20111230Decision Memo.pdf

DECISION MEMORANDUM 1
DECISION MEMORANDUM

TO: COMMISSIONER KJELLANDER
COMMISSIONER REDFORD
COMMISSIONER SMITH
COMMISSION SECRETARY
COMMISSION STAFF
LEGAL

FROM: KARL KLEIN
DEPUTY ATTORNEY GENERAL

DATE: DECEMBER 29, 2011

SUBJECT: INTERMOUNTAIN GAS CO.’S APPLICATION TO DECREASE PRICES,
CASE NO. INT-G-11-03

On December 22, 2011, Intermountain Gas Company applied for authority to
decrease its revenues from February 1, 2012 to September 30, 2012 by $6.0 million. Application
at 2. The Company contends the proposed revenue decrease relates to changes in the Company’s
gas purchase costs and will decrease customer rates while not affecting the Company’s earnings.
Id. at 2. The Company asks that the Commission process the Application by Modified
Procedure, and that the new rates take effect February 1, 2012. Id. at 6.
THE APPLICATION
With this Application, Intermountain Gas seeks to pass-through to its sales customer
classes a decrease in gas commodity costs resulting from a decrease in Intermountain’s weighted
average cost of gas (“WACOG”). The Company says this would result in an overall price
decrease to Intermountain’s RS-1, RS-2, GS-1, LV-1, IS-R and IS-C customers. Application at
3.
Intermountain proposes decreasing the WACOG from the currently approved
$0.45342 per therm to $0.41812 per therm because regional natural gas prices have continued to
decline since Intermountain filed INT-G-11-01 in August 2011. Id. at 4. The Company
attributes the decline to: (1) the continued prolific availability of U.S. shale gas production, (2)
storage balances being at or near record high levels, (3) the lack of material hurricane activity
that would typically reduce natural gas deliverability, and (4) a mild winter that has dampened
natural gas demand across the Pacific Northwest. Id. Additionally, the Company says the
DECISION MEMORANDUM 2
domestic Ruby pipeline has displaced traditional Canadian natural gas supplies and softened
“prices at the AECO hub in Alberta which makes up a significant portion of the Company's gas
supply portfolio.” Id.
Intermountain says it has allocated the proposed price changes to each of its customer
classes based on Intermountain’s Purchased Gas Cost Adjustment (PGA) provision. Id.1 The
Company says the proposed price changes are just, fair, and equitable. Id. at 5.
Intermountain asserts that customers have been notified regarding Intermountain’s
Application through a customer notice and press release. Id. Finally, the Company requests that
this matter be handled under Modified Procedure and that its rates become effective on February
1, 2012. Id. at 6.
STAFF RECOMMENDATION
Staff recommends that the case be processed by Modified Procedure, with initial
comments due in 14 days and Company reply comments, if any, due 7 days later.
COMMISSION DECISION
Does the Commission wish to process this case under Modified Procedure, with
initial comments due in 14 days and Company reply comments, if any, due 7 days later?

M:INT-G-11-03_kk
1 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.