20051118Decision memo.pdf

DECISION MEMORANDUM
TO:COMMISSIONER KJELLANDER
COMMISSIONER SMITH
COMMISSIONER HANSEN
COMMISSION SECRETARY
COMMISSION STAFF
LEGAL
FROM:DONOVAN E. WALKER
DATE:NOVEMBER 18, 2005
SUBJECT:INTERMOUNTAIN GAS COMPANY'S APPLICATION FOR A CHANGE
IN ITS COMPOSITE DEPRECIATION RATE - CASE NO. INT-05-
On October 28, 2005, Intermountain Gas Company (Intermountain Gas, Company)
filed an Application to change its composite depreciation rate with the Commission. The
Company requests that its Application be processed by Modified Procedure.
THE APPLICATION
The Commission set Intermountain Gas Company s current composite depreciation
rate at 3.93% in Case No. INT-02-4. Order No. 29187. The Company was directed to submit
an updated depreciation study three years from entry of that Order. Id. The Company states it
has contracted the services of AUS Consultants to perform an update to the 2002 depreciation
study. According to the Application, the results of this study indicate that the current composite
rate is over depreciating the Company s assets. Consequently, Intermountain Gas is requesting a
decrease in its composite depreciation rate from 3.93% to 3.37%.This would decrease
Intermountain Gas s annual depreciation accrual by $1 998 923. The Company does not seek to
change its prices as a result of this Application.
The Company states that the current study addresses, among other things, the
lengthening of its mains and services depreciation lives and the corresponding adjustment to net
salvage of that same plant. The Application states that the continued use of plastic in the
Company s mains and services, coupled with the increasing evidence of the benefits of plastic
longer service life and lower costs vs. steel, necessitates the proposed change in mains and
servIces.
DECISION MEMORANDUM
The Company states that the study update was based upon the books and records of
the Company as of September 30, 2004. The Company requests that the decrease in annual
composite depreciation rate be made effective at the beginning of its fiscal year, on October 1
2005. The Company attached a summary of the study as Exhibit 1 to its Application. The
Company states that a copy of the current depreciation study working papers, which is
voluminous, is available for inspection at the Company s general business office.
STAFF RECOMMENDATION
Staff recommends that the Company s Application be processed by Modified
Procedure. However, Staff recommends a comment period of 60 days to allow sufficient time to
review the voluminous working papers associated with the depreciation study.
COMMISSION DECISION
Does the Commission preliminarily find that the public interest may not require a
hearing to consider the issues presented, and that this proceeding may be processed under
Modified Procedure as requested by the Company and recommended by Staff?
DECISION MEMORANDUM