20041018Decision Memo.pdf

DECISION MEMORANDUM
TO:COMMISSIONER KJELLANDER
COMMISSIONER SMITH
COMMISSIONER HANSEN
COMMISSION SECRETARY
COMMISSION STAFF
LEGAL
FROM:DONOVAN E. WALKER
DATE:OCTOBER 8, 2004
SUBJECT:IN THE MATTER OF INTERMOUNTAIN GAS COMPANY'S 2005-2009
INTEGRATED RESOURCE PLAN, CASE NO. INT-04-
On April 30, 2004 Intermountain Gas Company (Company) submitted its Integrated
Resource Plan (IRP) for the years of 2005-2009 to the Commission. The Company s filing was
made pursuant to the Commission s directive in Order No. 25342. (PURPA 9 303(b)(3), Energy
Policy Act of 1992). Order No. 25342 initiated Integrated Resource Plan requirements for local
gas distribution companies (LDC) in accordance with amended Section 303 of PURP A. That
Order lists the elements that the IRP should contain. The Commission twice modified the
requirements for Natural Gas IRPs: Order No. 27024 allowed natural gas utilities to shorten the
planning horizon to five years to match the Company s planning horizon and available market
products; and Order No. 27098 removed the requirement that IRPs include a formal evaluation
of the costs and benefits of potential demand side management (DSM) programs, stating that a
general explanation of whether there are cost effective DSM opportunities will be sufficient.
THE INTEGRATED RESOURCE PLAN
According to the Company s IRP Executive Summary, the IRP is meant to describe
the currently anticipated conditions over the five-year planning horizon, the anticipated resource
selections, and the process for making those resource decisions. IRP at 1. Intermountain Gas is
the sole distributor of natural gas in southern Idaho, and during fiscal year 2003 it served about
242 000 customers in 74 communities. Id. Their system contains approximately 9 500 miles of
transmission, distribution, and service lines, with over 350 miles of those lines being added in
fiscal year 2003 to accommodate new customer additions and to maintain service for the
Company s growing customer base. Id.
DECISION MEMORANDUM
Intermountain Gas has two maj or markets: 1) the residential/commercial market; and
2) the industrial market. The Company s residential and commercial customers increased 5%
during the first quarter of fiscal year 2004. Id. Forty-eight percent (48%) of the throughput on
the Company s system during fiscal year 2003 was attributable to industrial sales and
transportation. Id.
Forecast Peak Day Sendont
Customer growth forecast in the IRP was analyzed not only from a total company
perspective but also by specific geographic regions within the Company s service territory. Id.
2. Peak day sendout studies and load duration curves were developed under design weather
conditions to determine the magnitude and timing of future deficiencies in firm peak day
delivery capability from both a total company interstate mainline perspective, as well as within
each specific geographic region. Id. Residential, commercial and industrial customer peak day
sendout was matched against available resources to determine which combination of new
resources would be needed to meet the Company s future peak day delivery requirements at the
best possible cost. Id.
Total Company - Residential, commercial, and industrial peak day load growth on
the Company s system is forecast ove~ the five-year period to grow at an average of 4%. Id.
When matched against existing resources, a peak day delivery deficit occurs starting in January
2007, and increases each year thereafter. Id. at 3. The projected deficits in firm deliverability
will be eliminated through one or more means including: 1) long-term firm capacity release
and/or segmentation; 2) city gate deliverable gas supply; 3) storage, together with related
mainline rights; and 4) call back opportunities. Id. at 4
Idaho Falls Lateral Region - The Idaho Falls Lateral Region serves a number of
cities between Pocatello in the south to St. Anthony in the north. Id. The residential
commercial, and industrial load served off of the Lateral represents approximately 16% of the
total Company customers and 20% of the Company s total winter sendout during the winter of
2003-2004. Id. When forecasted peak day sendout is matched against the existing peak day
distribution capacity, a peak day delivery deficit occurs in 2005 and increases each year
thereafter. Id. at 5. The Company believes that small, short duration peak day distribution
delivery deficits can be eliminated or at least mitigated by working with the regions industrial
customers to facilitate the use of fuel oil during extreme cold temperatures. Id. However, the
DECISION MEMORANDUM
projected delivery deficits are of such magnitude that "looping" of the existing system is
warranted, adding the necessary firm delivery capability to that area. Id.
Sun Valley Lateral Region - The load served by this region represents approximately
4% of the total Company customers and 4% of the Company s total winter sendout during the
winter of 2003-2004. Id. A peak day delivery deficit under the IRP's forecasted peak day
sendout occurs during 2005 and increases each year thereafter. Id. at 5-6. Growth along the Sun
Valley Lateral warrants an upgrade to the existing pipeline system. Id. at 6. The tourism
industry driven industrial load in this region is limited in size and does not currently have the
capability to switch to alternative fuels as a means of mitigating peak day sendout. Id.
Canyon County Region - The load served off of the Canyon County Lateral
represented approximately 14% of the total Company customers and 17% of the Company s total
winter sendout during the winter of 2003-2004. Id. Forecasted peak day sendout results in a
peak day delivery deficit occurring during 2006 and increasing each year thereafter. Id. at 6-
The industrial customer base served by the Canyon County Lateral does not currently have the
capability to switch to alternative fuels as a means of mitigating peak day sendout and the
Company is currently exploring optional means of enhancing the distribution capability on this
Lateral. Id.
STAFF RECOMMENDATION
Staff recommends that the Company s Integrated Resource Plan filing be processed by
Modified Procedure, and a comment period opened.
COMMISSION DECISION
Should Intermountain Gas Company s Integrated Resource Plan be processed by
Modified Procedure?
Donovan E. Walker
DECISION MEMORANDUM