20030509Decision Memo.pdf

DECISION MEMORANDUM
TO:COMMISSIONER KJELLANDER
COMMISSIONER SMITH
CO MMISSI 0 NER HANSEN
COMMISSION SECRETARY
COMMISSION STAFF
LEGAL
FROM:JOHN HAMMOND
DATE:MAY 9, 2003
SUBJECT:IN THE MATTER OF THE APPLICATION OF INTERMOUNTAIN GAS
COMPANY FOR AUTHORITY TO INCREASE ITS RATES FOR
SERVICE, CASE NO. INT-03-
On May 7, 2003, Intennountain Gas Company filed an Application with the
Commission for authority to place into effect new rate schedules that will result in an overall
increase of approximately $61 million or 37.76% in revenues. The Company s Customer Notice
and Press Release contend that should this proposed increase be approved the following
increases in rate classes would occur: residential customers using natural gas for heating and
water heating could experience an averaged monthly increase of $18 or 38%; residential
customers using natural gas for space heating only could experience an average monthly increase
of$12 or 33%; and, commercial customers could experience an average monthly increase of$78
or 43%.
The Company has requested an effective date of July 1 , 2003 for its proposed rate
schedules. Intennountain Gas states that despite this request for an increase in revenues the
Company s earnings will not be increased as a result of the proposed changes in prices.
THE APPLICATION
Intennountain Gas seeks with its Application to pass through to each of its customer
classes the change in gas related costs resulting from: (1) changes in Intennountain Gas' finn
transportation and storage costs resulting from the Company s management of its storage and
finn capacity rights on pipeline systems including the Williams Northwest Pipeline ("Williams
or "Northwest"); (2) an increase in Intennountain Gas' weighted average cost of gas
DECISION MEMORANDUM
W ACOG"); (3) an updated customer allocation of gas related costs pursuant to the Company
purchased gas cost adjustment provision; and (4) the inclusion of temporary surcharges and
credits for one year relating to gas and interstate transportation costs from the Company
deferred gas account. Application at 3-4. Intennountain Gas also seeks with its Application to
eliminate the temporary surcharges and credits included in its current prices during the past 12
months. See Case No. INT-02-3. The aforementioned changes will result in an overall price
Increase to Intennountain Gas' RS-, RS-, GS-1 and LV-1 customers and a decrease to
Intennountain Gas ' T-1 and T-2 customers.
The Company states that natural gas is a commodity traded in the open market and
as with all other commodities, is subject to the same laws of supply and demand. The Company
believes that the current forecast for market prices for natural gas dictate that the W ACOG be
established at the $0.50305 level as compared to the $0.32000 per thenn currently included in
the Company s tariffs. However, Intennountain Gas states that forward market prices for this
commodity could be subject to fluctuations. Accordingly, the Company has represented that it
will continue to remain vigilant in monitoring natural gas prices and is committed to file an
application with the Commission prior to this winter s heating season should those forward
prices materially deviate from this W ACOG.
The Company contends that its Application has been brought to the attention of its
customers through a customer notice and by a press release sent to daily and weekly newspapers
and major radio and television stations in the Company s service area. The Company has
attached its press release and customer notice to its Application. In addition, copies of this
Application, exhibits and workpapers have been provided to those parties regularly intervening
Intennountain Gas' rate proceedings.
Intennountain Gas requests that this matter be handled under Modified Procedure
pursuant to Rules 201 through 204 of the Commission s Rules of Procedure. The Company
states that it stands ready for immediate consideration of this matter.
STAFF RECOMMENDATION
After reviewing the Company s filing the Commission Staff recommends that the
Commission process this case using Modified Procedure (i., by written submission) under the
Commission s Rules of Procedure. IDAPA 31.01.01.201-204. In processing this case by
Modified Procedure Staff recommends that the Commission schedule public workshops in which
DECISION MEMORANDUM
the Staff will make a presentation on and answer questions about the Company s Application.
The Commission may also wish to schedule public hearings at the conclusion of each public
workshop to take testimony from interested persons.Finally, Staff recommends that the
Commission establish comment deadlines subsequent to the public workshops and hearings.
COMMISSION DECISION
Does the Commission wish to process this case under Modified Procedure using the
recommendations made above?
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DECISION MEMORANDUM