20081107Decision Memo.pdf

DECISION MEMORANDUM 1
DECISION MEMORANDUM

TO: COMMISSIONER REDFORD
COMMISSIONER SMITH
COMMISSIONER KEMPTON
COMMISSION SECRETARY
COMMISSION STAFF

FROM: KRISTINE SASSER
DEPUTY ATTORNEY GENERAL

DATE: NOVEMBER 5, 2008

SUBJECT: IN THE MATTER OF INTERMOUNTAIN GAS COMPANY’S REQUEST
FOR AUTHORITY TO DECREASE ITS RATES, CASE NO. INT-G-08-04

On September 30, 2008, the Commission approved Intermountain Gas Company’s
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 (WACOG). 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 therm.
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
WACOG to $0.67482 per therm. 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 requests 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 WACOG.
The proposed changes would be applicable to service rendered under rate schedules affected by
and subject to Intermountain’s annual PGA.
DECISION MEMORANDUM 2
Intermountain Gas proposes decreasing the WACOG from the currently approved
$0.78484 per therm to $0.67482 per therm. The Application asserts that domestic supplies for
natural gas remain strong and that the proposed $0.11002 per therm decrease in the WACOG
reflects the downward pricing pressures on domestic supplies of natural gas. Application at 4.
The Company calculates 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
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. 4.
Intermountain asserts that customers have been notified regarding Intermountain’s
Application through a customer notice and press release. Id. At 5. Intermountain states 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 requests 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.
STAFF RECOMMENDATION
Staff compared the WACOG 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, Staff recommends that the Company’s Application requesting
authority to decrease its rates be approved without further delay or comment to be effective
December 1, 2008.
COMMISSION DECISION
1. Does the Commission wish to approve the Company’s Application to decrease its
rates without further comment?

M:INT-G-08-04_ks