20150402press release.pdf

Case No. INT-G-14-02, Order No. 33260
Contact: Gene Fadness [phone], 890-2712
www.puc.idaho.gov

PUC sets lower depreciation rate for Intermountain Gas

BOISE (April 2, 2015) – The Idaho Public Utilities Commission is approving a small reduction to
Intermountain Gas Company’s composite depreciation rate from 3.07% to 3.05%.

The company had originally requested an increase to 3.12%, but agreed with changes proposed
by commission staff to slightly decrease the rate.

The commission did adopt the company’s proposed increase to its total General Plant
amortizations from $1.75 million to $2.6 million.

The changes will not impact rates for Intermountain Gas’ 330,000 customers across southern
Idaho.

Utilities are allowed a depreciation component in retail rates to help cover the costs to replace
facilities. Intermountain Gas updates its depreciation rate every three years. It contracts with
an outside vendor, AUS Consultants, to conduct the update study.

The AUS study determined Intermountain Gas is under-depreciating its assets. The study
addressed, among other items, adjustments to the projected lives of Intermountain’s electronic
transmitters used to read meters, its distribution mains and service lines and improvements
made to the company’s Liquefied Natural Gas facility in Nampa.

Intermountain began using the electronic read transmitters (ERTs) in 2002. The units were
expected to continue in service for 15 years. However, recent studies indicate that the devices
will need to be replaced earlier than anticipated, resulting in a shortening of their remaining
useful life. After discussion, commission staff and the company agreed to delay a change in the
depreciation rate for the transmitters until after the company has replaced all ERTs. The
resulting more precise expense can then be included in the next depreciation study.

Commission staff also made downward adjustments to the proposed depreciation rates for the
company’s distribution mains and for the equipment that regulates the pressure in the
pipelines. The commission did not accept the company’s proposed depreciation rate increase
from 2% to 2.55% for the Nampa Liquefied Natural Gas facility.

Depreciation, as applied to Intermountain Gas’ plant, means the loss in service value not
restored by maintenance or covered by insurance, but incurred in connection with wear and
tear, decay, inadequacy, obsolescence and new requirements from public authorities, among
other causes.

A copy of the commission’s final order along with other documents related to the case can be
accessed on the commission’s website at www.puc.idaho.gov. Click on “Open Cases” under the
“Natural Gas” heading and scroll down to Case No. INT-G-14-02.

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