20080903notice_of_application_order_no_30634.pdf

Office of the Secretary
Service Date
September 3, 2008
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION
OF INTERMOUNTAIN GAS COMPANY
FOR AUTHORITY TO CHANGE ITS
PRICES (2008 PURCHASED GAS COST
ADJUSTMENT)
NOTICE OF APPLICATION
CASE NO. INT -08-
NOTICE OF
MODIFIED PROCEDURE
ORDER NO. 30634
On August 15, 2008, Intermountain Gas Company filed its annual Purchased Gas
Cost Adjustment (PGA) Application requesting authority to increase its annualized revenues by
$54.3 million. Application at 2. The PGA mechanism is used to adjust rates to reflect annual
changes in Intermountain s costs for the purchase of natural gas from suppliers - including
transportation, storage, and other related costs. See Order No. 26019. Intermountain s earnings
will not be increased as a result of the proposed changes in prices and revenues. The Company
requests that its Application be processed by Modified Procedure and that new rates become
effective October 1 2008.
NOTICE OF 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) a decrease in costs
billed to Intermountain pursuant to the Settlement of the General Rate Case filed by Gas
Transmission Northwest Corporation ("Gas Transmission Northwest" or "GTN"); (2) the
procurement of discounted interstate transportation on Northwest Pipeline GP ("Northwest" or
Northwest Pipeline ); (3) benefits included in Intermountain s firm transportation and storage
costs resulting from Intermountain s management of its storage and firm capacity rights on
pipeline systems including Northwest Pipeline, GTN and TransCanada s BC system; (4) an
increase in Intermountain s Weighted Average Cost of Gas, or "W ACOG"; (5) an updated
customer allocation of gas-related costs pursuant to the Company s Purchased Gas Cost
Adjustment provision; and (6) the inclusion of temporary surcharges and credits for one year
relating to gas and interstate transportation costs from Intermountain s deferred gas cost
accounts. Application at 3-
NOTICE OF APPLICATION
NOTICE OF MODIFIED PROCEDURE
ORDER NO. 30634
YOU ARE FURTHER NOTIFIED that the Company calculates that, if its
Application is approved, residential customers using natural gas for space heating alone could
experience an average increase of $7.90 on their monthly bill (15% increase per therm).
Residential customers using natural gas for both space and water heating could experience an
increase of $12.30 on an average monthly bill (18% increase per therm). Commercial customers
could realize a $55.30 increase in monthly billing (18% increase per therm).
YOU ARE FURTHER NOTIFIED that Intermountain Gas proposes to increase the
W ACOG from the currently approved $0.63583 per therm to $0.78484 per thermo The
Application asserts that worldwide demand for energy, coupled with constraints on production
has driven the price of all energy to record highs. The Company maintains that its proposed
W ACOG includes the benefits to Intermountain s customers generated by the Company
management of significant natural gas storage assets. More specifically, the Company procures
natural gas during the summer season for withdrawal and use during the winter when prices
would otherwise be higher. Additionally, the Application states that, in an effort to further
stabilize the prices paid by customers during the upcoming winter period, Intermountain has
entered into various hedging agreements to lock-in the price for significant portions of its
underground storage and other winter "flowing" supplies. Application at 6. Although current
commodity futures prices dictate the use of a $0.78484 per therm W ACOG, the Company
intends to remain vigilant in monitoring natural gas prices. If forward prices for natural gas
materially deviate from $0.78484 per therm, the Company is committed to return to the
Commission prior to this winter s heating season to amend these proposed rates.
YOU ARE FURTHER NOTIFIED that, pursuant to Order No. 30443 , Intermountain
included temporary surcharges and credits in PGA rates last October. Exhibit No., Line 26
reflects the elimination of these temporary surcharges and credits. The Company includes a
fixed-cost collection adjustment pursuant to the provisions of its PGA tariff which provides that
proposed rates will be adjusted for updated customer class sales volumes and purchased gas cost
allocations. Application at 7. Intermountain proposes to pass back to its customers the benefits
generated from the management of its transportation capacity totaling over $9 million. Id.
Exhibit No.7. Further, the Company proposes to allocate deferred gas costs from its Account
No. 186 balance to its customers through temporary price adjustments to be effective during the
NOTICE OF APPLICATION
NOTICE OF MODIFIED PROCEDURE
ORDER NO. 30634
12-month period ending September 30, 2009, as follows: (1) fixed gas costs credit of $8.
million attributable to the collection of interstate pipeline capacity costs, the true-up of expense
issues previously ruled on by the Commission, refunds attributable to the Settlement of GTN'
General Rate Case and mitigating capacity release credits from Intermountain s upstream
capacity; and (2) deferred gas cost debits of $18 million attributable to variable gas costs since
October 1 , 2007. Application at 8. Intermountain proposes to collect the balances via a per
therm surcharge and credit. Id.
YOU ARE FURTHER NOTIFIED that Intermountain states that a straight cents-per-
therm price increase was not utilized for the LV -1 tariff. The proposed increase is fixed-cost
related and, since there are no fixed costs recovered in the tail block of the LV -1 tariff, a cents-
per-therm increase relating to fixed costs was made only to the first two blocks of the LV-
tariff. Each block ofthe proposed T-3 and T-4 tariffs include a uniform cents-per-therm increase
for unaccounted-for gas recovery. Id. Additionally, these industrial tariffs were updated to
reflect the elimination of the T-l and T-2 tariffs.! Order No. 30599.
YOU ARE FURTHER NOTIFIED that the proposed increase to the T-5 Tariff
Demand Charge is fixed-cost related and reflects the removal of a fixed-cost temporary credit
currently included in the T-5 Demand Charge. Also, the T-5 Commodity Charge includes a
uniform cents-per-therm increase for unaccounted-for gas recovery. Application at 9.
YOU ARE FURTHER NOTIFIED that Intermountain asserts that customers have
been notified regarding Intermountain s Application through a customer notice and press release.
Id. Intermountain states that the proposed overall price changes reflect a just, fair, and equitable
pass-through of changes in gas-related costs to Intermountain s customers.
YOU ARE FURTHER NOTIFIED that the Company has asked that its Application
be processed under Modified Procedure. The Company has requested an effective date of
October 1 , 2008.
NOTICE OF MODIFIED PROCEDURE
YOU ARE FURTHER NOTIFIED that the Commission has preliminarily
determined that the public interest may not require a formal evidentiary hearing in this matter
I Intermountain Gas currently offers four industrial tariff options: L V-
I - Large Volume Firm Sales Service; T-3 -Interruptible Distribution Transportation Service; T-4 - Firm Distribution Only Transportation Service; and T-5 -Firm Distribution Service with Maximum Daily Demand.
NOTICE OF APPLICATION
NOTICE OF MODIFIED PROCEDURE
ORDER NO. 30634
and will proceed under Modified Procedure pursuant to the Commission s Rules of Procedure
201 through 204, IDAPA 31.01.01.201 through .204. The Commission notes that Modified
Procedure and written comments have proven to be an effective means for obtaining public input
and participation in cases of this nature.
YOU ARE FURTHER NOTIFIED that any person desiring to state a position on this
Application may file a written comment in support or opposition with the Commission no later
than September 25, 2008. The comment must contain a statement of reasons supporting the
comment. Persons desiring a hearing must specifically request a hearing in their written
comments. Written comments concerning this Application shall be mailed to the Commission
and Intermountain Gas at the addresses reflected below:
Commission Secretary
Idaho Public Utilities Commission
PO Box 83720
Boise, ID 83720-0074
Michael P. McGrath
Director - Gas Supply & Regulatory Affairs
Intermountain Gas Company
PO Box 7608
Boise, ID 83707
Street Address For Express Mail:
472 W. Washington Street
Boise, ID 83702-5918
Stephen R. Thomas
Moffatt, Thomas, Barrett, Rock & Fields
Chartered
PO Box 829
Boise, ID 83701
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
document.
YOU ARE FURTHER NOTIFIED that if no written comments or protests are
received within the time limit set, the Commission will consider this matter on its merits and
enter its Order without a formal hearing. If written comments are received within the time limit
set, the Commission will consider them and, in its discretion, may set the same for formal
hearing.
YOU ARE FURTHER NOTIFIED that the Application, supporting workpapers and
exhibits have been filed with the Commission and are available for public inspection during
NOTICE OF APPLICATION
NOTICE OF MODIFIED PROCEDURE
ORDER NO. 30634
regular business hours at the Commission offices. The Application and other workpapers are
also available on the Commission s Website at www.puc.idaho.gov under the "File Room" and
then "Gas Cases.
YOU ARE FURTHER NOTIFIED that all proceedings in this matter will be held
pursuant to the Commission s jurisdiction under Title 61 of the Idaho Code, and specifically
Idaho Code 99 61-307, 61-313 , 61-503 and 61-622. The Commission may enter any final Order
consistent with its authority under Title 61.
YOU ARE FURTHER NOTIFIED that all proceedings in this matter will be
conducted pursuant to the Commission s Rules of Procedure, IDAPA 31.01.01.000 et seq.
ORDER
IT IS HEREBY ORDERED that this case be processed under Modified Procedure.
Interested persons and parties may file written comments no later than September 25 , 2008.
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this 3;'.,(
day of September 2008.
~~~ ~ -
MACK A. REDFO
MARSHA H. SMITH, COMMISSIONER
~d~~JI . KEMPTO , C MISSIONER
ATTEST:
i8'J1Commission Secretary
O:INT-08-03 ks
NOTICE OF APPLICATION
NOTICE OF MODIFIED PROCEDURE
ORDER NO. 30634