20160909notice_of_application_order_no_33593.pdf

Office of the Secretary
Service Date
September 9, 2016
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION
OF INTERMOUNTAIN GAS COMPANY'S
APPLICATION TO CHANGE ITS RATES
AND CHARGES FOR NATURAL GAS
SERVICE IN THE STATE OF IDAHO
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)
) CASE NO. INT-G-16-02
)
) NOTICE OF APPLICATION
)
) NOTICEOF
) INTERVENTION DEADLINE
)
) ORDER NO. 33593
On August 12, 2016, Intermountain Gas Company ("Intermountain") filed an
Application seeking authority to increase Intermountain's general rates for natural gas service in
Idaho. Intermountain proposes a rate plan that would increase annual natural gas-billed revenues
by approximately $10.2 million ( 4.04% ). See Madison Direct at 6. Intermountain asks that the
new rates and charges take effect September 12, 2016.
NOTICE OF APPLICATION
YOU ARE HEREBY NOTIFIED that Intermountain is a public utility engaged in the
distribution of natural gas in the State of Idaho. Intermountain's Idaho service area includes 75
communities in southern Idaho serving approximately 334,650 customers. Id. at 2.
Intermountain's last general rate filing took place in 1985. Id. at 6. Intermountain's existing
base rates and charges for natural gas services were last approved by the Commission on
September 29, 2015, and took effect October 1, 2015. See Order No. 33386.
YOU ARE FURTHER NOTIFIED that Intermountain claims its existing rates are
not fair, just, and reasonable, and that it must increase them so it can earn a fair return on its
investment in Idaho. Intermountain maintains that it needs to increase its rates primarily to cover
increased operating expenses and costs associated with plant additions. Specifically,
Intermountain claims that its existing rates should increase in order to cover non-revenue
generating infrastructure, such as pipeline expansion and replacement and investment in
customer systems and information technology. See Madison Direct at 12.
YOU ARE FURTHER NOTIFIED that, based on an average annual usage level of
747 therms per year, Intermountain's proposed natural gas rate increase would, on average,
increase bills by: (1) $2.31 per month (4.93%) for customers who use gas for space and water
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NOTICE OF INTERVENTION DEADLINE
ORDER NO. 33593
heating; (2) $1.16 per month (3.26%) for customers who use natural gas for space heating only;
and (3) $12.16 per month (6.29%) for commercial customers. See Madison Direct at 6.
Intermountain asserts that it notified the general public and its customers about the proposed rate
increases by distribution of a Press Release and Customer Notice on or about August 12, 2016.
YOU ARE FURTHER NOTIFIED that Intermountain bases its supporting evidence
for the requested rate increases on a 12-month test year ending December 31, 2016. See
Application at 3. Intermountain requests a 50% common equity, a 50% long-term debt ratio, a
9.90% return on equity, a 4.94% cost of debt, resulting in an overall rate of return of 7.42%. See
Gaske Direct at 3.
YOU ARE FURTHER NOTIFIED that Intermountain proposes to modify its rate
schedules and rate structures by: ( 1) creating a single rate schedule for service to all residential
customers; (2) modifying the General Services-I (GS-1) rate structure so that rates charged to the
GS-1 customer class more closely align with Intermountain's costs and reduce subsidization; (3)
eliminating seasonal rate variation between summer and winter for residential and general
service customers; (4) combining two rate schedules to create a single Industrial Firm
Transportation Service customer class; (5) adding a demand charge to Large Volume Firm Sales
Service (LV-1) to cover distribution costs associated with distribution to that class; and (6)
applying the current Rate Schedule T-5, which includes a demand charge, to the newly proposed
Rate Schedule T-4 rate structure. See Blattner Direct at 18 and Attachment O l to Application.
YOU ARE FURTHER NOTIFIED that as a part of this case Intermountain also
proposes to implement new demand-side management (DSM) programs that would help its
customers conserve energy. According to Intermountain, DSM means finding opportunities for
Intermountain to purchase therms through conservation versus a natural gas supplier. See
Spector Direct at 3. Specifically, Intermountain seeks to introduce a new Energy Efficiency
Rebate Program that would provide rebates to customers who install high-efficiency natural gas
equipment and ENERGY Star-certified homes. Id. at 5.
YOU ARE FURTHER NOTIFIED that, as a result of DSM implementation,
Intermountain asserts that fixed-cost recovery is necessary to mitigate marginal losses from
conservation efforts. Id. at 8. Therefore, Intermountain proposes to raise the monthly residential
and commercial fixed customer charges to more closely match fixed costs and to better reflect
class rates to class customer-related costs. See Blattner Direct at 28. Intermountain proposes to
NOTICE OF APPLICATION
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ORDER NO. 33593 2
recover said fixed costs by implementing a natural gas fixed-cost collection mechanism (FCCM).
Intermountain defines FCCM as the calculation of total sales service margin less Purchased Gas
Adjustment (PGA) revenues and less revenues recovered from the customer charge for the
applicable rate schedules. See McGrath Direct at 2. Intermountain states that the purpose of the
FCCM is to break the link between Intermountain's gas deliveries and earnings. Id. at 2. Under
the proposed FCCM, Intermountain's revenues would adjust each month to reconcile the
difference between its actual FCCM and the allowed or approved FCCM. Id. Intermountain
maintains that the FCCM will allow its revenues and earnings to be unaffected by variations in
the quantities of natural gas it distributes to customers. Id.
YOU ARE FURTHER NOTIFIED that the Commission has designated this case as a
general rate case. As such, Intermountain's intrastate revenue requirement, and every
component of it, both rate base and expense, are at issue. The Commission may grant, deny, or
modify the revenue requirement requested and may find a revenue requirement different from
that proposed by any party is just, fair and reasonable. ID APA 31.01.01.124.01.
YOU ARE FURTHER NOTIFIED that the rates and charges of all Intermountain
retail customers, both recurring and non-recurring, including those of special contract customers,
are at issue, and every component of every existing and proposed rate and charge is at issue. The
Commission may approve, reject or modify the rates and charges proposed and may find that
rates and charges different from those proposed by any party are just, fair and reasonable. Id.
YOU ARE FURTHER NOTIFIED that the Commission may approve, reject or
modify existing or proposed relationships between and among rates and charges within, between
or among customer classes or rate groupings and may approve, reject or modify existing or
proposed relationships among and between customer classes or rate groupings. Id.
YOU ARE FURTHER NOTIFIED that the Commission may abolish, reduce or
create rate blocks or categories of rates and charges, abolish, create or reduce components of
rates and charges, abolish, reduce or create customer classes or rate groupings, and abolish,
reduce or create absolute or relative differences among and between existing classes or rate
groupings of customers. Id.
YOU ARE FURTHER NOTIFIED that the tariffs, practices, rules and regulations,
service, instrumentalities, equipment, facilities, classifications, and customer relations of the
utility are at issue, and the Commission may address any of them in its order. Id.
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ORDER NO. 33593 3
YOU ARE FURTHER NOTIFIED that the Application and supporting workpapers,
testimonies and exhibits have been filed with the Commission and are available for public
inspection during regular business hours at the Commission offices. The Application and
testimonies are also available on the Commission's web site at \VWw.puc.idaho.gov. Click on the
"File Room" tab at the top of the page, scroll down to "Open Gas Cases," and then click on the
case number as shown on the front of this document.
YOU ARE FURTHER NOTIFIED that, given the complexity of the issues presented
by this case and the length of time since Intermountain's last general rate case, the Commission
finds it appropriate to suspend Intermountain's first proposed effective date of September 12,
2016, for a period of 30 days plus 5 months, unless the Commission issues an earlier Order
accepting, rejecting, or modifying Intermountain's Application. See Idaho Code§ 61-622(4).
YOU ARE FURTHER NOTIFIED that all proceedings in this case will be held
pursuant to the Commission's jurisdiction under Title 61 of the Idaho Code and specifically
Idaho Code §§ 61-501, 61-502, 61-507, 61-520, 61-523, and 61-622. The Commission may
enter any final Order consistent with its authority under Title 61.
NOTICE OF INTERVENTION DEADLINE
YOU ARE FURTHER NOTIFIED that persons desiring to intervene in this matter
for the purpose of presenting evidence or cross-examining witnesses at hearing must file a
Petition to Intervene with the Commission pursuant to this Commission's Rules of Procedure
72 and 73, IDAPA 31.01.01.072 and -.073. Persons intending to participate at the hearing must
file a Petition to Intervene no later than fourteen (14) days from the service date of this
Order. Persons desiring to present their views without parties' rights of participation and cross­
examination are not required to intervene and may present their comments without prior
notification to the Commission or the parties.
YOU ARE FURTHER NOTIFIED that the Commission Secretary shall issue a
Notice of Parties after the deadline for intervention has passed. The Notice of Parties shall
assign exhibit numbers to each party in this proceeding.
YOU ARE FURTHER NOTIFIED that once the Notice of Parties is issued, the
Commission Staff will convene an informal prehearing conference for the parties to discuss a
schedule to process this case and other issues as may be raised by the parties.
NOTICE OF APPLICATION
NOTICE OF INTERVENTION DEADLINE
ORDER NO. 33593 4
YOU ARE FURTHER NOTIFIED that the following persons are designated as
Intermountain' s representatives in this matter:
Michael P. McGrath
Director, Regulatory Affairs
Intermountain Gas Company
555 S. Cole Road
PO Box 7608
Boise, ID 83707
E-mail: [e-mail]
Ronald L. Williams
Attorney for Intermountain Gas Company
1015 W. Hays Street
Boise, ID 83702
E-mail: [e-mail]
YOU ARE FURTHER NOTIFIED that all hearings and prehearing conferences in
this matter will be held in facilities meeting the accessibility requirements of the Americans with
Disabilities Act (ADA). Persons needing the help of a sign language interpreter or other
assistance in order to participate in or to understand testimony and argument at a public hearing
may ask the Commission to provide a sign language interpreter or other assistance at the hearing.
The request for assistance must be received at least five (5) working days before the hearing by
contacting the Commission Secretary at:
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-0074
[phone] (Telephone)
[phone] (FAX)
E-Mail: [e-mail]
YOU ARE FURTHER NOTIFIED that all proceedings in this matter will be
conducted pursuant to the Commission's Rules of Procedure, ID APA 31.01.01.000 et seq.
ORDER
IT IS HEREBY ORDERED that Intermountain's proposed September 12, 2016,
effective date is suspended for a period of thirty days plus five months, unless the Commission
issues an earlier Order accepting, rejecting, or modifying the Application. See Idaho Code § 61-
622( 4 ).
NOTICE OF APPLICATION
NOTICE OF INTERVENTION DEADLINE
ORDER NO. 33593 5
IT IS FURTHER ORDERED that persons desiring to intervene in this matter for the
purpose of presenting evidence or cross-examination at hearing shall file a Petition to Intervene
with the Commission no later than fourteen (14) days from the service date of this Order.
IT IS FURTHER ORDERED that discovery is available in this case pursuant to the
Commission's Rules of Procedure, IDAPA 31.01.01.221-234.
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this
day of September 2016.
ATTEST:
Jean D. Jewel
Cbmmission s'bcretary
O:INT-G-l 6-02_sc
NOTICE OF APPLICATION
NOTICE OF INTERVENTION DEADLINE
ERIC ANDERSON, COMMISSIONER
ORDER NO. 33593 6