20150929final_order_no_33386.pdf

Office of the Secretary
Service Date
September 29,2015
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF INTERMOUNTAIN )
GAS COMPANY’S APPLICATION FOR )CASE NO.INT-G-15-02
AUTHORITY TO DECREASE ITS PRICES )
(2015 PURCHASED GAS COST )ORDER NO.33386
ADJUSTMENT).)
On August 7,2015,Intermountain Gas Company filed its annual Purchased Gas Cost
Adjustment (PGA)Application.The PGA adjusts rates each year to reflect changes in the
Company’s costs to buy natural gas from suppliers—-including transportation,storage,and other
related costs.See Order No.26019.If approved,the Company’s proposed PGA rates would
decrease the Company’s annualized revenues by $15.3 million (5.69%).The Company requested
that its proposed PGA rates take effect October 1,2015.
On August 26,2015,the Commission issued a Notice of Application and Notice of
Modified Procedure setting a September 16,2015 comment deadline and a September 23,reply
deadline.The Commission Staff filed the only comments in the case,and recommended that the
Commission approve the Company’s Application.The Company did not reply.
Based on our review of the record,we approve the Company’s Application as more
specifically described below.
THE APPLICATION
With this PGA Application,the Company proposed to pass through to customers gas-
related cost changes that would decrease the average bill of:(1)residential customers who use
natural gas for space heating and water heating,by $3.12/month (6.11%);(2)customers who use
gas for space heating only,by $1.36/month (3.56%);and (3)commercial customers by
$12.15/month (5.66%).
The Company explained that these gas-related cost changes result from:(1)
transportation costs billed to the Company by Northwest Pipeline GP (“Northwest”or “Northwest
Pipeline”);(2)a decrease in the Company’s weighted average cost of gas (“WACOG”);’(3)an
The WACOG is the Company’s average variable cost to buy and transport gas to satisfy its customers’estimated
annual gas needs.The WACOG includes the volumetric interstate transportation rate,city gate costs,IGI Resources
administrative fees,and Gas Technology Institute (GTI)charges.It does not include fixed-capacity costs for interstate
transportation,liquid storage,and underground storage.The WACOG is roughly 68%of the Company’s total annual
gas cost.See Staff Comments at 4.
ORDER NO.33386 1
updated customer allocation of gas-related costs under the Company’s PGA provision;(4)the
inclusion of temporary surcharges and credits for one year relating to natural gas purchases and
interstate transportation costs from the Company’s deferred gas cost accounts;and (5)benefits
resulting from the Company’s management of its storage and firm capacity rights on various
pipeline systems.The Company’s proposed price changes incorporate all changes in costs relating
to the Company’s firm interstate transportation capacity including,but not limited to,any price
changes or projected cost adjustments implemented by the Company’s pipeline suppliers as well
as any volumetric adjustments in contracted transportation agreements which have occurred since
the Company’s last PGA filing,Case No.1NT-G-14-0l.
The Company’s new rates also include $1.4 million related to the acquisition of
additional Plymouth LNG storage capacity on Northwest’s delivery system.The Company
acquired incremental Plymouth capacity of 378,900 MMBtu with a daily deliverability of 41,975
MMBtu.The Company stated that the Plymouth facility has been a valuable asset given its ability
to help ensure supply and delivery to customers.
The Company proposed decreasing the WACOG from the currently approved
$0.39482 per therm to $0.32764 per therm.The Company stated that shale reserves in North
America continue to be significant which,combined with slow growth of the nation’s economy,
have contributed to the decrease in the Company’s WACOG.The Company noted,however,that
natural gas supplies combined with significant storage balances have kept natural gas prices lower
than they were just a year ago.The Company noted that it has entered into fixed-price agreements
to lock in the price for significant portions of its underground storage and other winter “flowing”
supplies.
With this Application,the Company would also pass through to its customers,as per
therm credits,$3.9 million that will be generated from the management of its transportation
capacity.The Company also proposed to temporarily adjust prices for 12 months —until
September 30,2016 —to allocate deferred gas costs from its Account No.191,including:(1)a
fixed-gas cost debit of $1.1 million;(2)a variable gas cost debit of $0.7 million;and (3)a Lost
and Unaccounted For Gas (LAUF Gas)credit of $76,166.
The Company stated that the resulting overall price changes are a just,fair,and
equitable pass through of changes in gas-related costs to the Company’s customers.
ORDER NO.33386 2
STAFF COMMENTS
Staff examined the Company’s Application and gas purchases for the year.Staff
confirmed that the Company s PGA proposal would not change the Company’s earnings,the
Company’s deferred costs are prudent.and the Company’s proposed WACOG is reasonable.Staff
thus recommended the Commission approve the Company’s Application and tariffs as filed to
decrease the Company’s annual revenue by $15.3 million (5.69%)and establish a WACOG of
$0.3276 per therm.Staff also recommended the Commission direct the Company to promptly
return to the Commission to amend its WACOG if prices materially deviate from proposed rates in
the upcoming year.
While Staff recommended the Commission approve the Application,Staff also
expressed concern that the Company’s new Customer Care and Billing System itemizes charges
on bills in a complex way that differs from how charges are broken up in the Company’s tariff.
Consequently,while Staff can confirm that the billed charges add up to the total cents per therm
charge authorized in the Company’s tariff,Staff cannot simply consult the tariff to verify the
accuracy of each itemized item.Staff noted that the Company has agreed to work with Staff after
the case concludes to resolve these billing and tariff issues.
DISCUSSION AND FINDINGS
The Commission has reviewed the record for this case,including the Application and
comments.The Company is a public utility,and the Commission has jurisdiction over it and the
issues in this case under Title 61 of the Idaho Code,and more specifically,Idaho Code §61-501
and 61-502.The Commission must establish just,reasonable,and sufficient rates for utilities
subject to its jurisdiction.Idaho Code §61-502.As noted above,the PGA adjusts the Company’s
rates to reflect changes in the Company’s costs to buy natural gas from suppliers—including
transportation,storage and other related costs.The PGA passes the Company’s prudently incurred
natural gas costs to customers through new rates,but the resulting rate changes do not increase or
decrease the Company’s profits.See Order No.26019.
The Commission has examined the Company’s Application and gas purchases for the
year,and finds that the Application should be granted and the tariffs approved as filed.We
approve the Company’s proposed decrease in its WACOG from $0.3948 per therm to $0.3276 per
therm.and find that that the resulting customer rates are fair,just,and reasonable.
ORDER NO.33386
We appreciate the Company and Staff working to resolve the billing and tariff issues
described above.
ORDER
IT IS HEREBY ORDERED that the Company’s Application is granted.The Company
is authorized to pass through its proposed adjustments,surcharges,and credits to customers as
filed.The Company shall establish a WACOG of $0.3276 per therm.The tariff sheets filed with
the Company’s Application are hereby approved,effective October 1,2015.
IT IS FURTHER ORDERED that the Company shall promptly apply to amend its
WACOG if natural gas prices materially deviate from the WACOG approved in this Order.
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.
DONE by Order of the Idaho Public Utilities Commission at Boise,Idaho this 29
day of September 2015.
PAUL KJELLANDER,PRESIDENT
MARSHA H.SMITH,COMMISSIONER
-tFV
K INE RAPER,COMMISSIONER
ATTEST:
(tan D.Jew
Commission Secretary
O:INT-G-1 5-02_kk2
ORDER NO.33386 4