20100922Comments.pdf

KRISTINE A. SASSER
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-0074
[phone]
BARNO. 6618
11:d 'J
iRiD SEP 22 PM 4: 42
Street Address for Express mail
472 W. WASHINGTON
BOISE, IDAHO 83702-5918
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION OF )
INTERMOUNTAIN GAS COMPANY FOR )
AUT~ORITY TO CHANGE ITS PRICES (2010 )
PURCHASED GAS COST ADJUSTMENT). )
)
)
CASE NO. INT-G-I0-03
COMMENTS OF THE
COMMISSION STAFF
! The Staff of the Idaho Public Utilties Commission, by and through its attorney of record,
Kristine A. Sasser, Deputy Attorney General, in response to the Notice of Application and
Notice of Modified Procedure (Order No. 32051) submits the following comments.
BACKGROUND
On August 11, 2010, Intermountain Gas Company fied its anual Purchased Gas
Cost Adjustment (PGA) Application requesting authority to decrease its annualized revenues by
$2.2 milion. 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 earings
will not change as a result of the proposed changes in prices and revenues. The Company
requests that its Application be processed by Modified Procedure and that its rates become
effective on October 1,2010.
With this Application, 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 biled to
STAFF COMMENTS 1 SEPTEMBER 22,2010
Intermountain by Northwest Pipeline GP ("Northwest" or "Northwest Pipeline"); (2) an increase
in costs from Intermountain's "upstream" pipeline suppliers; (3) a decrease in Intermountain's
Weighted Average Cost of Gas, or "W ACOG"; (4) an updated customer allocation of gas-related
costs pursuant to the Company's Purchased Gas Cost Adjustment provision; (5) the inclusion of
temporar surcharges and credits for one year relating to gas and interstate transporttion costs
from Intermountain's deferred gas cost accounts; and (6) 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. Application at 3-4.
Intermountain Gas proposes decreasing the W ACOG from the curently approved
$0.49600 per therm to $0.49211 per thermo The Application maintains that weather-adjusted
demand for natural gas has diminished, driven by the downturn in our regional and national
economy. At the same time, natual gas supplies are plentifuL. This curent imbalance between
supply and demand has driven down the near-term prices for natural gas. Application at 5.
Pursuant to Order No. 30913, Intermountain included temporar surcharges and
credits in its October 1, 2009, prices for the principal reason of collecting or passing back to its
customers deferred gas cost charges and benefits. Intermountain seeks with this Application to
eliminate the temporar surcharges and credits included in its current prices during the past 12
months. Exhibit No.4, line 26, reflects the elimination of these temporary surcharges and
credits. The proposed changes would result in a price decrease to Intermountain's RS-2, GS-l
and LV-l customers and a slight increase to Intermountain's RS-l customers. Transportation
customers would also experience a small rate increase resulting from the reversal of the prior
year's amortization rates. Application at 4 and 6.
The Company asserts that the proposed W ACOG includes the benefits resulting from
Intermountain's storage of significant amounts of natural gas procured during the sumer season
for use during the winter when market prices are normally higher. Additionally, and in an effort
to furher stabilze prices paid by customers during the coming 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 5. Although curent
commodity futures prices dictate the use of a $0.49211 per therm WACOG, the Company
continues to remain vigilant in monitoring natural gas prices. If forward prices for natural gas
materially deviate from $0.49211 per therm, the Company is committed to retuing to the
Commission to amend its rates.
STAFF COMMENTS 2 SEPTEMBER 22,2010
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
12-month period ending September 30,2011, as follows: (1) fixed gas costs credit of$2,079,148
attributable to the collection of interstate pipeline capacity costs, the true-up of expense issues
previously ruled on by the Commission, and mitigating capacity release credits generated from
the release of Intermountain's pipeline capacity; (2) deferred gas cost amounts of$15.6 milion
attributable to variable gas costs since October 1,2009; and (3) deferred gas costs related to Lost
and Unaccounted for Gas which results in a net per-therm decrease to both sales and
transportation customers. Application at 6 and 7.
Intermountain states that a straight cents-per-therm price decrease was not utilzed for
the LV -1 taiff. There are no fixed costs recovered in the tail block of the LV -1 tariff. The
proposed changes in the W ACOG and variable deferred credits (outlined in Company Exhibit 9)
are applied to all three blocks of the LV -1 tariff, but adjustments relating to fixed costs are
applied only to the first two blocks of the LV-l tariff. ¡d. Each block of the proposed LV-I, T-
3, T-4 and T-5 taiffs include a uniform cents-per-therm decrease to adjust for Lost and
Unaccounted for Gas. ¡d.
Intermountain asserts that customers have been notified regarding Intermountain's
Application through a customer notice and press release. Application at 8. 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.
STAFF REVIEW
Staff has reviewed the Company's Application and gas purchases for the year to verify
that the Company's earnings wil not change as a result of the filing, that the deferred costs are
prudent, and to determine the reasonableness of the W ACOG request. The table below
ilustrates the impact the proposed decrease will have on the various customer classes served by
the Company:
STAFF COMMENTS 3 SEPTEMBER 22,2010
Table 1:
Customer Class
RS-1 Residential
RS-2 Residentiai1
GS-1 General Service 1
LV-1 Large Volume
T -3 Transportation
T -4 Transportation
T -5 Transportation
Proposed
Change in
Class
Revenue
59,568
(2,270,229)
(55,974)
(8,625)
27,233
53,588
8,564
(2,185,875)
Proposed
Average
Change in
$/Therm
0.00185
(0.01329)
(0.00056)
(0.00337)
0.00042
0.00042
0.00042
Proposed
Average %
Change
0.20%
-1.58%
-0.07%
-0.59%
2.52%
1.00%
1.47%
-.83%
Proposed
Average
Price
$/Therm
0.94852
0.82920
0.80002
0.57125
0.01708
0.04237
0.02906
The overall effect of the proposed changes in the Company's Application is a decrease in anual
revenue received by Intermountain Gas Company of $2, 185,875. This decrease is comprised of
the following items:
Table 2:
Deferrals:
Removal ofINT-G-09-02 Temporaries $ 19,268,569
Removal ofINT-G-09-02 Lost and Unaccounted for Gas 896,763INT-G-1O-03 Temporaries (21,459,356)Total Deferrals $ (1,294,024)
Lost and Unaccounted for Gas (INT-G-I0-03) $ (547,731)
Re-allocation of Fixed Costs
Changes in the Weighted Average Cost of Gas
Fixed Cost Changes:
Northwest Pipeline
New Upstream Capacity Costs
Other Storage Facilty Changes
Total Fixed Cost Changes
Total Annual Price Change
$(1,166,760)
1,826,053
72,382
$ 113,651
$ (1,189,446)
$ 731,675
$ (2,185,875)
i There were no therm sales under the IS-R and IS-C tariffs. However, the IS-R price is based on the RS-2
December-March price and receives the same PGA adjustments and the IS-C price is based on the GS- I December-
March price and receives the same PGA adjustments.
STAFF COMMENTS 4 SEPTEMBER 22,2010
Weighted Average Cost of Gas (WACOG)
The Company's current Application proposes to decrease the WACOG by approximately
0.78% from that approved last year by Commission Order No. 30913. More specifically, the
proposal drops the WACOG from the current rate of $0.49600 per therm to the proposed rate of
$0.49211 per thermo This request reflects the third decrease since October 1, 2008, and the
fourth decrease in the past five PGA filings. The table below ilustrates the changes in the
W ACOG volatilty experienced over the last foureen years:
Table 3:
Percentage
Increase/ODecrease)
Year WACOG From Prior Year
1998 0.15684 N/A
1999 0.18252 16.37%
2000 0.28673 57.10%
2001 0.38796 35.30%
2002 0.32000 (17.52%)
2003 0.47500 48.44%
2004 0.55492 16.83%
2005 0.73219 31.95%
2006 0.68500 (6.45%)
2007 0.63583 (7.18%)
2008 0.78484 23.43%
2008 0.67482 (14.02%)
2009 0.49600 (26.50%)
2010 0.49211 (0.78%)
The primary reason for the decline in the W ACOGis the continuing decline in natural gas prices
due to the weakess in our regional and national economy that has reduced the weather adjusted
demand for natural gas during a period of time when natural gas supplies have been plentifuL. A
national report issued by the Energy Information Administration (EIA) in August of this year,
provides insight into the anticipated conditions of the natural gas industry through 2011 in the
areas of natural gas consumption, production, inventory and pricing. Natural gas consumption is
forecast to increase by 3.8% from the 2009 levels of 64.9 bilion cubic feet per day (Bcf/d) in
2010 and remain flat in 2011. Natural gas consumption in the industrial sector is projected to
STAFF COMMENTS 5 SEPTEMBER 22, 2010
increase by 7% through the remaining months of 20 10 and expected to increase by only 1 %
through 2011. Residential and commercial consumption through 2011 is projected to remain at
levels comparable to those of 2009. Production during 2010 is expected to be 1.1% above 2009
levels with a 1.4% reduction in driling activity in 2011. The EIA Report (September 9, 2010)
states that inventories held in underground storage in the lower 48 states is 5.5 percent above the
five-year average of 2.998 trilion cubic feet, and 6.4 percent below last year's storage level of
about 3.382 trilion cubic feet. Finally, natural gas spot price averaged $0.463 per therm in July
2010 - $0.0017 per therm less than June 2010. EIA forecasts natural gas prices for the remainder
of 20 1 0 to average $0.4466 per therm with an average price of $0.498 per therm in 2011.
In order to determine the WACOG for the following year, the Company looks at the
combined forward gas prices of the supply sources it utilzes and then considers the impact of
current and forecasted economic factors on natural gas demand and supply. Last year's
W ACOG of $0.49600 per therm in the Company's amended 2009 PGA fiing was high
compared to what Intermountain paid for gas throughout the year. Actual gas prices continued
decreasing throughout the year, and therefore resulted in the Company over-collecting revenue
from customers. This over-collection wil be credited back to customers over the next twelve
months.
Thoughout the year, Staff reviews several publications relating to the natural gas
industry. However, two primary sources are utilzed to develop forecasts, specifically: (1)
NYMEX Futures Index and (2) Energy Information Administration (EIA). For purposes of this
Application, Staff has reviewed the Company's proposed WACOG of$0.49211 and its
forecasted natural gas prices through September 2011. When comparing the data from the above
informational sources and forecasts, it is clear that the NYMEX forward prices are slightly
inflated to account for upward price risk in the long term market. When looking at the forward
prices indicated by Intermountain, the Company seems to be predicting gas prices slightly higher
than anticipated, however, the Company's forecasted gas prices are reasonable and within the
confidence intervals of the national forecasts.
Staff reviewed the established and recently proposed WACOG's of other major
northwest gas utilties and found that Intermountain's proposed WACOG continues to be the
lowest. However, direct comparisons can be difficult because some utilties include different
(transportation and storage) elements in the WACOG calculation and have different amortization
STAFF COMMENTS 6 SEPTEMBER 22,2010
rates on the year to year deferral balances. Some of Intermountain's WACOG difference can
also be attributed to: (1) Northwest Pipeline's proximity to Intermountain's service territory;
(2) the significant capacity Intermountain holds on Northwest Pipeline for delivery of gas
supplies from the Rockies Basin; and (3) Intermountain's extensive gas storage that allows it to
hedge gas at lower prices.
These contributing factors, coupled with Intermountain's dynamic hedging strategies,
have historically allowed the Company to provide stable and low prices to customers. Given that
the Company has locked the majority of its winter flowing gas supplies, the W ACOG of
$0.49211 per therm is reasonable when compared to forecasted future commodity prices. Staff
recommends the Commission accept the Company's proposed WACOG. However, Staff agrees
with the Company that if prices significantly deviate from the proposed rates, the Company
should retur to the Commission with a new fiing.
Temporary Surcharges and Credits
Pursuant to Order No. 30913, Intermountain included temporar credits in its October 1,
2009 prices for the principal reason of passing back to its customers deferred gas cost charges
and benefits. The temporary credits consisted of three separate items: (1) a credit of
approximately $5.9 milion in benefits generated by releasing some pipeline transporttion
capacity; (2) an additional credit of$741,000 attributable to the collection of pipeline capacity
costs, the true-up of expenses from the 2008 PGA, and charges attibutable to new rates effective
Januar 1, 2009 for Northwest Pipeline; and (3) the $12.7 milion deferred credit balance, which
is the difference from the commodity costs that Intermountain actually paid for natural gas and
the WACOG that was included in rates. When the temporar credit items are totaled to account
for the drop in revenue proposed by the Company, the credits total $19.3 milion. In the same
case, Lost and Unaccounted for Gas temporar credit deferrals were $900,000.
The new temporar credits consist of three separate items: (1) a credit of approximately
$3.8 millon in benefits generated by releasing some pipeline transportation capacity; (2) an
additional credit of $2.1 milion attributable to the collection of pipeline capacity costs, the true-
up of expenses from the 2009 PGA, and capacity release credits generated from the release of
Intermountain's pipeline capacity; and (3) the $15.6 milion deferred credit balance, which is the
difference from the commodity costs that Intermountain actually paid for natural gas and the
W ACOG that was included in rates. When the temporar credit items are totaled to account for
STAFF COMMENTS 7 SEPTEMBER 22,2010
the drop in revenue proposed by the Company, the credits total $21.5 milion. However, when
offset by the removal of prior temporaries (including Lost and Unaccounted for Gas) the
reduction in revenue is $1.3 milion. As shown on page 4, Table 2, the total reduction in revenue
is $2.2 milion. This is the combination of the current Lost and Unaccounted for Gas credit of
$600,000, the proposed $1.2 milion revenue reduction due to the reduced WACOG, additional
fixed cost changes and the $1.3 milion temporary surcharges and credits discussed above.
Natural Gas Storage
Intermountain utilzes storage to avoid high winter prices by procuring gas during the
summer when prices are usually cheaper. Currently, Intermountain stores gas at Northwest's
Plymouth LNG and Jackson Prairie facilties, and Questar Pipeline's Clay Basin facilty.
Underground storage is typically used for fulfillng the Company's basic core market needs. The
Company has 111 milion therms in underground storage going into the winter heating season,
which represents 52% of its November 2010 to March 2011 supply requirement. Intermountain
entered into various hedging agreements to lock-in the price of its underground storage and other
winter flowing supplies. The remaining storage injections have been locked in at prices ranging
from $0.39800 to $0.41600/therm. Therefore, the resulting affect of the Company's forward
purchasing plan on the W ACOG is small and any difference wil be reconciled in customer rates
next year.
The Company continues to utilize Liquid Natural Gas (LNG) for design weather peaking
puroses and to curail entitlements where the pipeline imposes stringent control of pipeline
flows leaving Intermountain with limited supply options. When at capacity, LNG represents
approximately 15% of the Company's total storage; however the Company expects to keep this
below capacity throughout the winter. Consistent with prior years, as of September 1, 2010, the
Company's LNG storage was at approximately 59% of its capacity. Storing significantly more
LNG than what is expected to be used during the winter season would come at an additional
expense to ratepayers because of Intermountain's cost to maintain the LNG at a specific
temperature.
Pipeline Transportation
Intermountain delivers transported natural gas to its Idaho City gates through Northwest
Pipeline, an interstate transportation provider whose pipeline runs through Intermountain's
STAFF COMMENTS 8 SEPTEMBER 22,2010
service territory. However, in order to move gas from Canada to Northwest Pipeline,
Intermountain also utilizes capacity on Gas Transmission Northwest (GTN), TransCanada's
Foothills Pipeline system (Foothils) and its Alberta system known as Nova Gas Transmission
(Nova). Intermountain's pipeline capacity rates for both Nova and Foothils increased in 2010
resulting in an increase of $1.8 milion. Northwest Pipeline updated its rates effective May 21,
2010. While some rates decreased and others increased (storage and fuel rates), the pipeline
transporttion rate biled to Intermountain remains unchanged. Contractual terms with
Northwest Pipeline allowed for a slight decline in daily volume and a decrease in capacity costs
of $1.2 milion. Capacity on these pipelines remains a key component in serving customers and
maintaining supply diversity. Intermountain will also determine when its contracted interstate
transportation is under-utilzed due to warer weather or declines in industrial demand. This
capacity wil be posted for release to others with the release payments received benefiting
Intermountain customers.
Intermountain's proximity to several interstate pipelines allows it to effectively allocate
its natural gas supply mix from different basins based on price differentials, and subsequently
redeliver that specified volume on its own distribution pipeline network. This year the Company
purchased nearly 62% of its gas from the Rockies Basin, leaving approximately 38% between
Sumas and AECO. Since Northwest Pipeline runs directly through Intermountain's service
territory, Intermountain is able to geographically utilze this service more directly.
Lower Rockies Basin prices have benefited Intermountain due to its lack of pipeline
infrastructure capable of moving Rockies gas east. However, Rockies Express pipeline, a 639
mile pipeline built to move gas east, was completed this past year. This pipeline wil enable
Rockies direct access to the eastern markets for the first time which is expected to increase price
competition among suppliers in North America. To date, the completion of the Rockies Express
pipeline has not significantly influenced natural gas prices.
The Company's diversity of supply basins has enabled it to hedge expected winter
flowing gas requirements at favorably contracted prices. This diversity allows Intermountain to
exercise hedging options and provide customers with lower priced natual gas.
Recovery of Lost and Unaccounted for Gas
Lost and unaccounted for gas (L&U gas) is the difference, or variance, between the
physical purchase of natural gas to serve customers and the volumes biled to those same
STAFF COMMENTS 9 SEPTEMBER 22, 2010
customers. Intermountain Gas requests the recovery of L&U gas through a per therm surcharge.
The PGA surcharge request reflects L&U gas amounts above those which are included in base
rates as approved by the Commission in 1985. In response to concerns about increasing L&U
gas recovery, in 2008 the Commission ordered "that Intermountain Gas be permitted to recover a
maximum of 0.85% of its total throughput as lost and unaccounted-for gas." Order No. 30649.
The Commission also ordered the Company to submit quarerly reports outlining: (1) the
Company's framework for how it has tested for, identified, and remediated equipment
measurement errors or leaks; and (2) the business process for alleviating measurement errors
through its financial accounting of nominations, scheduling, measurements, flow volume
allocation, and biling. Intermountain was directed to work with Staff to outline steps toward
identifying the sources of lost and unaccounted for gas and work toward improvement.
The table below ilustrates the Company's L&U gas estimates submitted as par of the
past four PGA filings along with the percentage change in these estimates experienced over the
same period:
Estimated %% Change From
Lost & ofL&U Gas Prior Year's
Unaccounted vs.Estimated
Year (L&U)Throughput L&U
2007 3,700,000 0.72%n/a
2008*4,800,000 0.86%29.73%
2009*2,414,773 0.45%-49.69%
2010 1,077,361 0.20%-55.38%
*According to the INT-G-09-02, INT-G-08-03 & INT-G-08-04 filing
As indicated by the table, this year the Company has signifcantly reduced its estimated
percentage ofL&U gas from a high of 0.86% to 0.20% of total throughput, approximately 55%
lower than last year's estimates of 0.45%. The Company's actual percentage ofL&U gas to total
throughput has steadily decreased over the course of the last three fiings as well. Actual L&U
gas was 0.94%, 0.47% and 0.44% for 2007,2008 and 2009, respectively. The Company
indicates that this year's L&U gas estimate of 0.20% is expected to be closer to the actual L&U
gas going forward. According to the Company, this is due to aggressive commitment and focus
on continuous improvement in the area ofreducing.L&U gas by Intermountain.
STAFF COMMENTS 10 SEPTEMBER 22,2010
In an effort to meet the conditions of Commission Order No. 30649, Intermountain has
filed its quaerly reports explaining how it tests for, identifies, and remediates equipment
measurement errors or leaks. One measure Intermountain takes to identify errors and leaks is the
completion of variance reports, i.e., an auditor reviews biled consumption compared to "Low
Usage Reports." The goal of these reports is to identify inaccurate bilings due to the
malfunctioning of the customer's meter. The report analyzes each meter read in every cycle and
compares the current measured usage to the usage in the same period one year earlier. Accounts
with disparities greater than 60% are summarized anq receive the attention of an analyst who
reviews other usage history to determine whether there is a valid reason for the difference. If
there is no valid reason for the difference, the analyst flags the account for a couresy phone call
or "check-for-dead" meter order.
During 2010, Intermountain performed 6,481 "check-for-dead" billng audits and found
slightly over 8% to be dead or have a drive/pressure related issue. This is compared to 4,837
audits in 2009,5,088 audits in 2008 and 7,382 audits in 2007 with "dead meter rates" of 11 %,
13% and 7%, respectively. In addition, Intermountain regularly completes audits to: (1) verify
that the appropriate type and size meter is installed; (2) identify problems in programming
software used to translate metered consumption into biled consumption; and (3) ensure the
amounts delivered to Intermountain's distribution system according to the interstate pipeline are
equivalent to those same volumes measured by the Company's Gas Control Deparment.
In 1985, the Commission established the normalized unit cost collected as par of base
rates at $0.00182 per thermo However, when adjusted for growth and the natural gas rate of
recovery approved in Case No. INT-G-07-03, the normalized level ofL&U gas embedded in
base rates yields a collection of lost and unaccounted for gas in the amount of $1 ,000,241 as
ilustrated on Workpaper NO.8 included with the Company's Application. Intermountain is
requesting to recover the difference between the total estimated October 2009 to September 2010
L&U gas and the normalized level ofL&U gas revenue already collected in current base rates.
As stated above, the normalized level ofL&U gas already collected is $1,000,241 while the
October 2009 to September 2010 actual amount ofL&U gas is $423,407. Thus, Intermountain is
requesting that the difference of $576,834 be passed back as a credit to customers.
Staff recommends that the Commission allow the Company to credit the L&U gas
amount requested in this PGA. However, as mentioned in previous Staff Comments, Staffwould
expect the Company to fie for an accounting order authorizing it to defer the costs of the repair
STAFF COMMENTS 11 SEPTEMBER 22,2010
and lost gas in the event of catastrophic failure. Staff also maintains that losses due to errors in
faulty meters or measurement control practices should not be recovered in the PGA. Staff
recommends that the Company continue to submit semi-annual L&U gas reports for review.
Staff also recommends that the Commission maintain the maximum L&U gas recovery at 0.85%
of total throughput as specified in Order No. 30649.
Risk Management and Gas Purchasing
Intermountain's risk management and purchasing strategies are dynamic and involve the
flexibilty to make decisions based on the fudamentals of the natural gas environment. These
include decisions based on weather and huricane forecasts, storage levels, dril rig counts, new
Gulf of Mexico and shale gas supplies, LNG levels, interstate pipeline transportation changes,
and consumption patterns. All of these factors go into determining how the Company executes a
given hedge strategy, layers in the execution of a given hedge strategy, fixes the price for a given
time frame, or utilizes other forms of financial pricing. The Company and Staff continue to
evaluate the market fudamentals and management guidelines within the "Gas Supply Risk
Management Program" to evaluate the risk of price volatilty to customers. The primar
purposes of the gas purchasing strategies are: (1) to ensure adequate gas supplies are available to
customers; (2) to mitigate the adverse impact of significant price movements in the natural gas
commodity; and (3) to minimize the credit risk inherent in the implementation of certain price
risk reducing strategies.
This year because of declining economic conditions, natural gas prices have been steadily
declining. This spring, in response to low summer and forward prices, the Company was able to
lock in gas for the injection season at favorable prices. Once again, this winter Intermountain
has locked approximately 90% of its supply, leaving 10% unlocked for weather variabilty and
the possibilty that warmer conditions drop the supply requirements. By leaving 10% unlocked,
customers are protected from potentially higher winter prices and market volatilty. Although
the Company's contracts for physical gas supplies are stil typically based on the first-of month
index price, the Company sometimes converts these to daily pricing depending on what benefits
customers. The Company's strategy, foresight, and flexibilty continue to offer savings to
customers, and more importantly mitigate the volatilty by hedging in comparison to the
WACOG. This year, continued weak economic conditions coupled with the Company's hedging
strategies have allowed the Company to purchase gas at prices much lower than the W ACOG
STAFF COMMENTS 12 SEPTEMBER 22, 2010
curently set in rates. This contributed to the over-collection of$15.6 milion now being credited
back to customers.
CONSUMER ISSUES
Customer Notice and Press Release
The Customer Notice and Press Release were included in Intermountain's Application.
The Application was received on August 11,2010. Staff reviewed the customer notice and press
release and determined they were in compliance with the requirements of IPUC Rules of
Procedure 125.04 and 125.05 (IDAPA 31.01.01.125). The customer notice was mailed with
cyclical billngs beginning August 12,2010 and ending September 14,2010.
Customer Comments
Customers were given until September 22,2010 to fie comments. As of September 21,
2010, one customer had commented on this case. The comment was from an RS-l residential
customer (space heating only) who wil receive a slight increase in rates if the PGA is approved.
The commenter indicated that it was not fair to reward some customers with a decrease because
they use more product and penalize others that use less product. He felt it was inequitable
treatment.
Financial Assistance for Paying Heating Bils
If approved, Intermountain's RS-2 residential customers wil see a slight decrease in their
rates (average RS-2 customer wil see 90 cents per month in savings) and RS-l residential
customers wil see a slight increase in their rates (average RS-l customer wil see 9 cents more in
biling per month). Staff encourages all customers that qualify to apply for the federally-fuded
Low Income Home Energy Assistace Program (LIHEAP). Bil payment assistance is also
available through organizations such as Project Share in southwestern Idaho and Project Warth
and Helping Hands in southeastern Idaho. For more information on these programs, customers
may call the nearest community action agency, Intermountain Gas Company, the Idaho Public
Utilties Commission, or the 2-1-1 Idaho Care Telephone Line.
STAFF COMMENTS 13 SEPTEMBER 22, 2010
STAFF RECOMMENDATION
After a thorough examination of the Company's Application and gas procurements for
the year, Staff recommends that the Commission accept the Company's Application and filed
tariffs decreasing the annual revenue of Intermountain Gas Company by $2.2 milion and
establishing a weighted average cost of gas at $0.49211/therm. Staff furher recommends that
the Commission continue to require semi-anual L&U gas reports and maintain a cap for L&U
gas recovery at 0.85% of total throughput.
Respectfully submitted this ~ day of September 2010.
~,a.~.
Kre ASasser
Deputy Attorney General
Technical Staff: Doug Cox
Patricia Harms
Marilyn Parker
i:umisc:commentslintgl O.3ksphdcmp comments. doc
STAFF COMMENTS 14 SEPTEMBER 22, 2010
CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS 22ND DAY OF SEPTEMBER 2010,
SERVED THE FOREGOING COMMENTS OF THE COMMISSION STAFF, IN
CASE NO. INT-G-1O-03, BY MAILING A COPY THEREOF, POSTAGE PREPAID, TO
THE FOLLOWING:
KATHERIE BARNARD DIR
MANAGER REG AFFAIRS
INTERMOUNTAIN GAS CO
222 F AIRVIEW AVE NORTH
SEATTLE WA 98109
E-MAIL: Kathie.barardØ)cngc.com
STEPHEN R THOMAS
MOFFATT THOMAS ET AL
101 S CAPITOL BLVD
STE 1000
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SECRETARY
CERTIFICATE OF SERVICE