20130717final_order_no_32855.pdf

Office ofthe Secretary
Service Date
July 17,2013
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF INTERMOUNTAIN )GAS COMPANY’S 2013-2017 INTEGRATED )CASE NO.INT-G-13-03
RESOURCE PLAN )
)
)ORDER NO.32855
________________________________________________________________________________________
)
On February 28,2013,Intermountain Gas Company filed its Integrated Resource
Plan (“IRP”)for the years 2013-2017.The IRP describes the Company’s plans to meet its
customers’future natural gas needs.
On May 7,2013,the Commission issued a Notice of Filing and Notice of Modified
Procedure that sought comments on the IRP.See Order No.32801.Commission Staff filed the
only comments in the case,and recommended that the Commission acknowledge the IRP and
accept it for filing.
Based on our review of the record,we issue this Order acknowledging the
Company’s 2013-2017 IRP and accepting it for filing.Further,as the Company has started using
its IRP to discuss how it identifies Lost and Unaccounted for Gas,we alter the Company’s
LAUF gas reporting requirements as discussed below.
BACKGROUND
The Company files an IRP every two years pursuant to Commission Order No.25342
and Section 303(b)(3)of the Public Utility Regulatory Policies Act (PURPA).The IRP must
discuss the following subjects:
•Demand Forecasting
•Assessment of Efficiency Improvements (DSM Actions)&Avoided Costs
•Natural Gas Supply Options
•Natural Gas Purchasing Options and Cost Effectiveness
•Integration of Demand and Resources
•Relationship Between Consecutive Plans (2008 Plan to 2010 Plan)
•Public Participation.
See Order Nos.25342,27024 and 27098.The Commission reviews the IRP to ensure that it
discusses these subjects and represents a diligent effort by the Company to plan for anticipated
ORDERNO.32855 1
supply and demand for natural gas during 2013-20 17.The Commission’s acceptance of the IRP
does not constitute approval of plan specifics or of any transaction undertaken as part of the plan.
SUMMARY OF THE COMPANY’S IRP
The Company’s IRP explains that the Company regularly forecasts the demand of its
growing customer base and determines how to best meet the load requirements brought on by
this demand.The Company’s IRP represents a snapshot in time of the Company’s ongoing
planning process;it describes the currently anticipated conditions over a five-year planning
horizon,the anticipated resource selections,and the process for making resource decisions.IRP,
p.5.
The Company explains that it sells natural gas to two major markets:the
residential/commercial market and the industrial market.In 2012,the Company served an
average of 285,275 residential and 30,428 commercial customers,which is a 1%increase in
average residential and commercial customers from 2011.Residential and commercial
customers use natural gas primarily for space and water heating.The Company’s industrial
customers use natural gas for boiler and manufacturing applications.The IRP says the
agricultural economy and the price of alternative fuels strongly influences industrial demand for
natural gas.In 2012,industrial sales and transportation accounted for 49.8%of the throughput
on Intermountain’s system.See IRP at 5.
The Company further explains that its peak day loads (throughput during the
projected coldest winter day)are growing at a slower rate than was forecast in the 2010 IRP.
The Company says the economic downturn and its negative impact on housing and business
growth resulted in a much reduced customer growth forecast in the years common to the 2010
and 2012 IRPs.Id.But the IRP does show peak day load growth,albeit at a slower rate,over
the planning period.The Company attributes this to:(1)growth in its customer base,primarily
residential and commercial,and (2)production-related growth occurring in its industrial firm
transportation market,Id.at 5-6.
Forecast Peak Day Send-Out
The IRP says the Company analyzed several peak day send-out (delivery)studies to
determine the magnitude and timing of future deficiencies in firm peak day delivery capabilities,
looking at both a total interstate mainline perspective as well as geographic region specific
perspectives.Id.at 6.Residential,commercial,and industrial customer peak day load send-out
ORDER NO.32855
was matched against available resources to determine which combination of new resources
would be needed to meet the companys future peak day delivery requirements in the most cost-
effective manner.Id.The Company estimates that residential,commercial,and industrial peak
day load growth over the five-year period will increase at an average annual rate of 1.03%under
a base case scenario.The IRP indicates that there are no peak day delivery deficits when
forecasted peak day send-out is matched against existing resources.Id.at 7.
Regional Studies
The 1RP analyzes certain geographic regions within the Company’s service territory
based upon the anticipated or known need for distribution system upgrades within each specific
region.The geographic regions are identified as the Idaho Falls Lateral Region,the Sun Valley
Lateral Region,the Canyon County Region,the State Street Lateral Region and an All Other
Region.Id.at 7.
The Idaho Falls Lateral is 104 miles long and serves cities between Pocatello and St.
Anthony in eastern Idaho.The Idaho Falls Lateral serves about 1 7%of the Cornpany s
customers.Id The 2010 IRP identified the potential for peak day delivery deficits on the Idaho
Falls Lateral.To meet the projected growth requirements.the Company completed a 16”
pipeline loop around the city of Idaho Falls.With the completion of this project in the winter of
2012,the Idaho Falls Lateral’s distribution system capacity increased from 810,000 therms to
990,000 thernis.which ensures no potential peak day deficits during the IRP planning horizon.
Id.at 8.
The Sun Valley Lateral serves about 4%of the Company’s customers.The 2010 TRP
revealed potential peak day deficits on the Sun Valley Lateral beginning as soon as 2011.To
ensure adequate capacity on the lateral,the Company installed a compressor station during the
winter of 2010/2011 to boost pressure.The compressor station increased the Sun Valley
Lateral’s capacity from 1 75,000 therms to 204.000 therms.The increased capacity ensures there
will be no peak day delivery deficits during the IRP planning horizon.Id.at 9.
The Canyon County Lateral serves about 15%of the Company’s customers.The IRP
says that a matching of the existing peak day distribution with anticipated demand shows that
there are no peak day delivery deficits during 2013-2017.Id.at 10.
The State Street Lateral serves about 14%of the Company’s customers.There
currently are no capacity constraints on the State Street Lateral,but the Company will continue
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to monitor the area as demand begins to approach design capacity.During the 2013-2017
timeframe,there are no capacity constraints for the State Street Lateral.Id at 11
Assessment of Potential DSM Programs
The IRP says that the Company reviewed traditional and non-traditional resource
alternatives and potential DSM measures to mitigate potential constraint areas.Id.The
Company noted that natural gas prices have continued to fall after the 2010 IRP was completed,
and that its core customers have seen a 40%price reduction since 2008.Because of this,DSM
programs that were previously considered for pilot programs no longer provide cost benefits.
Further,the U.S.Department of Energy has set new rules mandating higher,region-based
minimum efficiency standards for gas water heaters beginning in April 2015.The Company
continues to offer a $200 rebate to customers who install a 90%or greater efficiency natural gas
furnace when converting to natural gas.The Company also continues to promote high-efficiency
homes and ENERGY STAR to the new construction market.Id.at 12.
Summary
In summary,the IRP analyzed residential,commercial and industrial customer growth
and its impact on the Company’s distribution system using design weather conditions under
various scenarios for Idaho’s economy.Peak day send-out under each of these customer growth
scenarios was measured against the available natural gas delivery systems to project the
magnitude and timing of delivery deficits,both from a total Company perspective and a regional
perspective.The Company analyzed the resources needed to meet the projected deficits within a
framework of options to help determine the most cost-effective means to manage the potential
deficits.The Company says that these options allow its customers to rely on uninterrupted
service in the years to come.Id.
STAFF COMMENTS
Staff recommended the Commission accept Intermountain’s 2011-2015 IRP as
fulfilling the requirements established by the Commission.However,Staff suggested that the
Company (1)encourage greater public participation in future TRPs,and (2)change the way it
reports on Lost and Unaccounted for Gas (“LAUF gas”).These two suggestions are summarized
below.
ORDER NO.32855 4
Enliancmg Public Participatioii
Staff opined that the Company “met the basic requirements to provide an opportunity
for public participation and comment”but still “could do more to improve public participation
and feedback in the IRP.”Comments at 1 0.For example.Stall observed that the Company
notified local officials about its Idaho Falls IRP but did not appear to have notified local Treasure
Valley officials about the Cornpanys Boise meeting.Staff stressed that the Company should
have notified these key.Treasure Valley stakeholders and obtained their input,particularly when
Company plans to add the Orchard-Farmway Loop to its Canyon County lateral in 2014 and has
recently started selling LNG from its Nampa facility.Id.at 10-Il.Staff also implied that the
Company should hold more public meetings about its IRP;Avista Utilities,for example,held
four public meetings about its JRP.Id.at 10.
New LA UF Gas Reporting Requirements
Staff noted that the Company has started to use its IRP to discuss the steps it takes to
identify LAUF gas.Given this,Staff suggested changing the Company’s LAUF gas reporting
requirements.
By way of background,LALTF gas is the difference between volumes of natural gas
delivered to the distribution system and volumes of natural gas billed to customers.Potential
sources of LAUF gas vary,but it primarily is due to meter malfunctions that cause measurement
error at the city gate or at customers’meters.LAUF gas may also occur if the Company’s billing
system is incorrectly programmed or if an industrial customer has changed its demand and,
consequently,has an incorrect meter size.When known leaks and line breaks occur between the
city gate and customers’meters,the Company completes a Gas Loss Report for each line break,
which includes an estimate of total natural gas lost during the break.These reports are totaled at
the end of the year and then subtracted from the annual LAUF gas statistics.
The Commission permits the Company to recover a maximum of 0.85%of its total
throughput as LAUF gas.The Commission has ordered the Company to submit semi-annual
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 billing.See Order Nos.30649 and 30913.Staff believes dialogue
with the Company on how to identify LAUF gas should continue.However,the Company has
ORI)ER NO.32855 5
started using the IRP to discuss how it does this.Accordingly,Staff believes the Commission
should discontinue the Company’s semi-annual LAUF gas reporting requirement and replace it
with LAUF gas discussions in the PGA and IRP.Specifically,Staff suggests that:(1)the
statistical summary from the semi-annual reports be included in the Purchased Gas Adjustment
(‘PGA”)filing as a separate exhibit;and (2)the Company be required to include a LAUF gas
section in its IRP.Staff said this new reporting approach would enable Staff to annually monitor
trends in the Company’s LAUF gas while eliminating duplication between the semi-annual
reports and the IRP.Staff believes that changing the LAUF gas reporting in this way will not
harm customers and still allow Staff to adequately monitor the Company’s LAUF gas trends.
Staff Comments at 5-7,and 10.
DISCUSSION AND FINDINGS
Intermountain Gas is a natural gas utility as defined in Idaho Code §61-116 and 61-
117,and the Commission exercises jurisdiction over Intermountain pursuant to Idaho Code §61
129 and the Commission’s Rules of Procedure,IDAPA 3 1.01.01.000,ci seq.An IRP is a
planning document for the Company to consider many factors and variables that can arise as the
Company looks at natural gas supply and demand in the next few years.The plan is not merely
an academic or regulatory exercise but is intended to demonstrate to the public that the Company
has considered,and prepared for,a multitude of scenarios.The Commission expects each
company submitting an TRP to vigorously test each assumption used in its plan to better ensure
that the results of its IRP accurately reflect changing markets and customer demand.
Based upon our review of the Company’s IRP and the written comments,the
Commission finds that the Company’s 2013-2017 JRP satisfies the requirements set forth in
previous Commission Orders.Accordingly,the Commission accepts the Company’s 2013-20 17
IRP for filing.We also wish to address two points made by Staff.
First,although the Company obtained some public participation during the IRP
process,we find that opportunities exist for the Company to improve such participation.For
example,the Company could hold more public meetings and better notify key stakeholders about
the opportunity to participate in these meetings.
Second,we find it reasonable for the Company to discontinue its semi-annual LAUF
gas reports now that it is using its IRP to report on LAUF gas.However,the Company must
comply with the following requirements:(1)the LAUF gas section in the Company’s future IRPs
ORDER NO.32855 6
must explain the Company’s (a)framework for how it has tested for,identified,and remediated
equipment measurement errors or leaks,and (b)business process for alleviating measurement
errors through its financial accounting of nominations,scheduling,measurements,flow volume
allocation,and billing;and (2)the Company’s annual PGA filing must include an exhibit that
summarizes the statistics that the Company otherwise would have reported in its LAUF gas
semi-annual reports.
Lastly,we wish to commend the Company for using non-traditional supply resources,
such as LNG,and its financial hedging and storage activities.These activities help guard against
rate increases that might otherwise occur should natural gas prices rise to unusually high levels.
We appreciate that the Company continues to look for opportunities to diversify and to protect its
customers from market volatility.
ORDER
IT IS HEREBY ORDERED that the Commission accepts the Company’s 2013-2017
IRP for filing.The Company shall continue to work to improve public participation in the IRP
process.
IT IS FURTHER ORDERED that the Company shall discontinue its semi-annual
LAUF gas reports.The Company shall include an exhibit in its PGA summarizing the statistics
that have historically been reported in its LAUF gas semi-annual reports.Further,in future IRPs,
the Company shall include a LAUF gas section that contains the information referenced above.
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 62-6 19.
ORDER NO.32855 7
DOSE by Order of the Idaho Public Utilities Commission at Boise,Idaho this /I
day ofJulv 2013.
(fl
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MACK A.REDFORb.COMMISSIONER
?5kL J
MARSHA Fl.SMITH,COMMISSIONER
ATTEST:
71 /1 ii
J,an D.Jeweif.
Commission Secretary
O:INT-G-i 3-03kk2
ORDER NO.32855 8