20170215Darrington Rebuttal.pdf

Ronald L. Williams, ISB No. 3034
Williams Bradbury, P.C.
1015 W. Hays St.
Boise,ID 83702
Telephone: [phone]
Email: [e-mail]
Attorneys for Intermountain Gas Company
BEFORE TIIE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION OF
INTERMOUNTAIN GAS COMPANY FOR
THE AUTHOzuTY TO CHANGE ITS RATES
AND CHARGES FOR NATURAL GAS
SERVICE TO NATURAL GAS CUSTOMERS
IN THE STATE OF IDAHO
Case No. INT-G-16-02
REBUTTAL TESTIMONY OF JACOB DARRINGTON
FOR INTERMOTINTAIN GAS COMPANY
February 15,2017
)
)
)
)
)
)
)
a.
A.
Please state your name, position and business address.
My name is Jacob Darrington. I am employed by Intermountain Gas Company
("Intermountain" or "the Company") as a Regulatory Analyst. My business
address is 555 South Cole Road, Boise, ID 83707.
Are you the same Jacob Darrington that prepared and previously presented
preliled direct testimony on behalf of Intermountain Gas Company in this
Case?
Yes.
What is the purpose of your rebuttal testimony?
The purpose of my testimony is to rebut the following three issues that were
discovered during my review of the supporting calculations to Company Witness
Morrison's Exhibit Nos. I l0 and I I 1:
l. Stating that he "Accepted Company Billing Determinants" for the T-3
customer class in response to the Company's Production Request No. 20
but then using an inflated five-year average to calculate the T-3
normalized test year revenue.
2. Arbitrarily reallocating the spread of therms in the T-4 billing blocks.
3. Ignoring the Lost Gas adjustment proposed by the Company.
What Billing Determinants did Doctor Morrison use for the T-3 customer
class?
In response to Company Production Request No. 20, Dr. Morrison provided an
Excel file that had the electronic copies of Exhibits No. 110 and No. 111,
including supporting calculations. On the first tab of that Excel file, titled
Darrington, Reb. I
Intermountain Gas Company
a.
A.
o.
A.
a.
A.
I
2
3
4
5
6
7
8
9
"Proposed Allocation_Exl10," Dr. Morrison stated that he "Accepted Company
Billing Determinants" for IS-R, IS-C, GS-12 (CNG), LV-l, T-3,T-4 and T-5 (see
Exhibit No. 43). However, after reviewing the supporting calculations provided
in this Excel file, it is apparent that Dr. Morrison did not accept the Company's
billing determinants for the T-3 customer class, but instead used a five year
average to determine total throughput. Additionally, Dr. Morrison's direct
testimony never discussed an adjustment to the T-3 customer class throughput.
This adjusted throughpttis l2%o higher than the original throughput filed by the
Company. Dr. Morrison's analysis ignores the fact that three of the largest T-3
customers migrated to the T-4 customer class during the five year period he used
for averaging. He also ignored actual throughput for the first six months of 2016.
The overall effect of this averaging causes T-3 normalized test year margin (i.e.
revenues less cost ofgas) to be overstated by $81,559, which can be seen on
Exhibit No. 44, Page 1, Column (d), Line 13. For the reasons stated above, the
Company rejects Dr. Morrison's proposed adjustment to the T-3 customer class.
Will you please explain the effect of Dr. Morrison's arbitrary reallocation of
the spread of therms in the T-4 billing blocks?
Yes. As mentioned above, Dr. Morrison stated that he "Accepted Company
Billing Determinants" for the T-4 customer class. While it is true that he accepted
the total actual and forecasted throughput for the T-4 customer class, as presented
by the Company, he arbitrarily reallocated the spread of therms in the billing
blocks. The effect of this reallocation was to increase the throughput in to the
higher margin I't block and decrease the throughput in the other lower margin
Darrington, Reb. 2
Intermountain Gas Company
10
1l
T2
13
t4
l5
16 a.
t7
18 A.
l9
20
2t
22
23
1
2
J
4
5
6
7
8
9
10
11
t2
13
t4
l5
t6
t7
a.
A.
blocks. He not only adjusted the forecast months, but also adjusted the actual
billed data for January through June of 2016. Because Dr. Morrison had no
objection to the actual and forecasted throughput for the T-4 customer class in
total, there is no valid reason to arbitrarily reallocate the spread of therms to the
billing blocks so as to achieve an inflated test year margin for the T-4 customer
class. The total impact of this error increases the Company's test year margin by
$227,807, which can be seen on Exhibit No. 44, Page2, Column (d), Line 13.
Please address the exclusion of the Lost Gas expense adjustment.
Certainly. With this filing, the Company proposed to update the Lost Gas
Expense benchmark. To do this, an adjustment for the difference between the
current Lost Gas Expense benchmark and the proposed benchmark was included
in the cost of gas normalization. Dr. Morrison's work excludes this adjustment
from the normalized test year. The effect is to exclude the Lost Gas adjustment
from the current case even though no Staffwitness has filed testimony opposing
the adjustnent.
Does this conclude your testimony?
Yes it does.
Darrington, Reb. 3
Intermountain Gas Company
a.
A.