20081112final_order_no_30676.pdf

Office of the Secretary
Service Date
November 12, 2008
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF INTERMOUNTAIN
GAS COMPANY'S REQUEST FOR
AUTHORITY TO DECREASE ITS RATES
ORDER NO. 30676
CASE NO. INT -08-
On September 30, 2008, the Commission approved Intermountain Gas Company
annual Purchased Gas Cost Adjustment (PGA) application requesting authority to increase its
annualized revenues by $54.3 million. Order No. 30649. Within its PGA application, the
Company affirmed that current commodity futures prices dictated the use of a $0.78484 per
therm weighted average cost of gas (W ACOG). However, Intermountain Gas committed to
return to the Commission prior to this winter s heating season to amend its rates if forward prices
for natural gas materially deviated from $0.78484 per thermo
On October 27, 2008, Intermountain Gas filed an Application with the Commission
for authority to decrease its rates. More specifically, the Company seeks to decrease its
W ACOG to $0.67482 per thermo This decrease reflects the downward pricing pressures on
domestic supplies of natural gas. Intermountain s earnings will not be decreased as a result of
the proposed changes in prices and revenues. The Company requested that its new rates become
effective December 1 , 2008.
THE APPLICATION
With this Application, Intermountain Gas seeks to pass-through to each of its
customer classes a decrease in gas commodity costs resulting from a decrease in its W ACOG.
The proposed changes would be applicable to service rendered under rate schedules affected by
and subject to Intermountain s annual PGA.
Intermountain Gas proposed decreasing the W ACOG from the currently approved
$0.78484 per therm to $0.67482 per thermo The Application asserted that domestic supplies for
natural gas remain strong and that the proposed $0.11 002 per therm decrease in the W A COG
reflects the downward pricing pressures on domestic supplies of natural gas. Application at 4.
The Company calculated that if its Application is approved, residential customers
using natural gas for space heating alone could experience a $5.18 decrease on their monthly bill
(8.49% decrease per therm). Residential customers using natural gas for both space and water
ORDER NO. 30676
heating could experience a decrease of $7.41 on an average monthly bill (9.22% decrease per
therm). Commercial customers could realize a $34.63 decrease in monthly billing (9.73%
decrease per therm). Application, Exhibit No.
Intermountain asserted that customers have been notified regarding Intermountain
Application through a customer notice and press release. Id. at 5. Intermountain stated that the
proposed overall price change reflects a just, fair, and equitable pass-through of changes in gas-
related costs to Intermountain s customers. Finally, the Company requested that this matter be
handled under Modified Procedure pursuant to Rules 201-204 of the Commission s Rules of
Procedure and that its new rates become effective December 1 , 2008.
COMMENTS
Staff compared the W ACOG requested by Intermountain Gas to the NYMEX
Futures Index, Global Insights Forecast, and the Energy Information Administration s outlook.
Staff believes that, while somewhat optimistic, the Company s projections appear to be
reasonable estimates. Therefore, Staffrecommended that the Company s Application requesting
authority to decrease its rates be approved without further delay or comment to be effective
December 1 2008.
DISCUSSION
We have reviewed the record for this case, including the Application and Staffs
comments. The Commission has jurisdiction over Intermountain Gas Company, a public utility,
its Application for authority to change rates and prices, and the issues involved in this case
pursuant to Title 61 of the Idaho Code, and more specifically, Idaho Code ~~ 61-117 , 61-129
61-307, 61-501 , and 61-502, along with the Commission s Rules of Procedure IDAPA
31.01.01.000 et seq.
The Commission is required to establish just, reasonable, and sufficient rates for
utilities subject to our jurisdiction. Idaho Code ~ 61-502. The PGA mechanism is used to adjust
rates to reflect changes in the costs for the purchase of gas from suppliers, including
transportation, storage and other related costs of acquiring and delivering natural gas. The
Company s earnings are not affected by changes in prices and revenues resulting from the annual
PGA. The PGA mechanism is designed to pass-through prudently-incurred commodity costs in
a timely fashion.
ORDER NO. 30676
Wholesale natural gas prices have continued to fluctuate dramatically. Intermountain
Gas pursues a gas supply and risk management program designed to mitigate the adverse impact
that significant price movements in the natural gas commodity can have on the Company
supplies, customers, and other operations. We commend Intermountain Gas for taking
advantage of lower prices when the opportunity arises within its established risk management
policy.
Although in its Application the Company requested a December 1 effective date, the
Commission finds that a decrease in rates, under these circumstances, warrants immediate
implementation. The Company has indicated that it can implement the decrease as early as
November 15 2008. Therefore, Intermountain Gas Company s new WACOG of $0.67482 shall
be effective on November 15 , 2008.
ORDER
IT IS HEREBY ORDERED that Intermountain Gas Company s Application is
approved. Intermountain is authorized to pass-through its proposed rate decrease to customers as
filed. The Company s W ACOG shall be decreased from $0.78484 per therm to $0.67482 per
thermo The Company shall file conforming tariffs to be effective November 15 , 2008.
IT IS FURTHER ORDERED that Intermountain Gas continue to file quarterly
W ACOG projections and monthly deferred-costs reports with the Commission.
THIS IS A FINAL ORDER. Any person interested in this Order (or in issues finally
decided by this Order) may petition for reconsideration within twenty-one (21) days of the
service date of this Order. Within seven (7) days after any person has petitioned for
reconsideration, any other person may cross-petition for reconsideration. See Idaho Code ~~ 61-
626 and 62-619.
ORDER NO. 30676
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this 1.1. rho
day of November 2008.
~L-i~
MACK A. REDFORD, PRESID T
MARSHA H. SMITH, COMMISSIONER
ATTEST:
Commission Secretary
O:INT-08-04 ks
ORDER NO. 30676