2) an updated
customer allocation of gas-related costs pursuant to the Company s Purchased Gas Cost
Adjustment 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.
Application at 3-
NOTICE OF APPLICATION
NOTICE OF MODIFIED PROCEDURE
NOTICE OF COMMENT DEADLlliE
ORDER NO. 29042
YOU ARE FURTHER NOTIFIED that the Company proposes to implement the
following permanent change and temporary surcharge to its tariff rates for natural gas service
and sales:
Permanent Adjustment
. INT-01-3 Elimination of Temporary Surcharges/Credits
Base Rate Change
Fixed Cost Collection
($40 994 177)
($1 007 635)
($478 316)
Temporary Surcharges or Credits: Deferred Gas Costs (Intermountain Gas PGA
Account 186)
Market Segmentation
Northwest Pipeline FERC settlements
Fixed Gas Cost Misc.
Variable Cost Collection Adjustment
($2 369 508)
($1,490 349)
$116 073
($6 295 055)
YOU ARE FURTHER NOTIFIED that Intermountain Gas proposes to allocate
deferred gas costs from its PGA Account No. 186 balance to its customers through a temporary
price adjustment effective during the 12-month period beginning July 2002 and ending June
, 2003. Since July 2001, Intermountain Gas has a variable gas cost balance in the amount of
$10 038 839. The Company proposes to refund this amount via a per therm credit.
YOU ARE FURTHER NOTIFIED that Intermountain proposes leaving the weighted
average cost of gas (W ACOG) at $0.35295 per therm, which is the same W ACOG approved by
the Commission last year in Case No. INT-01-3. Order No. 28783. The Company states that
current market-based commodity prices support the continuance of the $0.35295 per therm
W ACOG to Intermountain s customers. However, due to the Company s management and
participation in hedging transactions, Intermountain states that under normal conditions
customers will receive "savings" of $0.033 per therm "over the next 12-month period as
compared to the $0.35295 per therm W AGOG.Application at 4-5. In other words, the
Intermountain W ACOG would over-collect the predicted amount that will be required to pay gas
related costs incurred from July 2002 to July 2003 by $0.033 per thermo This would result in an
over-collection totaling $8.2 million. When added to the requested $52.5 million decrease, this
over-collection would otherwise result in an average decrease of28.7% (an additional 4.7%).
NOTICE OF APPLICATION
NOTICE OF MODIFIED PROCEDURE
NOTICE OF COMMENT DEADLINE
ORDER NO. 29042
That said, the Application states that natural gas future prices predict an upward trend
for future PGA periods even though Intermountain does not believe that market fundamentals
will support the high future prices now predicted. Id. at 5. Therefore, Intermountain believes
that "by allowing the W ACOG to remain at the $0.35295 per therm level, a future price increase
can be avoided or mitigated during the July 2003 PGA period (one year from now) by offsetting
future increases with the savings generated by Intermountain s currently hedged supplies.!d.
If approved, this purposeful over-collection of the PGA account would represent a deviation
from the current PGA methodology. If circumstances so warrant, Intermountain would file an
out of period" PGA if natural gas prices decline substantially to a level that facilitates price
stability for the future with the pass through of any deferred gas cost credits that may exist at the
time. !d.
YOU ARE FURTHER NOTIFIED that Intermountain s requested decrease in annual
revenue is $52.5 million or approximately 24%. If approved, the Company estimates that
residential customers (RS-1) using natural gas for space heating only could experience
average annual billing decrease of approximately $128 (21.8%). Residential customers (RS-
using natural gas for both space and water heating could experience an average annual decrease
of$188 (24.2%). Commercial customers (GS-l) could experience an average annual decrease of
$795 (25.6%). Intermountain Gas recommends the following annualized change in rates per
customer class:
Customer Class Revenue Proposed Proposed Proposed
Average Decrease Average Decrease Average Price
$ /Therm % Change $/Therm
RS-l Residential ($7,414 546)($0.20818)(21.8%)$0.74544
RS-2 Residential ($25 310 212)($0.20524)(24.2%)$0.64330
GS-1 General Service ($18 892 039)($0.20419)(25.6%)$0.59509
LV-l Large Volume *($631 513)($0.20203)(31.4%)$0.44213
* T-l tariff price plus the Weighted Average Cost of Gas (WACOG) $0.35295
W ACOG = total commodity cost of gas -7 total purchase therms
NOTICE OF APPLICATION
NOTICE OF MODIFIED PROCEDURE
NOTICE OF COMMENT DEADLINE
ORDER NO. 29042
Proposed Proposed Proposed
Transportation Revenue Average Increase Average Increase Average Price
(Decrease)(Decrease)$/Therm
$ /Therm %Change
T -1 Transportation ($221 884)($0.00600)(5.7%)$0.09975
T -2 Transportation ($49 044)($0.00202)(7.1 %)$0.02656
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-95-, INT-88-, U-I034-
137). Because there are no fixed costs currently recovered in the tail block ofIntermountain 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 decrease is made only to the first two blocks of the
1 tariff. The proposed decrease 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-l commodity charge.
YOU ARE FURTHER NOTIFIED that because of changes in Intermountain s gas-
related costs, Intermountain states that its earnings will not be affected as a result of the proposed
decrease in prices and revenues.
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 Company requests that this matter be
handled under Modified Procedure pursuant to Rules 201-204 of the Commission s Rules of
Procedure. !d. at 9.
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 APPLICATION
NOTICE OF MODIFIED PROCEDURE
NOTICE OF COMMENT DEADLINE
ORDER NO. 29042
NOTICE OF MODIFIED PROCEDURE
Intermountain Gas requests that its Application be processed under Modified
Procedure, i., by written submission rather than by hearing. Reference Commission Rules of
Procedure, IDAPA 31.01.01.201-204. The Company has requested an effective date of July 1
2002.
YOU ARE FURTHER NOTIFIED that the Commission has reviewed the filings of
record in Case No. INT-02-3. 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.
31.01.01.203.
Reference IDAP A
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
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. INT-01-3 is Wednesday, June 26, 2002. 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 written comments concerning this
Application must be mailed to the Idaho Public Utilities Commission and Intermountain Gas
Company at the following addresses:
NOTICE OF APPLICATION
NOTICE OF MODIFIED PROCEDURE
NOTICE OF COMMENT DEADLINE
ORDER NO. 29042
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
Email: mhunting(m,intgas.com
MORGAN W. RICHARDS, JR., ESQ.
Moffatt, Thomas, Barrett, Rock & Fields, Chartered
PO BOX 829
BOISE, ID 83701
Email: mwr~moffatt.com
These comments should contain the case caption and case number shown on the first page of this
document.Persons desiring to submit comments via e-mail may do so by accessing the
Commission s home page located at www.puc.state.id.us under the "File Room" icon. Once at
the "File Room" page, select "File a Comment " fill in the case number as it appears on the front
of this document, and enter your comments. These comments must also be sent to the Applicant
at the e-mail addresses listed above.
YOU ARE FURTHER NOTIFIED that the Commission specifically requests
comment on the whether Intermountain Gas should be allowed to over-collect $8.2 million this
year to mitigate a potential rate increase next year. Overall rates would decrease this year by
additional 4.7% without such over-collection, for a total overall decrease of28.7%.
YOU ARE FURTHER NOTIFIED that the Application in Case No. INT-02-
together with accompanying exhibits and workpapers can be reviewed at the Commission
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). In
addition, the Application and testimonies (excluding exhibits) are available on the Commission
Website at www.puc.state.id.us under the "File Room" icon.
ORDER
In consideration of the foregoing and as more particularly described above, IT IS
HEREBY ORDERED that the foregoing scheduling be adopted.
NOTICE OF APPLICATION
NOTICE OF MODIFIED PROCEDURE
NOTICE OF COMMENT DEADLINE
ORDER NO. 29042
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this 3 nt
day of June 2002.
See attached Dissent Opinion
PAUL KJELLANDER, PRESIDENT
MARSHA H. SMITH, COMMISSIONER
ATTEST:
O:INTGO203 In
NOTICE OF APPLICATION
NOTICE OF MODIFIED PROCEDURE
NOTICE OF COMMENT DEADLINE
ORDER NO. 29042
DISSENT OPINION OF
CO MMISSI 0 NER PAUL KJELLAND ER
CASE NO. INT -02-
ORDER NO. 29042
Although the comment period adopted by the Commission in this Notice is in excess
of the 21 days required by Procedural Rule 202, I am concerned that it does not allow sufficient
opportunity for all customers to comment on the Application after receiving individual notice.
According to Intermountain Gas, the last individual customer notices will accompany bills issued
on June 25 2002. While it is true that the Company has provided other customer notice through
various media, those customers who receive individual notice in their bills in the mail on June 25
or 26 and choose to reply will have less than 36 hours to comment before the June 26 comment
deadline.
Even though only a small percentage of customers will be placed in this position, I
also am concerned about the content of the notice provided by the individual customer notice and
press release. While the Company has technically met the notice requirement of IDAP A
31.21.01.102 to "give the proposed overall percentage change from current rates " the customer
notice and press release do not explain that the Application proposes to over-collect $8.2 million
to promote rate stability next year. Without this over-collection, overall customer rates would
decrease by 28., not the 24% included in the customer notice. Although allowing a longer
comment period will not change the content of the notice provided to customers, it will guarantee
that every customer who wishes to comment will have adequate time to do so.
As a point of clarification, this dissent only addresses the procedural timeframe for
public comments. It does not attempt to place any value on the relative merits of the Company
proposal to over-collect from customers for the purpose of providing rate stabilization.
~IDEm
DISSENT OF
COMMISSIONER PAUL KJELLANDER