20161216Farley Direct with Exhibit 120.pdf

BEFORE THE Rr:CEI ED -.~.
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IDAHO PUBLIC UTILITIES COMMIS$iON1-:~~'..~· (1ss10N
IN THE MATTER OF INTERMOUNTAIN
GAS COMPANY'S APPLICATION TO
CHANGE ITS RATES AND CHARGES
FOR NATURAL GAS SERVICE.
)
) CASE NO. INT-G-16-02
)
)
)
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DIRECT TESTIMONY OF JOHNATHAN FARLEY
IDAHO PUBLIC UTILITIES COMMISSION
DECEMBER 16, 2016
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Q. Please state your name and business address for
the record.
A. My name is Johnathan Farley. My business
address is 472 West Washington Street, Boise, Idaho
83702.
Q.
A.
By whom are you employed and in what capacity?
I am employed by the Idaho Public Utilities
Commission (Commission) as a Utilities Compliance
Investigator.
Q. What is your educational and professional
background?
A. I received a BA in Political Science from
Salisbury University in 2010. From 2009 to 2014, I was
employed as a Project Manager with an investigative and
intelligence services firm in Alexandria, Virginia. My
primary duties included contract administration and
coordination of field investigations and other research
activities with company personnel and contractors.
In 2014, I accepted the position of
Weatherization Coordinator with the Community Action
Partnership Association of Idaho (CAPAI) in Boise, Idaho.
My primary function was to serve as the day to day
administrator of the Idaho Low Income Weatherization
Program. Along with ensuring state and federal program
compliance, I served as a liaison to five sub-grantees
CASE NO. INT-G-16-02
12/16/16
FARLEY, J. (Di)
STAFF
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aiding in policy development, training and technical
assistance.
Since joining the Commission Staff (Staff), I
attended the Basic Utility Rate School offered by the
Center for Public Utilities at New Mexico State
University. I have earned certificates through the U.S.
Office of Energy Efficiency & Renewable Energy's Federal
Energy Management Program (FEMP) in the areas of planning
and financing renewable energy projects, strategies for
O&M and energy conservation, Energy Savings Performance
Contracts (ESPC), and Utility Energy Service Contracts
(UESC) .
Q. Have you previously testified before the
Commission?
No . A.
Q. What is the purpose of your testimony in this
proceeding?
A. The purpose of my testimony is to address: (1)
tariffs submitted with the Company's application; (2)
billing audits and customer migrations; (3) the Company's
line extension policy; and (4) gas service rules.
Q.
A.
Please summarize your testimony.
I will be recommending: (1) the Company file
all tariff sheets subject to change as a result of the
Commission's final order in this case in both legislative
CASE NO. INT-G-16-02
12/16/16
FARLEY, J . (Di)
STAFF
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and clean format; (2) the Commission accept the Company's
proposal to combine residential rate schedules RS-1 and
RS-2 into a single residential schedule; (3) the
Commission order the Company to file a new case within
ninety (90) days of the Commission's final order to
revise its line extension tariff; and (4) the Company
work with Staff to integrate Gas Safety Rules into its
tariff.
TARIFF SUBMISSION
Q. Are utilities required to submit all proposed
tariff changes, including revisions or cancellations of
existing tariff sheets, with an application?
A. Yes. Under the Commission's Rules of Procedure
Rule 121, the Company is required to provide all proposed
changes to the tariff with its initial application.
IDAPA 31.01.01.121. Submission of existing and proposed
tariffs enables the Commission, parties, customers, and
the public to understand the Company's proposed changes.
It also fulfills the Company's responsibility to provide
updated tariffs to those Commission Staff charged with
the administrative responsibility to maintain utility
tariffs.
Q. Have you reviewed the Company's proposed tariff
changes filed with its Application?
A. Yes. In one instance, the Company proposes a
CASE NO. INT-G-16-02
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FARLEY, J. (Di)
STAFF
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new demand-side management (DSM) program offering rebates
for the installation and use of energy efficient
equipment. The Company currently has a rebate program in
its tariff under Schedule ER. In response to Staff
Production Request 60, the Company indicated that it
intends to cancel Schedule ER if the Commission accepts
its proposed DSM program. However, the Company should
have submitted Schedule ER, marked as cancelled, with its
initial application.
There are a number of other instances where
testimony submitted with the Company's application will
require tariff changes but revisions were not provided.
For example, based on changes proposed by the Company in
its initial application, Sections A, C and D of the
General Service Provisions of the Company's tariff will
need revision. Those sections refer to tariff schedules
RS-1, RS-2, and T-5, the Company's authorized rate of
return, or other substantive information that the Company
has proposed to cancel or change through this case.
Updates to obsolete information should have been
reflected in proposed tariffs in the Company's initial
application.
Q. Did the Company meet the requirements of Rule
121?
A. No, it did not.
CASE NO. INT-G-16-02
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FARLEY, J. (Di)
STAFF
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Q. Since the Company did not submit all proposed
revisions to its tariff, what is your recommended
solution?
A. I recommend the Commission order the Company to
file all changes to its tariff in legislative format
along with the final clean copy of the Company's
conforming tariff at the conclusion of this case. The
tariff changes presented in legislative format will
further aid Staff in reviewing the Company's conforming
tariff.
BILLING AUDITS AND CUSTOMER MIGRATIONS
Q. What are "billing audits" and why are they
important?
A. Billing audits are conducted by the Company to
ensure customers are on the proper rate schedule. The
Company looks at customer specific information such as
gas usage, property use, city zoning codes, and customer
appliances to assess if the customer is on the proper
schedule. The Company analyzes different variables
dependent on customer class. Billing audits are also used
to detect meter malfunction or failure, meter mix-ups,
drive rate errors and billing errors, but I will not be
addressing these types of audits in my testimony.
Q. What are "customer migrations"?
A. When I use the term "customer migration", I am
CASE NO. INT-G-16-02
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FARLEY, J. (Di)
STAFF
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referring to customers moving from one rate schedule to
another. For example, a customer on the general service
rate schedule (GS-1) moving to a large volume rate
schedule (LV-1).
Q. Why would a customer move to a different rate
schedule?
A. A customer would move from one rate schedule to
another if usage or end use changes and the customer no
longer qualifies to receive service under the current
rate schedule or would qualify for a more favorable rate.
For example, a residential customer moving from RS-1 to
RS-2 can save around $0.08 a therm during the winter
months just by changing rate schedules.
Q. Doesn't the Company's application propose
combining the RS-1 and RS-2 rate schedules?
A. Yes, and I support the Company's proposal to
combine RS-1 and RS-2. Combining the two schedules not
only simplifies the Company's tariff, it eliminates the
need to monitor residential accounts to determine proper
rate schedule assignments.
Q. Are residential customers the only rate class
where migrations between schedules is possible?
No. A.
Q. How does the Company ensure non-residential
customers are on the proper rate schedule?
CASE NO. INT-G-16-02
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FARLEY, J. (Di)
STAFF
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A. Accounts for Large Volume and Transportation
customers are reviewed by the Company monthly because
these customers have contracts specifying usage and
penalties.
According to the Company, it reviews the
largest GS-1 accounts on a quarterly basis to determine
if the customer's usage has grown large enough to merit
large volume service. If a customer has twelve months of
usage near or exceeding 200,000 therms, the Company will
contact the customer to discuss changing rate schedules.
LINE EXTENSION POLICY
Q. Have you reviewed the Company's current line
extension policy?
A. Yes, I reviewed the Company's policy as
articulated in its tariff along with explanations
provided in responses to Staff production requests.
Sections A and C of the tariff's General Service
Provisions pertain to main and service line extensions.
For convenience, I will refer to the sections of the
tariff addressing both main and service line extensions
as the Company's "line extension policy". There have
been no substantive revisions to these sections of the
tariff since 1986 and Staff is concerned that some of the
critical concepts and methodologies contained in the
tariff are seriously outdated.
CASE NO. INT-G-16-02
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FARLEY, J. (Di)
STAFF
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Q. Please provide an example of why you think the
line extension policy need to be revised?
A. In its current state, the Company's line
extension policy states that any main extension project
with a rate of return of less than 12.5% will not be
constructed without an advance payment from the customer
for all construction costs above the allowance provided
by the Company. The fact that the Company's current rate
of return is embedded in the tariff creates a conflict
wherever the Commission might approve a different rate of
return, as is likely to happen in this case.
Q. Does the Company agree that its line extension
policy needs to be revised?
A. Yes. In response to Staff's production request
No. 226, the Company filed the following response:
The methodology and models from which Main
and Service Line Extension financial
evaluations were based are outdated and in
need of revision. Consequently. .the
Company. .proposes that, following this
case (INT-G-16-02), it work with Staff and
prepare a compliance filing that updates
Intermountain's Main & Service Extension
provisions last approved by this Commission
in June of 1986. During the interim
period between the outcome of this case and
the preparation and approval of the Company's
revised Main & Service Extension provisions,
the Company will record and keep all amounts
received as Contributions in Aid of
Construction ("CIAC") and thereafter provide
customer adjustments as necessary.
I recommend the Commission order Intermountain Gas
CASE NO. INT-G-16-02
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FARLEY, J. (Di)
STAFF
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Company to file a case to revise its line extension
policy no later than 90 days from date of the
Commission's final order in this case.
GAS SERVICE RULES
Q. What comments do you have regarding the Gas
Service Rules?
A. The Commission has two rule sets that address
gas safety-the Service Rules for Gas Utilities (IDAPA
31.31.01.000) and the Safety and Accident Reporting Rules
(IDAPA 31.11.01). In Case No. GNR-G-08-01, Order No.
30625, the Commission suspended Gas Service Rule 102,
which requires gas utilities to inspect installations of
gas appliances and makes an incorrect and obsolete
reference to the Commission's adoption of the National
Fuel Gas Code and the Uniform Mechanical Code. The
Commission's Safety and Accident Reporting Rules
correctly refer to the codes currently adopted by the
Commission. See Staff Exhibit No. 120 for a copy of
Order No. 30625.
Gas Service Rule 102 has not been repealed and
the conflicting provisions contained in the two sets of
rules have occasionally caused confusion when Staff or
other parties are researching code requirements. Order
No. 30625 indicated that the Commission Staff and other
interested parties would informally review the Gas
CASE NO. INT-G-16-02
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FARLEY, J. (Di)
STAFF
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Service Rules. Staff's objective was to determine
whether the remaining provisions of the Gas Service
Rules, which address maintaining system maps, plans and
records as well as meter testing and accuracy, were still
necessary and if so, whether they could be incorporated
into gas utilities' tariffs. Moving relevant
requirements into each utility's tariff would then allow
the Commission to propose repeal of the entire rule set.
This collaborative review has not taken place
and Staff recommends that the Commission once again
direct the Company and Staff to undertake this review
following the conclusion of this case.
Q. Does this conclude your direct testimony in
this proceeding?
A. Yes, it does.
CASE NO. INT-G-16-02
12/16/16
FARLEY, J. (Di)
STAFF
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Office of the Secretary
Service Date
August 19, 2008
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE SUSPENSION OF )
THE COMMISSION'S GAS SERVICE RULE ) CASE NO. GNR-G-08-01
102, IDAPA 31.31.01.102 )
) ORDER NO. 30625 ____________ )
In July 2008, the Commission Staff received an inquiry from Avista Utilities
regarding an apparent conflict between two Commission rules. The issue was brought to
Avista's attention when a Post Falls City building official asked Avista about the utility's
procedures for inspecting a customer's installation of a natural gas appliance. More specifically,
the City official was referring to the Commission's Gas Service Rule 102, IDAPA 31.31.01.102.
This rule states in pertinent part:
The gas corporation shall inspect the customer's installation [of a gas appliance]
before the connection of a meter to ascertain that the installation conforms to the
provisions contained in the National Fuel Gas Code and the Uniform
Mechanical Code, as adopted by the Commission.
Gas Rule 102, IDAPA 31.31.01.102 (1993) (emphasis added).
The apparent conflict arises with Subsection .02 of the Commission's Safety Rules 202
and 203, IDAPA 31.11.01.202.02 and 203.02. Safety Rules 202 and 203 were most recently
amended in 2008. These two rules are nearly identical and read in pertinent part:
02. Utility Compliance. All gas corporations subject to the jurisdiction of
this Commission are required to abide by applicable provisions of the
International Mechanical Code [ or International Fuel Gas Code] and to
connect for service and light only those installations that:
a. Have been inspected and approved by authorized agencies; or
b. When inspecting agencies do not exist, to require their customers to abide
by applicable provisions of the International Mechanical Code [ or Fuel Gas
Code] as a condition of receiving service or continuing to receive service.
Safety Rules 202.02 and 203 .02, IDAPA 31.11.01.202.02 and 203.02 (emphasis added). Safety
Rule 202 adopts the International Fuel Gas Code of 2006 and Safety Rule 203 adopts the
ORDER NO. 30625 1 Exhibit No. 120
Case No. INT-G-16-02
J. Farley, Staff
12/16/16 Page I of 4
International Mechanical Code of 2006. The International Codes are updated and published
every three years by the International Code Council.
Based upon its review, Staff asserts there are two inconsistencies between Gas
Service Rule 102 and the two Safety Rules. First, in 2006 the Commission adopted the
"International Mechanical Code" and "International Fuel Gas Code" which superseded the
Uniform Mechanical Code and National Fuel Gas Code, respectively. The Commission took this
action after the Legislature adopted the International Mechanical Code and the International Fuel
Gas Code in 2004, Idaho Code § 54-5001. Second, the new International Codes no longer
require a gas utility to inspect the installation of gas appliances. As the Commission explained in
its 2004 Notice of Rulemaking, the new International Codes establish a new regulatory
framework that employs permits and inspections. Idaho Code § 54-5016 requires that any
installation of a gas appliance be accomplished pursuant to the issuance of a permit. Idaho Code
§§ 54-5001 and 54-5018 require an inspection for each permit.
For local governments that have adopted the International Codes, the current
regulatory practice is for these jurisdictions to issue permits and conduct subsequent inspections.
For areas of the State that do not have inspection agencies, the State Division of Building Safety
issues permits and performs the inspections. IDAPA 07.07.01.1 In addition, the installation of
gas appliances is generally required to be performed by a licensed installer and the license holder
is required to comply with the International Mechanical Code. Thus, gas utilities are no longer
required to inspect the installation of gas appliances -inspections are the responsibility of other
entities. Consistent with the applicable International Codes, Safety Rules 202.02.b. and
203.02.b. simply compel utilities to "require their customers to abide by applicable provisions of
the International Mechanical [and Fuel Gas] Code[s] as a condition of receiving or continuing to
receive service." IDAPA 31.11.01.202.02.b. and 31.11.01.203.02.b.
DISCUSSION AND FINDINGS
Based upon our review of the rules in question, we find that Gas Service Rule 102 is
incompatible with the Commission's Safety Rules 202.02 and 203.02. In particular, the safety
codes referenced in Gas Rule 102 have been superseded. We further find that Gas Rule 102
compels utilities to perform actions that are no longer required under the International Codes
1 Idaho Code § 54-5002 does list certain exemptions but even if exempted, the installation of gas appliances "shall
comply with" the applicable International Codes.
ORDER NO. 30625 2 Exhibit No. 120
Case No. INT-G-16-02
J. Farley, Staff
12/1 6/1 6 Page 2 of 4
adopted in 2004 by our Legislature in Idaho Code§ 54-5001. Consequently, on our own motion,
we suspend Gas Service Rule 102, IDAP A 31.31.01.102.
We further find that it is appropriate for us to undertake a comprehensive review of
our Gas Service Rules. More specifically, we direct the Staff to meet with the gas utilities and
other interested persons and informally review the Gas Service Rules, IDAPA 31.31.01. This
informal review could be the basis for a negotiated rulemaking to update the Commission's Gas
Service Rules next year.
ORDER
IT IS HEREBY ORDERED that Gas Service Rule 102, IDAPA 31.31.01.102, be
suspended.
IT IS FURTHER ORDERED that the Commission Staff undertake an informal
review of our Gas Service Rules with gas utilities and other interested persons.
IT IS FURTHER ORDERED that the Commission Secretary serve this Order upon
our gas utilities.
THIS IS A FINAL ORDER. Any person interested in this Order (or in issues finally
decided by this Order) or in interlocutory Orders previously issued in this Case No. GNR-G-08-
01 may petition for reconsideration within twenty-one (21) days of the service date of this Order
with regard to any matter decided in this Order or in interlocutory Orders previously issued in
this case. Within seven (7) days after any person has petitioned for reconsideration, any other
person may cross-petition for reconsideration. See Idaho Code § 61-626.
ORDER NO. 30625 3
Exhibit No. 120
Case No. INT-G-16-02
J. Farley, Staff
12/16/16 Page 3 of 4
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this / q-t4-
day of August 2008.
ATTEST:
~Secretary
bls/O:GNR-G-08-0l_dh
ORDER NO. 30625
MACK A. REDFORD, P
~}./~
MARSHA H. SMITH, COMMISSIONER
4
Exhibit No. 120
Case No. fNT-G-16-02
J. Farley, Staff
12/16/16 Page 4 of4
CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS 16TH DAY OF DECEMBER 2016,
SERVED THE FOREGOING DIRECT TESTIMONY OF JOHNATHAN FARLEY, IN
CASE NO. INT-G-16-02, BY MAILING A COPY THEREOF, POSTAGE PREPAID,
TO THE FOLLOWING:
MICHAEL P McGRATH
DIR-REGULATORY AFFAIRS
INTERMOUNTAIN GAS CO
PO BOX 7608
BOISE ID 83707
E-MAIL: [e-mail]
BRADMPURDY
ATTORNEY AT LAW
2019N 17TH STREET
BOISE ID 83702
E-MAIL: [e-mail]
CHAD M STOKES
TOMMY A BROOKS
CABLE HUSTON LLP
1001 SW 5TH AVE STE 2000
PORTLAND OR 97204-1136
E-MAIL: [e-mail]
[e-mail]
BENJAMIN J OTTO
ID CONSERVATION LEAGUE
710 N 6TH STREET
BOISE ID 83702
E-MAIL: [e-mail]
PETER RICHARDSON
GREGORY MADAMS
RICHARDSON ADAMS PLLC
515 N 27TH STREET
BOISE ID 83702
E-MAIL: [e-mail]
[e-mail]
RONALD L WILLIAMS
WILLIAMS BRADBURY
1015 W HAYS ST
BOISE ID 83 702
E-MAIL: [e-mail]
EDWARD A FINKLEA
EXECUTIVE DIRECTOR
NW INDUSTRIAL GAS USERS
545 GRANDVIEW DR
ASHLAND OR 87520
E-MAIL: [e-mail]
ELECTRONIC ONLY
MICHAEL C CREAMER
GIVENS PURSLEY LLP
E-MAIL: [e-mail]
F DIEGO RIV AS
NW ENERGY COALITION
1101 8TH AVENUE
HELENA MT 59601
E-MAIL: [e-mail]
SCOTT DALE BLICKENSTAFF
AMALGAMATED SUGAR CO LLC
1951 S SATURN WAY
STE 100
BOISE ID 83 709
E-MAIL: [e-mail]
CERTIFICATE OF SERVICE
KEN MILLER
SNAKE RIVER ALLIANCE
PO BOX 1731
BOISE ID 83701
E-MAIL: [e-mail]
LANNY L ZIEMAN
NATALIE A CEPAK
THOMAS A JERNIGAN
EBONY M PAYTON
AFLOA/JA-ULFSC
139 BARNES DR STE 1
TYNDALL AFB FL 32403
E-MAIL: lanny.zieman. [e-mail]
[e-mail]
[e-mail]
[e-mail]
ANDREW J UNSICKER MAJ USAF
AFLOA/JACE-ULFSC
139 BARNES DR STE 1
TYNDALL AFB FL 32403
E-MAIL: [e-mail]
CERTIFICATE OF SERVICE