20080627Decision Memo.pdf

DECISION MEMORANDUM
TO:COMMISSIONER REDFORD
COMMISSIONER SMITH
COMMISSIONER KEMPTON
COMMISSION SECRETARY
COMMISSION STAFF
LEGAL
FROM:KRISTINE SASSER
DEPUTY ATTORNEY GENERAL
DATE:JUNE 24, 2008
SUBJECT:IN THE MATTER OF INTERMOUNTAIN GAS COMPANY'S 2009-2013
INTEGRATED RESOURCE PLAN, CASE NO. INT -08-
On May 30, 2008, Intermountain Gas Company filed its 2008 Integrated Resource
Plan (IRP) for the years 2009-2013. Intermountain Gas filed its IRP pursuant to Order No.
25342 and PURPA ~ 303(b)(3). Order No. 25342 set forth the original requirements for IRPs for
local gas distribution companies in accordance with amended Section 303 of PURP A. The
Commission has twice modified the requirements for natural gas IRPs. In Order No. 27024, the
Commission allowed natural gas utilities to shorten the planning horizon to five years to match
the company s planning horizon and available market products. Order No. 27098 removed the
requirement that IRPs include a formal evaluation of the costs and benefits of potential demand
side management (DSM) programs. In the latter Order, the Commission stated that a general
explanation of whether there were cost-effective DSM opportunities would be sufficient.
THE INTEGRA TED RESOURCE PLAN
In its Executive Summary, the Company states that the IRP is meant to describe the
currently anticipated condition from 2009-2013. It further states that the document is meant to
describe conditions based on current expectations for various demand scenarios rather than be "
prescription for all future energy resource decisions." IRP at 1. The Company is the sole
distributor of natural gas in southern Idaho, serving over 300 000 customers in 74 communities
during fiscal year 2008. Its system contains over 10 000 miles of transmission, distribution, and
service lines. Id. In fiscal year 2007 , over 421 miles of distribution and service lines were added
DECISION MEMORANDUM
in response to new customer additions and to maintain service for the growing customer base.
Id.
Intermountain s two major markets are the residential/commercial market (the "core
market") and the large volume, contract customer ("industrial") market. Id. Intermountain
experienced an increase of 5% in average residential and commercial customers during the first
half of fiscal year 2008. Id. Forty-three percent (43%) of the throughput on Intermountain
system during fiscal year 2007 was attributable to industrial sales and transportation. Id.
Forecast Peak Day "Send-Out"
Peak day "send-out" (delivery) 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. Residential, commercial, and industrial peak day load growth
on the Company s system is forecast to grow at an annual average rate of 4% over the next five
years. The Company calculated the growth for the system as a whole as well as for the separate
regions in which the Company operates. When forecasted peak day delivery is matched against
existing resources, there are no peak day delivery deficits. IRP at 3.
Idaho Falls Lateral Region
The Idaho Falls Lateral (IFL) Region serves many cities between Pocatello to the
south and St. Anthony to the north. The residential , commercial, and industrial load served off
the IFL represents approximately 16% of the total Company customers and 21 % of the
Company s total winter delivery during December of 2009. Id. When forecasted peak day
delivery on the IFL is matched against the existing peak day distribution capacity of 1 000 000
therms, there are no peak day deficits throughout the five-year IRP Plan. Id. Intermountain
believes that small, short-duration peak day distribution delivery deficits in the future can be
mitigated by working with customers who have the potential to cut their peak day consumption
by switching to fuel oil during extreme cold temperatures. IRP at 4. However, since there are no
deficits, no industrial alternative fuel use is required.
Sun Valley Lateral Region
The Company s residential, commercial, and industrial customers in the Sun Valley
Lateral (SVL) Region account for 3.5% of the total customer base and 3.3% of the Company
total winter delivery during December of 2007. Id. When forecasted peak day delivery on the
SVL is matched against the existing peak day distribution capacity, a peak day delivery deficit
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occurs during 2009 and increases thereafter. The primary industrial load on the SVL is tourism
and medical services. No industrial customers on the SVL have the capability to switch to
alternative fuels so using industrial fuel to mitigate peak day consumption is not an option.
However, the industrial peak day throughput is relatively small. IRP at 5. The optimization
model indicated that the most cost-effective method to increase delivery capability on the SVL is
the addition of a compressor station prior to FYI1. While there are some small deficits in FY09
and FYI0, the rebuilding of the primary gate station that serves the SVL and the use of line pack I
should be able to cover small, short-duration deficits until the new capacity comes on line for the
FYll heating season. Id.
Canyon County Region
Fifteen percent (15%) of the Company s residential , commercial, and industrial load
is served off the Canyon County Lateral (CCL) Region, and it accounted for 13% of the
Company s total winter delivery during December of2007. IRP at 6. When forecasted peak day
delivery on the CCL is matched against the existing peak day distribution capacity, a peak day
delivery deficit occurs during 2012 and increases thereafter. Id. The industrial customers in the
CCL Region do not currently have the capability to switch to alternative fuels as a means of
mitigating peak day consumption. However, the Company states that it is currently exploring
optional means of enhancing the distribution capability in this region. Id. The optimization
model selected a pipeline-looping project with an in-service of FY12 as the best solution to this
capacity deficit.
ST AFF RECOMMENDATION
Staff recommends that the Company s filing be processed by Modified Procedure
with a 60-day comment period. Staff does not anticipate that workshops will be needed.
COMMISSION DECISION
1. Does the Commission preliminarily find that the public interest may not require a
hearing to consider the issues presented in this case, and that this case is appropriate for
Modified Procedure pursuant to Commission Rules 201 through 204?
I Linepack - The ability of a natural gas pipeline to effectively "store" small quantities of gas on a short-term basis
by increasing the operating pressure of the pipe. Most pipelines use linepack as a resource to help manage the load
fluctuations on their systems, building up line pack during periods of decreased demand and drawing it down during
periods of increased demand.
DECISION MEMORANDUM
2. Anything else?
di;1A/Y\ II 2Y1A A t7
Kri ne A. Sasser
'-'
Deputy Attorney General
DECISION MEMORANDUM