20150512Reply Comments.pdf

EXECUTIVE OFFICES
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s55 SOUTH COLE ROAD . p.O. BOX 7608 . BO|SE, TDAHO 83707 . (2081377-6000 o FAX:[phone].),,rrl l, l'l iY I I t;1 l: 5t+
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May 12,2015
Jean Jewell
Idatro Public Utilities Commission
472W. Washington St.
P. O. Box 83720
Boise,lD 83720-0074
RE: Intermountain Gas Company
Case No.INT-G-15-01
Dear Ms. Jewell:
Enclosed for filing with this Commission is an original and seven (7) copies of Intermountain
Gas Company's Reply to Staff s and the Idaho Conservation Leagues Comments in the above
referenced Case.
Please acknowledge receipt of these Reply Comments by returning a stamped copy of this
letter for our Company files.
If you should have any questions or require additional information regarding the attached,
please contact me at 377-6168.
Sincerely,
Michael P. McGrath
Director - Regulatory Affairs
Intermountain Gas Company
Enclosure
cc: Scott Madison
Ron Williams
Michael P. McGrath
Director - Regulatory Affairs
Intermountain Gas Company
555 S. Cole Rd.
Boise,Idaho 83709
Telephone: [phone]
IN THE MATTER OF
INTERMOUNTAIN GAS
COMPANY'S
20 I 5 -2OI 9 INTEGRATED RES OURCE
PLAN
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
Case No. INT-G-I5-01
REPLY OF
INTERMOI'NTAIN GAS COMPAIIY
Intermountain Gas Company ("Intermountain" or "Company"), hereby files its Reply to
Comments frled by the Idaho Public Utilities Commission Staff ("Staff') and, separately, by the
Idaho Conservation League ("ICL").
STAFF RECOMMENDATIONS
As in the past, the Staffexpended considerable time and effort in reviewing the details of the
Company's Application. In addition to the recommendation by the Staffthat "...the Commission
accept the Company's 2015-2019 IRP...", Staff also recommended three (3) specific follow-on
recommendations for adoption by the Company. Intermourtain takes exception with one of those
three recommendations and would like to provide clarifring information pertinent to another.
RECOMEITIDATION #1:
"lnclude detailed descriptions of projects in process, under evaluation, and planned. This
should include: scope of work, estimated costs, and target completion dates;"
COMPANY REPLY:
The Company is concemed that an interpretation of this recommendation might persuade
the Commission to direct the Company in such a manner as to transform its Integrated Resource
Plan ("IRP") into more of a Capital Budget or Construction Plan as compared to the strategic
planning tool it currently is. The current form of the Company's IRP enables the Company to
REPLY OF INTERMOUNTAIN GAS COMPANY - I
evaluate projected demand against a myriad of resources and customer $owth scenarios.
Intermountain would also like to point out that a description of the projects under evaluation, as well
as the timing and estimated costs associated with those projects, were indeed included within the
filed IRP document. The Company would commit to working with the Staffin developing ways to
more clearly direct the reader to those data points.
RECOMMENDATION #3:
"Provide public participation details including invitation lists, public flyers, and number of
attendees."
COMPAIYY REPLY:
Exhibit No. 9 of the Company's filed Application included a public meeting invitation letter,
invitation list, a copy of the Company's meeting announcement published in various newspapers
and meeting handout materials. That same Exhibit did not, however, include the number of
attendees at each public meeting. As part of future IRP filings, Intermountain will include the
number of attendees at each of its public meetings.
IDAHO CONSERVATION LEAGUE COMMENTS
Contrary to the recommendation by the Idatro Public Utilities Staff, the "ICL recommends,
the Commission not accept Intermountain Gas Company's 2015 IRP". Endeavoring to support that
recommendation, the ICL provides the Commission with several points of reference whereby the
ICL purports that Intermountain's efforts were contrary to certain IRP criteria established by this
Commission. Intermountain Gas Company disagrees with that premise for the reasons more fully
described below.
1. Intermountain's Economic Forecasting is Sound.
The ICL, in their filed Comments, sought to discredit the economic forecast embodied
within the Company's IRP. As opposed to questioning specific economic parameters contained
within the Company's forecast, as explained within the Company's IRP, the ICL instead chose to
simply point out to the Commission that Intermoturtain's forecast was different than two of the
region's electric utility forecasts. More specifically, Intermountain's outlook for positive growth
was less robust in20l9 as compared to the two other noted utilities. As delineated more fully in the
REPLY OF INTERMOUNTAIN GAS COMPANY -2
Company's IRP, one of Idaho's premier economists was retained by Intermountain to provide a
population and household forecast for each and every county served by the Company. As more fully
delineated within the Company's filed IRP, twenty-one (21) separate industry categories (ob
creators) for the state of Idaho were factored into that same forecast. Also, there were two (2)
additional separate and distinct economic forecasts included within the IRP for evaluation by the
Company - those being the Low and High customer growth scenarios. lntermountain stands by this
most recent outlook for growth on its system.
The ICL also purports that the Company's economic forecast has the potential to cause
"inadequate lead-time" when adding or avoiding certain resources. Intermountain's IRP process
does indeed facilitate adequate lead-time when planning for future resources on its system. This fact
is supported by two important considerations: 1) the Company refreshes its economic outlook at
least bi-annually through the IRP process and,2) the required lead-times to add new resources for a
natural gas local distribution company ("LDC") are much shorter as compared to a vertically
integrated electric utility (i.e. an LDC does not have to plan for and build generation and/or
transmission plant which can take years to complete). The Commission acknowledged the benefis
of a five-year IRP planning horizon for natwal gas local distribution companies as part of Case No.
INT-G-97-02.
2. Intermountain's Fuel Price Risks Are Well Managed.
ICL's argument that Intermountain is not doing enough to "insulate its customers from
fuel price risk" is invalid. To the contrary, Intermountain has many effective tools which
insulate its customers from fuel price risk. These same tools are utilized with an eye towards
supply security, reliability, credit risk and price stability. Specifically, Intermountain's receipt
point flexibility, gas supply contract term diversity, and storage asset optimization provide very
effective means of protecting its customers from fuel price risk.
a. Receipt Point Flexibility: Intermountain interconnects with Northwest Pipeline LLC
('Northwest"), the only interstate pipeline which interconnects to its distribution system.
Over the years as Intermountain's market has grown, it has procured and put in place
long-term firm transportation contracts on Northwest that provide supply diversity. The
base firm transportation contracts on Northwest, held by Intermountain, are
approximately ll3 from the Sumas Receipt Point; 1/3 from the Stanfield Receipt Point
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(providing access to the Aeco supply basin) and ll3 from various Rocky Mountain
Receipt Points. The combination of Intermountain's strategic location on the Northwest
system together with the flexibility of receipt point use on the Northwest system, affords
the ultimate in flexibility in securing the lowest cost gas supplies without degradation of
firm service to Intermountain's customers.
Over the past years and for the foreseeable future, based on futures gas prices, the
lowest cost gas supplies are from the Alberta supply basin (Aeco). Because of the
transportation flexibility of the Northwest system, Intermountain has the ability to move
virtually 100% of its Sumas Receipt Point to the Stanfield Receipt Point and thus provide
the greatest firm access to these Alberta supplies. Thus, it is not appropriate to interpret
from the Company's IRP that Intermountain is relying too heavily on these Stanfield
delivered supplies and foregoing opportunities out of the Rockies, but rather the
Company is employing the most prudent and reasonably low cost gas supply delivery to
its customers, year in and year out.
Additionally, the somewhat recent pipeline expansions designed to move supplies
from the Rockies to the east and west have been in place for several years now and,
accordingly, the market has captured the pricing impact of these expansions and these
prices are already, therefore, included in Intermountain's outlook for natural gas prices.
Gas Supply Contract Term Diversity: Any prudent gas supply strategy should encourage
diversity of gas supply as well as diversity of access to such supply to allow for the
greatest flexibility in securing the lowest reasonably priced gas supplies. Intermountain
purchases gas supplies from multiple suppliers under contracts of up to five years in
length, one year in length, seasonal in length (i.e. winter only), monthly spot supplies and
day gas purchases and sales to balance out its daily needs. These contracted supplies
provide Intermountain, throughout each year, access to supplies from the Rocky
Mountain region, British Columbia Canada (Sumas or Stanfield) and from Alberta
Canada (Aeco or Stanfield).
Storage Utilization as a Natural Price Hedge and Additional BeneJits to Customers:
Intermountain holds approximately 9.5 BCF of supply basin gas storage (8.4 BCF in Clay
Basin in the Rockies supply basins and 1.1 BCF in Jackson Prairie in the Sumas or
British Columbia supply basin) which is utilized to purchase lower cost gas supplies in
the summer months for ultimate delivery to Intermountain's markets in the winter
b.
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months. These storage facilities are also under contract with an Asset Manager such that
winter delivery of the lower cost gas supplies is guaranteed but the Asset Manager also
pays Intermountain a fee for the right to use such storage assets when not in use by
Intermountain. This fee is a direct pass back to lntermountain's customers. During the
winter approximately 75% of Intermountain's firm transportation on Northwest out of the
Rockies is used by the Asset Manager for delivery of the Clay Basin storage gas to Idaho.
Cost Effectiveness, Building Codes & Safety, Customer Education and DSM.
Intermountain is Committed to Cost Effective Service: Contrary to the claims set forth in
the ICL Comments, Intermountain has established a comprehensive review of all
opportunities to participate in cost effective energy efficiency programs, including
Demand Side Management ("DSM") as part of its ongoing IRP process. As noted in the
2015 IRP, Intermountain believes that even with plentiful supplies and lower, more stable
prices, it remains vital that all natural gas customers use natural gas as wisely and as
efficiently as possible. Rather than assuming costly programs are the answer to
encouraging energy efficiency, however, Intermountain chooses to look at a much
broader portfolio of opportunities to encourage the wise and efficient use of natural gas.
The portfolio of options Intermountain considers in its ongoing energy efficiency review
include: participation in efforts to continually review and update building and equipment
standards; support for programs that encourage energy efficiency in new home
construction; customer education; support for Gas Technology Institute ("GTI") energy
efficiency research; support for the direct use of natural gas; continual lost and
unaccounted for gas monitoring; and its ongoing review of DSM opportunities.
Intermountain's findings regarding the cost ineffectiveness of natural gas DSM
progftlms are being replicated in the findings of other natural gas utilities throughout the
region. Avista was given permission by the IPUC to suspend their DSM programs in
Idaho because they were not cost effective. That decision was substantiated by the DSM
progftrm analysis completed as part of their recent IRP filing. The Energy Trust of
Oregon ("ETO") has also scaled back the natural gas energy efficiency programs they are
able to offer because programs are not meeting cost effectiveness tests. While natural gas
DSM programs are not cost effective under current market conditions, the Company has
observed a tendency by outside organizations to adopt different measuring sticks when
3.
a.
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analyzing DSM programs. Intermountain contends that it is in the best interest of its
customers to help keep natural gas prices as low as possible by not adding costly
progftrms that can only be shown to be cost effective by using non-traditional
measurement tools.
Building Codes and Safety: Intermountain is fully committed to customer safety, interacts
with the Division of Building Safety ("DBS") regularly, and has recently provided
significant funding assistance for DBS Carbon Monoxide radio safety messages
throughout its service territory. Intermountain also welcomes the opportunity to
participate in the Idaho Building Code Collaborative when and where participation is
relevant to Intermountain's business and services.
Customer Education: The ICL also falsely contends that Intermountain's educational
progftrms are inadequate and that Intermountain does not undertake activities to
encourage customers to use its website to access information. The majority of
Intermountain's customer communications, including billing envelopes and other
materials, encourage customers to use the website for all forms of interaction and
information, including conservation and efficiency information. In addition to
information customers can access on the website, Intermountain sends out an energy
conservation brochure annually to each of its over 327,000 customers as illustrated in the
2015 IRP filing'.
d. DSM: The ICL encourages the use of ".. behavioral science based programs such as
OPower..". OPower called on IGC to promote their peer comparison web tool. While it
is interesting, and a tribute to the clever use of technology, it holds no assurance of
providing any actual conservation, especially during a winter peak situation. If it is 20
degrees below zero, the average homeowner is far more likely to be concerned that his or
her home is warm enough and safely protected from freeze damage, rather than worrying
about how much gas their neighbor is using at the moment.
The ICL also notes that Intermountain has not assessed the potential for gas DSM
since 2012. This is an unfortunate typo in Intermountain's 2015 IRP document, as a
thorough reviewwas indeed conducted as part of the 2015 IRP process. The supporting
workpapers for that analysis were provided to Staff during the recent IRP audit. As part
1 lntermountain 2015 IRP at 81.
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b.
of the DSM review, Intermountain looked at a wide-range of DSM program
opportunities, not just those offered by other Idaho utilities as ICL states.
Intermountain's capacity expansions outlined in the IRP are driven by rapid
customer growth in certain areas of its system as well as system integrity issues. DSM
progftrms work at the margins to help delay investments in pipeline infrastructure. The
therms saved by participating customers help to reduce the average usage per customer in
existing areas of a distribution system. They cannot address enhancements required due
to customer growth or system integrity issues. The Cloverdale expansion mentioned by
ICL is an instance where former farm ground is being rapidly tumed into one of the
biggest commercial centers in the state of Idaho. This is an example of new
infrastructure that must be built to serye new customers in a rapidly growing area of
Intermountain's system. The only DSM program that could address this situation would
be one that is designed to eliminate customers or restrict the addition of new customers.
A program that reduces existing customer usage would have no impact on this situation
or others like it. Additionally, system expansions like Cloverdale serve to create
reliability in a pipeline system through pipeline loops and bi-directional flow ability. The
increased reliability helps to maintain customer service in the event of a line break,
required maintenance or other abnormal operating condition that could otherwise cause a
loss of service. For these reasons the costs of the Cloverdale expansion were not
included in Intermountain's avoided cost calculation.
Also outlined in the Company's filing, the second tank planned for installation at
the Rexburg LNG facility provides added security for the system. The tanks serve as
supplementary short-term storage for natural gas, ensuring that there will be needed
natural gas available should truck deliveries to Rexburg be impeded due to weather
conditions or other unforeseen situations. The second tank provides redundancy and
helps to ensure gas will flow on an extremely cold day. A DSM program has no bearing
on system integrity issues. For these reasons, the costs of the second LNG tank were not
included in Intermountain's avoided cost calculation.
In summary, Intermountain believes it has indeed provided the comprehensive
review and analysis of potential energy efficiency options as required by the IRP process.
REPLY OF INTERMOUNTAIN GAS COMPANY - 7
CONCLUSION
Based on the foregoing Reply Comments, lntermountain requests that this Commission:
Accept Intermountain's Integrated Resource Plan as filed in Case No. INT-G-15-01,
acknowledging that the filing has fulfilled the requirements established by the Commission
in prior Orders,
Accept Staffs recommendation#2 (include a summary of R&D projects in Intermountain's
next IRP filing) and #3 (to provide public participation details that include the number of
attendees),
Reject Staffls recommendation #1 (that future IRP filings include detailed descriptions of
projects in process, under evaluation or planned). The Company would commit to working
with the Staff in developing ways to more clearly direct the reader to those data points
already existing as part of the Company's filed IRP,
Reject the recommendation of the Idaho Conservation League to "not accept"
Intermountain's Integrated Resource Plan for the reasons outlined above.
Respectfully submitted this 12tr day of May,2015.
INTERMOI.INTAIN GAS COMPANY
l.
J.
4.
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CERTIFICATE OF MAILING
I HERBY CERTIFY that on this I 2tr day of May, 20 I 5, I served a copy of Intermountain
Gas Company's Reply Comments relating to CaseNo.INT-G-15-01 upon:
BenjaminJ. Ofto
c/o Idaho Conservation League
710 N 66 Steet
Boise,ID 83701
by depositing a tue copy thereof in the United States Mail, postage prepaid, in an envelope
addressed to said percon at the above address.
REPLY OF INTERMOI'NTAIN GAS COMPANY.9