20050826notice of application order no 29856.pdf

Office of the Secretary
Service Date
August 26, 2005
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION
OF INTERMOUNTAIN GAS COMPANY
FOR AUTHORITY TO CHANGE ITS
PRICES (2005 PURCHASED GAS COST
ADJUSTMENT)
CASE NO. INT -05-
NOTICE OF APPLICATION
NOTICE OF MODIFIED
PROCEDURE
ORDER NO. 29856
On August 8 , 2005 , Intermountain Gas Company filed its annual Purchased Gas Cost
Adjustment (PGA) Application with the Commission requesting authority to place new rate
schedules in effect as of October I , 2005 that will increase its annualized revenues by $67.
million (27.2%). Application at p. 2. The PGA mechanism is used to adjust rates to reflect
changes in the costs for the purchase of gas from the Williams Northwest Pipeline and other
suppliers, including transportation, storage, and other related costs of acquiring natural gas. See
Order No. 26019. Intermountain s earnings will not be increased as a result of the proposed
changes in prices and revenues. Application at p. 8. With this Order the Commission authorizes
the use of Modified Procedure to process the Company s Application 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 change in gas-related costs resulting from: (1) changes in the
Company s firm transportation and storage costs resulting from the Company s management of
its storage and firm capacity rights on pipeline systems, (2) an increase in the Company
weighted average cost of gas (W ACOG), (3) an updated customer allocation of gas-related costs
pursuant to the Company s 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 Intermountain s deferred gas cost account. Application at p. 3-
NOTICE OF APPLICATION
NOTICE OF MODIFIED PROCEDURE
ORDER NO. 29856
YOU ARE FURTHER NOTIFIED that according to its customer notice, if its
Application is approved, the Company states that rates for residential customers using natural gas
for space heating only could increase an average of25.5%. Rates for residential customers using
natural gas for space and water heating could increase an average of 27.4%, and rates for
commercial customers could increase an average of 28.4%.
YOU ARE FURTHER NOTIFIED that Intermountain Gas proposes increasing the
W ACOG from the currently approved $0.55492 per therm to $0.73219 per thermo Application at
p. 5. The Company states that over the past year natural gas prices have more closely followed
the price of crude oil, as hedge funds and traders have become increasingly indifferent as to
which commodity provides btu' s to the marketplace, and that both crude oil and natural gas
prices are at historic high levels. Id. The Company states that the price levels in its Application
are forward prices currently available through the use of financial derivatives as of July 29, 2005.
Application at p. 6. Although current commodity futures prices dictate the use of $0.73219
W ACOG Intermountain states that it continues to remain vigilant in monitoring natural gas
prices and is committed to come before the Commission prior to this winter s heating season to
amend these proposed prices, if the forward prices materially deviate from the $0.73219 per
thermo Id.
YOU ARE FURTHER NOTIFIED that the Company proposes to include various
surcharges, credits, and adjustments in its proposed prices. Application at pp. 6-
Intermountain has included the elimination of temporary surcharges and credits pursuant to last
year s PGA, Case No. INT-04-2. Application at p. 6, Exhibit 4, 1. 33. The Company includes
a fixed cost collection adjustment pursuant to the provisions of its PGA tariff which provides that
proposed prices will be adjusted for updated customer class sales volumes and purchased gas
cost allocations. Application at p. 6, Exhibit 6, 1. 24. The Company proposes to pass back to
customers the benefits generated from its capacity release agreements through the inclusion of a
$2.3 million credit. Application at p. 7, Exhibit 7, 1. 1. Further, the Company proposes to
allocate deferred gas costs from its Account No. 186 balance to customers through temporary
price adjustments effective during the 12-month period ending September 30, 2006 as follows:
(1) fixed gas costs debits of $7.5 million attributable to collection of interstate pipeline capacity
costs and the true-up of expense issues previously ruled on by the Commission; and (2) deferred
NOTICE OF APPLICATION
NOTICE OF MODIFIED PROCEDURE
ORDER NO. 29856
gas cost debits of $8.7 million attributable to variable gas costs since July 1 , 2004. Application
at p. 7. Intermountain proposes to collect each balance via a per therm surcharge and credit. Id.
YOU ARE FURTHER NOTIFIED that the Company states that a straight cents-per-
therm price decrease was not utilized for the T -1 tariff. The proposed decrease in the T -1 tariff is
fixed cost related, and since there are no fixed costs recovered in the tail block of the T -1 tariff, a
cents-per-therm decrease was made only to the first two blocks of the tariff. Application at p. 7.
Likewise, since the proposed increase to the T - 2 tariff demand charge is fixed cost related, a
cents-per-therm increase was made to the T-2 demand charge. Id. at p. 8.
YOU ARE FURTHER NOTIFIED that the Company states the proposed increase is
due to the higher prices the Company must pay to acquire natural gas for its customers and that
its own earnings will not increase as a result of the proposed increase 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 Intermountain Gas requests that this matter
be handled under Modified Procedure pursuant to Rules 201-204 of the Commission s Rules of
Procedure. The Company has requested an effective date of October 1 2005.
YOU ARE FURTHER NOTIFIED that the Commission has jurisdiction over this
matter and Intermountain Gas Company, a gas public 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.
YOU ARE FURTHER NOTIFIED that the Application together with supporting
workpapers, testimonies and exhibits, (if any) have been filed with the Commission and are
available for public inspection during regular business hours at the Commission offices. The
Application and testimonies are also available on the Commission Website at
www.puc.idaho.gov under the "File Room" icon.
NOTICE OF MODIFIED PROCEDURE
YOU ARE FURTHER NOTIFIED that the Commission has reviewed the filing of
record in Case No. INT-05-2. The Commission has preliminarily determined that the public
interest may not require a hearing to consider the issues presented in this case and that issues
raised by the Company s filing may be processed under Modified Procedure, Le., by written
submission rather than by hearing. IDAPA 31.01.01.201-204. In so doing, the Commission
NOTICE OF APPLICATION
NOTICE OF MODIFIED PROCEDURE
ORDER NO. 29856
notes that Modified Procedure and written comments have proven to be an effective means for
obtaining public input and participation.
YOU ARE FURTHER NOTIFIED that the Commission may 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. IDAPA 31.01.01.203.
YOU ARE FURTHER NOTIFIED that if no protests or written comments are
received within the deadline, the Commission will 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, in its discretion, set the matter for hearing or decide the matter and issue
its Order on the basis of the written positions before it. IDAP A 01.01.01.204.
NOTICE OF COMMENT/PROTEST DEADLINE
YOU ARE FURTHER NOTIFIED that the deadline for filing written comments
or protests with respect to the Application and the Commission s use of Modified Procedure in
Case No. INT-05-2 is September 20, 2005. Persons desiring a hearing must specifically
request a hearing in their written protests or comments.
YOU ARE FURTHER NOTIFIED that written comments concerning this case
should be mailed to the Commission and to the Company at the addresses reflected below.
Commission Secretary
Idaho Public Utilities Commission
PO Box 83720
Boise, ID 83720-0074
Street Address For Express Mail:
472 W. Washington Street
Boise, ID 83702-5983
Paul R. Powell
Executive VP & Chief Financial Officer
Intermountain Gas Company
PO Box 7608
Boise, ID 83707
E-mail: customerinput~intgas.com
Morgan W. Richards, Jr., Attorney
804 E. Pennsylvania Lane
Boise, ID 83706
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 homepage located at www.puc.idaho.gov. Click the "Comments and Questions
icon, and complete the comment form, using the case number as it appears on the front of this
NOTICE OF APPLICATION
NOTICE OF MODIFIED PROCEDURE
ORDER NO. 29856
document. These comments must also be sent to the Applicant at the e-mail address listed
above.
FINDINGS AND CONCLUSIONS OF LAW
The Idaho Public Utilities Commission has jurisdiction over Intermountain Gas
Company, its Application for authority to change rates and prices, and the issues involved in this
case by virtue of Title 61 , Idaho Code, specifically Idaho Code ~~ 61-129 61-117 and 61-307
and the Commission s Rules of Procedure, IDAPA 31.01.01.000 et seq.
The Commission has preliminarily determined that the public interest may not
require a hearing to consider the issues presented in this case, and that issues raised by the
Company s filing may be processed under Modified Procedure, i., by written submission
rather than by hearing. IDAPA 31.01.01.201-204. In so doing, the Commission notes that
Modified Procedure and written comments have proven to be an effective means for obtaining
public input and participation, especially when combined with public workshops.
ORDER
IT IS HERBY ORDERED that this case be processed under Modified Procedure.
Persons interested in submitting written comments regarding this case or protesting the use
Modified Procedure must do so no later than September 20, 2005.
IT IS FURTHER ORDERED that pursuant to Rule 125 IDAPA 31.01.01.125
Commission Staff is directed to conduct two public workshops, one in Boise and one in
Pocatello, to dispense information concerning the Company s Application and to receive written
or oral comments from the public prior to the Staff filing its comments in this case. These public
workshops will be scheduled during the week of September 12 through September 16, 2005. A
separate Notice of Public Workshop will be issued with specific dates and times, as well as
designation of the meeting place.
NOTICE OF APPLICATION
NOTICE OF MODIFIED PROCEDURE
ORDER NO. 29856
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this :2
(p +i'
day of August 2005.
j)~
MARSHA H. SMITH, COMMISSIONER
ATTEST:
~fJ
Je. D. Jewell
Commission Secretary
O:INT-05-02 dw
NOTICE OF APPLICATION
NOTICE OF MODIFIED PROCEDURE
ORDER NO. 29856