20100524final_order_no_31089.pdf

Offce of the Secretar
Service Date
May 24, 2010
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF INTERMOUNTAIN )
GAS COMPANY'S APPLICATION FOR ) CASE NO. INT-G-09-03
AUTHORITY TO ESTABLISH )
INTERRUPTIBLE SNOWMELT ) ORDER NO. 31089TARFFS. )
On November 5, 2009, Intermountain Gas Company fied an Application requesting
authority to implement new rate schedules. Application at 2. Specifically, the Company
proposes new rate schedules that would require any new residential or small commercial
customer installng new natural gas equipment, or any existing residential or small commercial
customer performing remodeling work that includes modification of equipment and piping, for
the purose of melting snow on sidewalks, driveways, or other similar appurenances
("Snowmelt"), to receive interrptible service for such Snowmelt either under the Company's
proposed Rate Schedule IS-R or Rate Schedule IS-C. The Company requested that its
Application be processed by Modified Procedure and that its rates become effective on
December 15,2009. On December 3,2009, the Commission suspended the Company's effective
date (for a period of30 days plus 5 months) and set a December 23,2009, comment deadline.
Several comments were received in the case. As a result of issues raised through the
public çomment process, the Commission convened a workshop on Februar 2, 2010. The
Company filed comments on May 5, 2010, addressing questions, concerns and considerations
raised durng the workshop. After reviewing the Application, comments and Company response,
we approve Intermountain Gas's proposed new rate schedules as set forth in greater detail below.
THE APPLICATION
Intermountain asserts that natural gas-fired Snowmelt equipment has increased in
popularty over the past decade. The Company explains that while Snowmelt usage can be
beneficial durng off-peak periods to more effciently use otherwse unused distrbution capacity,
it can negatively impact system pressures when firm sales and transportation customers require
peak-day deliveries.
The Company maintains that most Snowmelt equipment uses an inordinate amount of
natural gas compared to a standard space or water heating application. The Company states that
during periods of peak-day throughput, Snowmelt usage competes with firm customers for the
ORDER NO. 31089 1
finite amount of available natual gas that can flow through the Company's distribution system,
potentially degrading service to firm customers. Intermountain explains that because Snowmelt
customers use large amounts of natural gas for only a few days or weeks during the winter, it
creates an inefficient use of the Company's distribution system and does not allow for cost
recovery of the added capacity. Therefore, Intermountain proposes that Snowmelt use be
considered an interrptible service. 1
Intermountain proposes that all new Snowmelt applications have individual metering
facilties, separate and distinct from any metering providing any other natural gas service. At its
sole discretion, Intermountain will manualy or remotely tu off all Snowmelt meters in affected
regions of its system when system integrity is at issue. The Company believes that interrptions
will be short in duration and will depend on weather and snowfall conditions. Existing
Snowmelt users wil be given the option to convert to the terms and conditions of the proposed
rate schedules. 2
The proposed rate schedules include a Facility Reimbursement Charge to recover the
capital investment required to provide Snowmelt service to new customers. However, the
proposed schedules include a provision that would exempt existing Snowmelt customers from
the one-time Facilty Reimbursement Charge.
Intermountain asserts that customers have been notified regarding Intermountain's
Application though a press release in the Company's service area where customers would be
impacted by the proposed schedules. Intermountain states that the proposed schedules are just,
fair, and equitable.
THE COMMENTS
A number of cities, businesses, and residents have installed natural gas Snowmelt
under sidewalks, parking lots, and driveways. Natural gas Snowmelt equipment presents a
unique set of challenges for the Company in designing its distribution system because it puts a
very large load on the system. However, because Snowmelt is utilized for a short period of time
it does not generate revenue commensurate with the load, when compared to space and water
heating.
i During periods of peak-day throughput, interrptible customers can be required to cease using natual gas to help
ensure the needs of fi sales and transportation customers are met.
2 The Company has already negotiated voluntar agreements with existing large volume Snowmelt users that
provide for cessation of Snowmelt upon notice by the Company.
ORDER NO. 31089 2
Because the number and size of natual gas Snowmelt installations have grown, the
Company must design its system to meet the Snowmelt peak loads, which have a very low load
factor. By makng Snowmelt service interrptible, future system expansions to serve this load
can be avoided and Snowmelt service can occur when the system is close to capacity. The
proposed taiffs align the Company's commitment to provide reliable service with the desire to
avoid costly capital upgrades. Therefore, Staf agrees that the interrptible Snowmelt tarffs
present an equitable solution to keep costs down and prevent the subsidization of Snowmelt
customers by more traditional natural gas users.
Intermountain's proposal requires that all new Snowmelt applications have individual
metering facilities, separate and distinct from any metering providing other natural gas service.
When required, the Company will manually or remotely turn off all Snowmelt applications in
affected regions of its system. The Company has indicated to Staff that it can anticipate the need
to curail load and has the ability to provide notice to customers prior to interrption. Staff
agrees that it is important whenever possible to give customers adequate notice of an interrption
to make alternative arrangements for snow removaL. Staff recommended that except for
emergencies, the Company notify customers or property managers a minimum of two hours prior
to interrpting service. The Company should also keep customers abreast of when service is
expected to be restored. This up-to-date information wil allow customers who have selected
natural gas as their preferred method of snow removal to find alternative methods and plan
accordingly.
Because Snowmelt activity involves significant capacity requirements but is
necessar only for a fraction of the year, Intermountain's proposal to make this service
interrptible presents an opportity for all customers on the system to conserve resources and
lower costs by allowing the Company to forego expensive capital upgrades. In addition, similar
to a demand response program, the proposal induces existing customers to voluntarily convert
their Snowmelt systems to interrptible service. The proposal offers residential customers the
lower RS-2 winter rate for interrptible Snowmelt use between April and November, and offers
commercial customers the GS-l winter rate for interrptible Snowmelt that may occur between
April and November. Initially the number of customers on the interrptible Snowmelt schedules
wil be low; however, Staff hopes that the lower rate in shoulder months wil increase the
number of paricipants. When combined with the proposed tarff provision exempting existing
ORDER NO. 31089 3
residential and commercial customers from paying the one-time Facility Reimbursement Charge,
the proposal presents a modest incentive that is likely to entice existing customers to paricipate.
The proposed tariffs include a Facility Reimbursement Charge to recover the capital
investment required to provide interrptible Snowmelt service to a new customer. Ths charge
curently includes the cost of the meter set and other related facility and equipment costs.
Because there is no solution curently available within the natural gas industr to cost-effectively
shut off and tur on service remotely under cold conditions, interrption wil initially be made by
manual shut-off. However, once satisfactory remote Snowmelt cycling equipment is available,
Staff recommended the Company return with a proposal to the Commission outlning the cost of
installng automated equipment. Remote automation would allow the Company to cycle
customers' systems on and off for shorter periods of time during longer interrptions and make
the process of initiating interrptions more effcient as the number of customers with Snowmelt
Increases.
After a complete evaluation of the Company's Application, its methodology and
conclusions, Staff recommended that the Commission approve the Company's proposed
interrptible Snowmelt schedules subject to the following conditions: (l) that the Company
notify customers or property managers a minimum of two hours before interrpting service and
keep customers informed when service is expected to be restored and when service has been
restored; (2) that the Company actively promote and market the tarffs as a conservation measure
similar to a demand response program; and (3) that once satisfactory remote Snowmelt cycling
equipment is available, the Company retur with a proposal to the Commission outlining the cost
of instaling the new equipment.
Six customers fied comments regarding the Company's Application. One customer
requested that a tiered rate-type approach be used as opposed to interrptible service, i.e., higher
rates for larger users. Two customers supported the Company's proposal as a means of reining
in excessively large homes and as a positive conservation measure regarding our natural
resources. One customer opposed the proposed interrptible tarff because he utilzes a
Snowmelt system and does not want to be inconvenienced (it was unclear from his comment
whether he understood that as an existing customer he would have to "opt in" to the program
before his service would be subject to interrption). A comment was submitted on behalf of the
Sun Valley City Council asking for more time to comment. Although the case has remained
ORDER NO. 31089 4
open for five (5) months since the Council's comment was received, only one additional
comment was submitted to the Commission. The final comment was submitted by a gentleman
who installs Snowmelt systems. He strongly opposes an interrptible taiff and opines that
Snowmelt interrptions would result in personal injury and property and vehicle damage. He
relates any lack of capacity to Intermountain Gas's lack of planing.
Company Response Following Workshop Discussions
On May 5, 2010, Intermountain Gas fied comments in response to discussions and
concerns raised in the workshop. The Company reiterated that although the purose of the
proposed tarff is to ensure that essential needs for natural gas are not displaced by discretionar
uses, the Company has no financial incentive to unnecessarily interrpt gas sales.
Intermountain Gas initially proposed to tu off Snowmelt at the Company's meter
either manually or by electronically controlled devices. However, through cooperative
discussions at the workshop and further investigation, the Company determined that interrpting
Snowmelt at the customer's boiler system offers significant advantages. Controllng a
customer's boiler instead of the meter eliminates both the need for Company personnel to enter
the customer's home and the need to relight equipment when service is restored. The Company
maintains that it would be relatively simple to tie into the Snowmelt equipment's electrical
system to control its activation and that an "on/off' switch could be located at an outdoor,
perimeter site easily accessible to Company personneL. Three tyes of boiler control devices
were investigated by the Company. Intermountain Gas recommended the use of a unit that can
verify the boiler's on/off status and would be relatively easy to upgrade to a remote-controlled
system if and when technology and conditions warant. The Company also suggested the use of
a locking control box of sufficient size to provide added flexibility in upgrading to a remote
operating system.
An assertion was made by a paricipant at the workshop that Blaine County and/or
the cities within Blaine County had ordinances requiring the use of Snowmelt. The Company's
review of city and county ordinances found no such requirement. Based on the information
provided with its initial Application, the discussions during the workshop, and the follow-up
information provided, the Company requested that the Commission approve its Snowmelt tarffs.
ORDER NO. 31089 5
COMMISSION FINDINGS
The Commission has jursdiction over Intermountain Gas Company, a public utilty,
its Application for authority to implement new rates and charges, 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. Having fully reviewed the Application and comments in this proceeding,
we approve Intermountain Gas's Application for authority to implement new rate schedules
requiring that new Snowmelt customers be subject to interrptible service.
Because Snowmelt customers use large amounts of natural gas for only a few days or
weeks during the winter, costly capital upgrades to deliver natural gas for that use would create
an inefficient use of the Company's distribution system. Moreover, the upgrades would be
subsidized by more traditional and typical natural gas users who do not require the added
capacity. By making Snowmelt service interrptible, future system expansions to serve this load
can be avoided and Snowmelt service can occur when system capacity is available.
The Company represented that it can anticipate the need to curail load in order to
avoid interrptions to its firm service customers. It is important that customers be given
adequate notice of the need for an interrption in service so that they may make alternative
arangements for snow removaL. The Commission finds that a minimum of two (2) hours' notice
before interrpting a customer's Snowmelt service is reasonable. In addition, the Company must
keep the affected customers apprised of when service is expected to be restored.
Similar to a demand response program, the Company's proposed tariffs provide an
incentive for existing customers to voluntarly convert their Snowmelt systems to interrptible
service. The new schedules offer both residential and commercial customers a lower winter rate
for interrptible Snowmelt use between April and November. In addition, existing customers are
exempt from paying the one-time Facilty Reimbursement Charge. The Commission directs the
Company to actively promote and market its interrptible taffs as a conservation measure in
order to maximize paricipation among existing Snowmelt customers.
The Commission wishes to commend Intermountain Gas on its wilingness to work
with the Commission and the public regarding the concerns raised about interrptibilty and its
effects on customers and Snowmelt systems. Following the workshop, and afer some
investigation, the Company determined that it would be relatively simple to tie into the
ORDER NO. 31089 6
Snowmelt boiler's electrical system to control its activation and that an "on/off" switch could be
located at an outdoor, perimeter site easily accessible to Company personneL. The Commission
supports the Company's proposal to utilze a boiler control device that can verify the unit's
on/off status and allows for the abilty to upgrade to a remote-controlled system when technology
and conditions warant. The Company's responsiveness to the workshop discussion will
eliminate the need for Company personnel to enter a customer's home and the need to relight
equipment when service is restored. We direct the Company to retur to the Commission with a
new proposal outlining the costs of materials and installation of remote Snowmelt cycling
equipment when such technology becomes reasonably available.
In conclusion, we find the Company's proposed rate schedules to be reasonable and
appropriate.
ORDER
IT IS HEREBY ORDERED that Intermountan Gas Company's Application to
implement new rate schedules requiring that new Snowmelt customers be subject to interrptible
service is approved.
IT IS FURTHER ORDERED that Intermountain Gas provide a minimum of two (2)
hours' notice prior to interrpting a customer's Snowmelt service. The Company must also keep
the affected customers apprised of when service is expected to be restored.
IT IS FURTHER ORDERED that the Company fie conforming tarffs to be
effective June 1,2010.
THIS IS A FINAL ORDER. Any person interested in this Order may petition for
reconsideration within twenty-one (21) days of the service date of this Order. Withn seven (7)
days afer any person has petitioned for reconsideration, any other person may cross-petition for
reconsideration. See Idaho Code § 61-626.
ORDER NO. 31089 7
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this ~ Ll -fA.
day of May 2010.
~/GbM:MP~ì5NT --
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MARSHA H. SMITH, COMMISSIONER
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MACK A. REDFORD, COMMISSIONER
ATTEST:~il.~lD.eweU-
Commission Secretar
O:INT -0-09-03 _ ks3
ORDER NO. 31089 8