20030618Reply to Staff Comments.pdf

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EXECUTIVE OFFICES "Ci';:-"\\fEO lDh L. v '- I
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INTERMOUNTAIN GAS COMPANY :LCIJ \-
555 SOUTH COLE ROAD. p,O, BOX 7608 . BOISE, IDAHO 83707 . [phone] . FAX: 3 6L\97 OM 4: \ 8lUU) JU:, ,I r
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June 17 2003
Ms. Jean Jewell
Commission Secretary
Idaho Public Utilities Commission
472 W. Washington
Boise, Id 83702-5983
Re:Comments of the Commission Staff
Case No. INT-03-
Dear Ms. Jewell:
In response to the Comments of the Commission Staff filed as part of the above referenced Case
Intermountain Gas Company submits the following remarks.
At the conclusion of the Staff's Comments , the Staff makes a list of several recommendations that
would require some amount of action or follow through by the Company. In response to each of those
types of recommendations, Intermountain submits the following:
Staff Recommendation:
The Company seek formal or informal proposals for long-term gas supplies as well as short-term
supplies.
Company Response:
Intermountain will continue to seek both formal and informal proposals for gas supplies and will
continue to document its efforts regarding the same.
By way of repetition to the Staff's Comments, today no long-term producer or supplier, in contrast to
short-term producers or suppliers, who sells to Intermountain is willing to directly negotiate a fixed
price. While price has always been , and will continue to be, an important component of any of our
contracts with suppliers, the price discovery component of LOC/long-term supplier negotiations has
now been supplanted by the collective outlook on future prices with the advent of natural gas being
traded on the Nymex and the over the counter derivative markets. Not by coincidence, the Company
has found , of recent, that many of our preferred portfolio of long-term producers simply will no longer
respond to formal RFP's as they view the exercise as price discovery only and much prefer direct
negotiation with the Company. While there are producers and marketers who do offer to fix prices, it is
offered as a service and the producer or marketer will use the same method available to the buyer
(i.e. a third party derivative product) to effectuate the fixed price. In addition to the price component of
our supply contracts, Intermountain continues to ensure that our supplies are aligned with secure
reliable, and reputable credit worthy producers and suppliers who the Company is comfortable will
always provide firm, uninterrupted gas supply for our core market needs. All of Intermountain
suppliers meet the above criteria. The ability of long-term suppliers to meet the benchmarks of credit
worthiness and ability to deliver firm , uninterrupted supplies, have all been established by their
performance in the market and , therefore, their ability to meet these benchmarks need not
reestablished through a formal RFP process.
Comments of the Commission Staff
Page 2
June 17, 2003
Staff Recommendation:
The Company continue to increase its documentation regarding its purchase and other decisions.
Company Response:
Intermountain will continue with its documentation efforts.Staff Recommendation:
Intermountain continue to file its quarterly WACOG reports for the current gas year and also begin
filing WACOG projections for the subsequent gas year as well.
Company Response:
The Company can continue filing its quarterly WACOG reports for the current gas year and can also
begin filing WACOG projections for the subsequent gas year as well.
Staff Recommendation:
The Commission direct the Company to formalize its risk management policy with special emphasis
on managing reliability, price, service quality, credit risk , and customer rate volatility and file this
formalized written policy within 90 days.
Company Response:
Intermountain Gas has a formal Gas Management Risk Management Policy. Intermountain s Gas
Management Committee has , and will continue to , review and discuss various gas management
strategies that incorporate all the components contained within the above recommendation by the
Staff, with particular reference to the Staff's suggestion as to the value of price stability. However
because it is a Policy and not a Procedure Manual it needs to provide flexibility enough, while still
providing intent and general direction, so that the exercise of day-to-day judgement based upon
changing circumstances is not superceded by some rigid procedure or practice. Within 90 days, the
Company will make available to the Staff documentation regarding these strategy reviews and the
outcome of these reviews as it pertains to any action taken by the Committee.
Staff Recommendation:
The Company allow customers to ask questions and seek service through facsimiles as well as over
the phone and through the internet.
Company Response:
The Company has begun a study to determine the requisite steps to implement the use of a facsimile
machine in responding to customer inquiries and anticipates providing such a service to our
customers within the next several weeks.
Staff Recommendation:
Intermountain perform an additional Level Pay promotion in September to allow customers the
opportunity to sign up before the winter heating season. Customers would be encouraged to sign-up
for Level Pay in the fall and average their projected higher usage winter bills over a longer period.
Company Response:
Intermountain will perform a September Level Pay promotion.
Comments of the Commission Staff
Page 3
June 17, 2003
Intermountain Gas Company appreciates the opportunity to reply to the Comments of the Commission
Staff and requests that the above responses by the Company be considered in any final ruling given
by this Commission.
If you have any questions regarding the above comments, please contact me at 377-6168.
Sincerely,
-!i
Director
Market Services and Regulatory Affairs
MPM/slk
FILE No.989 06/17 '03 16:14 F~X :2083855384 2ID :MOFF~TT THOM~S P~GE
, Michael McGnth, have served upon Jefftey C. Brooks a copy ofIntennountain Gas
Company s Reply Comments in Case No. INT-O3-01.
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