20161216Terry Direct with Exhibits 103-106.pdf

HcCEI v'E D
BEFORE THE
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IDAHO PUBLIC UTILITIES COMM~SSIQN1• .. -.1.,1~'"'lON
IN THE MATTER OF INTERMOUNTAIN
GAS COMPANY'S APPLICATION TO
CHANGE ITS RATES AND CHARGES
FOR NATURAL GAS SERVICE.
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) CASE NO. INT-G-16-02
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DIRECT TESTIMONY OF JOSEPH TERRY
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 Joseph Terry. My business address
is 472 West Washington Street, Boise, Idaho.
Q.
A.
By whom are you employed and in what capacity?
I am employed by the Idaho Public Utilities
Commission as a Senior Auditor.
Q. What is your educational and professional
background?
A . I graduated from Boise State University with a
bachelor's degree in accounting in 2007. I have worked
with the Commission since 2011 and in that time have
worked on several rate cases, including United Water,
Rocky Mountain Power, and several small water company
cases.
Q.
A.
What is the purpose of your testimony?
The purpose of my testimony is to present
Staff's recommended revenue requirement for Intermountain
Gas Company (the Company, Intermountain Gas). In it, I
will provide an overview of each of Staff's adjustments
to the Company's proposed expenses, rate base, and rate
of return. I also will detail adjustments to: (1)
reflect an update to the Company's forecasted test year,
which the Company provided through a response to a
production request; (2) remove bank fees; (3) adjust
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salary expenses for nonunion employees; (4) remove the
profit sharing portion of the Company's retirement plan;
and (5) reclassify part of the Customer Service Center to
plant held for future use.
Q. Are you sponsoring any exhibits with your
testimony?
A. Yes, I am sponsoring Staff Exhibit Nos. 103
(Summary of Staff's Recommendation), 104 (Comparison of
Wages Nationwide to Idaho), 105 (Schedule Supporting
Salary Adjustment), and 106 (Schedule of Customer Service
Center Plant Held for Future Use).
STAFF'S RECOMMENDED REVENUE REQUIREMENT
Q. What is Staff's recommended revenue requirement
for the Company?
A. The Staff recommends a revenue requirement for
the Company of $263,542,866, which is $3,617,012 more
than the Company's current revenue requirement, and
$6,548,688 less than the Company's proposed increase.
See Exhibit No. 103, Column 11.
OVERVIEW OF STAFF'S RECOMMENDED ADJUSTMENTS
Q. Please outline Staff's recommended adjustments
to the Company's proposed revenue requirement components,
and identify who will testify about each adjustment.
A. Proceeding from left to right, Exhibit No. 103
sets forth the Company's proposed revenue requirement as
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modified to reflect an updated forecast that the Company
provided through discovery. The exhibit then specifies
Staff's recommended adjustments to each of the Company's
proposed revenue requirement components. The exhibit
then concludes with Staff's ultimate recommendations as
to each component and the overall revenue requirement.
Tracking through the exhibit,
"Column/Adjustment 1," adjusts the Company's proposal to
reflect actual expenses and rate base through September
30, 2016 and an updated three-month forecast that the
Company provided through discovery.
Adjustment 2 decreases the Return on Equity
from 9.9% to 9.25%. Staff witnesses Rogers and Carlock
will testify in support of this adjustment.
Adjustment 3 removes working capital from the
rate base calculation. Staff witness Carlock will
testify in support of this adjustment.
Adjustment 4 removes bank fees that were one­
time expenses. I will testify in support of this
adjustment.
Adjustment 5 adjusts nonunion salary expense.
I will testify in support of this adjustment.
Adjustment 6 removes the 1% profit sharing
contribution to the Company's retirement plan that is
based on target profitability. I will testify in support
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of this adjustment.
Adjustment 7 removes plant-in-service
associated with the Customer Service Center. I will
testify in support of this adjustment.
Adjustment 8 is a series of adjustments
supported in Staff witness Romano's testimony.
Adjustment 9 removes some expenses arising from
injuries and damages. Staff witness Romano will testify
in support of this adjustment.
Adjustment 10 is the normalization adjustment.
Staff witness Morrison will testify in support of this
adjustment.
STAFF POSITION ON THE TEST YEAR
Q. What test year did the Company propose in this
case?
A. In its Application, which the Company filed on
August 12, 2016, the Company proposed a 2016 test year
consisting of six month of actual results (January 1,
2016 to June 30, 2016) and six months of forecasts (July
1, 2016 to December 31, 2016).
Q. Do you have concerns with the use of forecasts
in this case?
A. Yes . Other than the need to set rates on
actual, verifiable numbers, the flaw with the use of
forecasts is that it is impossible to know if a forecast
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is accurate until after the forecast period has passed.
The Commission recognized this concern in Order No.
29838, p. 7 (UWI-W-04-04), where the Commission stated:
To facilitate an adequate review, Company
data should be provided in time to
incorporate the information in the prefiled
testimony of Staff and other parties. This
will facilitate the hearing and decision
processes by having similar time period and
information for Staff and intervenor prefiled
testimony, the Company's rebuttal, and at the
hearing. Using recent, actual data for the
hearing will reduce if not eliminate the need
to argue over forecasts.
Q. In light of the Commission's prior remarks, did
Staff take any action with regard to the test year
forecasts?
A. Yes. On November 2, 2016 Staff served the
Company with Production Request No. 178, which asked the
Company to provide actual data by FERC account as of
September 30, 2016, along with updated forecasts for
October, November, and December. The Company responded
to this request on November 23, 2016, by producing
updated test year data with actual expenses and rate base
through September 30, 2016, and providing new forecasts
for the remaining three months of the year. Staff has
used this update as the basis for its test year revenue
requirement.
We have several Production Requests that were
specifically considered to be continuing requests for
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updates to be received as the information was completed,
but the only information we received prior to November 23
that included data past September 30, 2016 is Company
Response to Production Request No. 165 referencing salary
information.
Q. What impact did the September 30, 2016 update
have on the Company's case?
A. This update reduces the Company's overall
request by $574,214 as shown on Exhibit No. 103,
Adjustment 1, line 43.
Q. Does this adjustment raise any concerns with
respect to expenses and rate base items that the Company
forecast through September 30, 2016?
A. Yes. In certain areas, one would expect the
Company's update -which provided the Company's actual
expenses and rate base through September 30, 2016 -to be
extremely close to Company's forecast for this period as
expressed in the Application. But the updated actuals
revealed that the Company's forecast was somewhat less
accurate in these areas than would be expected.
Q. Please provide some examples where the
Company's forecast should have been close to the updated
actuals, but was not.
A. The Company's forecasted amounts for plant-in-
service should have been close to the updated actual
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numbers. But the update revealed that the largest
forecast inaccuracy, in either expenses or rate base, was
in the Company's forecast for plant-in-service.
Intermountain Gas is a Local Distribution
Company (LDC) and, therefore, most of its plant-in­
service is gas distribution plant and these projects
should be easier to forecast. Additionally, accumulated
depreciation is a calculation based on current plant-in-
service. Plant-in-service and accumulated depreciation
are both based on the 13 month average. That means that
any adjustment later in the test year will have a
proportionally lesser effect on the rate base. Both the
plant-in-service and accumulated depreciation forecasts
were reduced by similar amounts, which respectively
lowered the amounts in those accounts by $1,216,587 and
$1,308,528. Depreciation expense is reduced by $268,492,
which was the third largest operating expense adjustment.
Q. Were there any other Company forecasts that
departed from the actual updated numbers?
A. Yes. Administrative and General Expense is
another category that should be a relatively constant
number, as these expenses are normally ongoing costs for
a company. But Intermountain's Administrative and
General Expense was the largest of all the expense
categories be updated. This creates some doubt about the
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accuracy of the Company's forecasting methodology.
Q. Does Staff propose an adjustment to the
Company's forecasted expenses for October -December
2016?
A. Yes. Adjustment 5 adjusts salaries and
incorporates a reduction to the Company's forecasted
annual salary expense. In addition, Adjustment 8 (which
is supported by Staff witness Romano) incorporates a
reduction to the Company's forecasts for specific
expenses related to Sales and General Advertising, along
with miscellaneous expenses discovered during Staff
witness Romano's review of the Company's Management
Expense Reports. In light of the Company's updated
adjustment to actuals, and the new forecast, Staff has
not proposed any further adjustments for the October to
December, 2016 period because such adjustments would only
minimally impact the Company's proposed revenue
requirement.
Q. Does Staff recommend an adjustment to the
Company's forecasted rate base?
A. No. In five of the previous six years before
2016, the Company failed to spend its entire capital
budget. On average, the Company has over-budgeted by
9.88% during that time frame. Because of this over­
budgeting, including the Company's budgeted amounts in
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rate base may artificially increase the return on capital
that customers pay through rates without any guarantees
that rate base is accurate or that plant is actually used
and useful.
That said, Staff does not recommend that the
Commission adjust the Company's forecasted rate base.
Staff reviewed the Company's forecasted capital expenses
for October through December. While Staff cannot accept
the Company's forecasts as accurate, any adjustment made
to additional plant placed in service late in the year
has a very minimal impact on the Company's revenue
requirement. Because the Company used a 13-month average
rate base, any adjustment to plant in service in December
only reduces rate base by 1/13th of that amount because it
would only be in service for one month out of the test
year. Staff calculated the impact of a five percent
reduction to the Company's capital expense for the fourth
quarter of 2016, and it reduced the Company's revenue
requirement by less than 1/lOOth of a percent. While
Staff does not support the use of forecasts, the impact
in this case is minimal. Therefore Staff does not propose
an adjustment to the remaining three months of forecasted
rate base.
STAFF'S RECOMMENDED ADJUSTMENT TO REMOVE BANK FEES
Q. Please describe your bank fees adjustment.
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A. During the audit, I found a series of fees that
a bank charged the Company to analyze the Company's
accounts. When I requested the invoices, the Company
provided bank statements showing these expenses were the
amounts that the bank charged in analysis fees. But the
statements did not explain what analysis the bank had
performed. Rather, they only revealed that
Intermountain's parent company, MDU, had assigned the
fees to Intermountain Gas for payment.
Q. Did MDU's assignment of the bank's fees to
Intermountain raise any concerns?
A. Yes. Since MDU and Intermountain are
affiliated companies, MDU's assignment of the bank fees
to Intermountain for payment subjects the transaction to
a higher level of scrutiny in which the Company has the
burden of proof to show that these are reasonable
expenses. The Company has not produced any evidence on
whether the bank fees were a reasonably incurred expense.
Also, I could not find evidence that the bank
fees are a recurring expense, as they were only posted in
July, August and September of 2016. There were no
entries before this time frame. And with the lack of
information available, there was no evidence to suggest
bank fee expense will be ongoing. Therefore, I propose
removing the expenses for bank fees.
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Q. What is the total effect of the adjustment to
remove the bank fees from the revenue requirement?
A. The actual expenses removed total $47,830.
After gross up it reduces revenue requirement by $79,902
as shown on Exhibit No. 103, Column 4, line 43.
STAFF'S POSTIION ON SALARIES
Q. What are the initial concerns dealing with the
salary levels in this case?
A. Salary expense is the Company's third largest
expense category. This is not a concern per se, but due
diligence is required to review this category. I note
that, when compared to the only other LDC in the state,
Avista Corp, the Company's labor cost as a percentage of
total revenue was higher; 7.05% vs 4.75%.
Q. Does the Company's salary expenses apply to
different classes of employees?
A. Yes. About half of the base salary expenses
are related to nonunion employees and half to union
employees.
Q. Did you evaluate the union salary separately
from the nonunion salary?
A. Yes. Union employees have a set contract
negotiated with the Company that sets the salary amounts
over a period of time. This is an arm's length
negotiation, and the transaction is separate from the
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Company operations.
Q. Has the Company provided any analysis of
salaries?
A. Yes. In its Confidential Response to
Production Request No. 66, the Company provided a wage
study performed by Aon Hewitt.
Q. Did you have any concerns with the study's
conclusions?
A. Yes. The Aon Hewitt study minimizes the
effects of regional markets on salaries. For example,
the study states that Idaho is approximately 90% of the
national average. On the other hand, I performed an
analysis based on data from the the Bureau of Labor
Statistics (BLS) that shows, on average, for all
occupations, Idaho is 84.46% of the national average.
And my sampling of likely professions (See Exhibit No.
104) shows that Idaho is 86.68% of the national average.
Both of these Idaho-based averages are lower than the 90%
of average stated in the Company's study from AON Hewitt.
Yet on page 3, the study suggests the Company not apply
geographic differentials.
Q. Do you have your own proposal for analyzing the
Company's salary levels?
A. Yes. The Aon Hewitt study recommends utilizing
surveys by Towers Watson and Mercer, two human resources
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consulting groups. I propose adding the BLS data from
the most recent year as a third data point. Using all
three surveys provides information on industry averages
while accounting for regional pricing.
Towers Watson and Mercer annually surveys
employment characteristics, including salary costs, on a
nationwide scale. In addition, these two surveys
separate industries to create industry-specific
information. For the Towers Watson and Mercer surveys, I
used the 50% percentile (which was the stated goal in the
Aon Hewitt study). Both surveys provide differing
information based on the level of expertise provided by
some employee classifications. For example, there is a
different wage for an entry level financial analyst and
an analyst with more experience or expertise.
On the other hand, BLS survey data generally
does not differentiate between classes in one employee
classification, except by using different percentiles in
a classification. Therefore, in the BLS data, I used the
75 th percentile. This also helps reflect the long tenure
that Intermountain Gas tends to have with its employees.
Q.
A.
How did you determine the classifications?
In some cases, the Company provided the
classification it has used in the past . In others, I
used the job description provided in the Response to
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Production Request No. 8, and compared that with the job
descriptions in the surveys.
Some classifications were not readily
comparable to one of the categories provided in these
individual surveys. In those instances, as opposed to
making assumptions that could be incorrect, I did not
include them in this analysis.
Q. How many classifications were included for your
analysis?
A. For the Towers Watson survey, I used 21
classifications. For the Mercer survey, I used 19
classifications. And for the BLS survey, 24
classifications.
What were the results of your analysis? Q.
A. For the Towers Watson data, I found that the
Company's base salary was above the industry average in
some employee classifications and below average in
others. Overall, compared to the Towers Watson Survey
the Company was above industry average by $447,270.
Exhibit No. 105, Column 6, line 26.
See
In nearly every employee classification in the
Mercer survey, I found the Company was below the industry
average. This totaled to $364,326.
Column 7, line 26.
See Exhibit No. 105,
For the BLS data, I found that the Company's
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base salary was similar to the Towers Watson data in that
some employee classifications were above the industry
average and below in others. Overall, compared to the
BLS survey the Company was above industry average by
$384,774. See Exhibit No. 105, Column 8, line 26.
Q. How did you calculate your recommended
adjustment for salary expenses?
A. My analysis produced three different results
depending on the survey. My purpose in using all three
surveys was to have all of them weighted against each
other to achieve a more accurate result. Because the
Mercer and Towers Watson surveys omit regional pricing
data, I recommend weighting the BLS data double. Doing
so would reduce salary expense by $213,123. See Exhibit
No. 105, Column 8, line 28. After gross up, this would
reduce the Company's proposed revenue requirement by
$356,033. See Exhibit No. 103, Column 5, line 43.
STAFF POSITION ON RETIRMENT BENEFITS
Q. Please describe the retirement benefits the
Company offers to its employees.
A. For nonunion employees, the Company offers a
traditional 40l(k) plan in which the Company matches 50%
of an employee's contribution up to the first 6%, for a
maximum employer match of 3%. Additionally, the Company
contributes 5% of income for all eligible employees,
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regardless of whether or not the employee voluntarily
contributes to the 401(k). The Company also contributes
an additional 1% in profit sharing if the Company reaches
its profitability target.
Union employees participate in a multi-employer
pension plan through the United Association of Journeyman
and Apprentices of the Plumbing and Pipe Fitting Industry
of the United States and Canada (Locals 296 and 648).
Intermountain Gas pays a negotiated amount per each hour
paid to a union employee based on the funding status of
the plan. The hourly amount is open for renegotiation
during the month of August within any contract year.
Q. Do you accept the level of retirement benefits
offered by the Company as reasonable?
A. With the exception of the 1% profit sharing
contribution mentioned above, I accept the Company's
retirement benefits package as reasonable and comparable
to other utilities serving Idaho and the region.
Q. Do you propose an adjustment to remove the 1%
profit sharing contribution?
A. Yes. Employee payments or benefits that are
based on criteria that are not properly aligned with the
interests of customers should be removed from rates. The
Commission, and other Idaho utilities, have a long
standing precedent of removing from customer rates
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employee benefits that are based on shareholder value.
Intermountain Gas has already removed from its revenue
requirement the portion of the employee incentive plan
that is awarded if net income targets are met. The
Company should have also removed the portion of its
retirement benefits package that is provided to employees
for creating additional shareholder value. My adjustment
removes $90,106, the amount the Company has accrued for
this benefit, from the Company's case. This adjustment
reduces the Company's overall revenue requirement request
by $150,527 as shown on Exhibit No. 103, Column 6.
STAFF POSITION ON CUSTOMER SERVICE CENTER ADJUSTMENT
Q. Please describe the analysis that went into
reviewing the Customer Service Center.
A. By way of background, as stated by Company
Witness Chiles the customer service center was built in
2010 in Meridian, ID to consolidate customer service,
credit and collections, customer development and
programs, and scheduling for all the brands . Initially,
I reviewed the allocation manual and also reviewed
entries for the total costs and the cost allocated to
Intermountain Gas. From there I went on site and viewed
how the new Oracle Customer Care and Billing (CC&B)
system worked and reviewed a sample of calls made. I
also reviewed the training methodology as well as the
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Company's method for forecasting the number of calls to
establish proper staffing levels.
Q.
A.
Where there any concerns from this analysis?
There was one primary concern. When on the
tour of the building in which the Customer Service Center
is housed, I observed that there was a large section of
the building that was empty. Discussions with Company
witness Chiles indicate approximately one third of the
building is currently not in use at this point in time,
and is not wired for expansion. This portion of the
building is only heated above the level needed to keep
the pipes from freezing in the winter. In addition the
Customer Service Center has been lowering employee head
count over the last several years as stated in Company
witness Chiles' testimony on page 5.
Q. Did Intermountain Gas give a reason for the
unused space in the Customer Service Center building?
A. Yes. Mr. Chiles stated that when the Company
designed the building in which the Customer Service
Center is housed, one of the Company's goals was to have
the building be Leadership in Energy and Environmental
Design (LEED) certified. The Company found it would be
less expensive to build the entire facility to be LEED­
certified than to build only the Customer Service Center
part of the building as LEED certified, and then expand
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into the new area if needed. I verified that the
building in which the Customer Service Center is housed
was LEED certified in 2010.
What is your recommendation? Q.
A. I recommend that the portion of the plant-in-
service associated the unused building space be removed
from plant-in-service and placed into plant-held-for­
future-use and not included in rates. This would also
remove that portion of the depreciation from the revenue
requirement.
Q
A.
How do you propose calculating this adjustment?
Using the Company's Response to Production
Request No. 139, I found that the amount of net book
value of the building and the land used for the Customer
Service Center is $5,615,255, and the depreciation
associated with the building is $83,407. See Exhibit No.
106, lines 4 and 8. These costs are allocated based on
number of customers and Intermountain Gas' percentage is
34.6%. See Exhibit No. 106, line 16. The amounts
allocated to Intermountain Gas is $1,942,878 in book
value and $28,859 in depreciation. See Exhibit No. 106,
lines 6 and 8. Because one third of the building is
currently not being used, I recommend that one third of
Intermountain's share of the building and land's net book
value, or $647,626, be removed from rate base. Further,
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24
25
one third of Intermountain's proposed depreciation for
the building, or $9,620, should be removed from
depreciation expense. See Exhibit No. 106, lines 10 and
11. My recommended adjustments would reduce the
Company's proposed revenue requirement by $92,885. See
Exhibit No. 103, Adjustment 7, line 43.
Q. Does this conclude your direct testimony in
this proceeding?
A. Yes, it does.
CASE NO. INT-G-16-02
12/16/16
TERRY, J. (Di)
STAFF
20
Company Column/Adjustment Number
Direct 1 2 3 4 s 6 7 8 9 10 11
Actual Results to Remove 1% Remove
Sept with updated Profit Sharing Customer Service Staff Witness Injuries and
line Forecast PR Overall Rate of Remove Cash Remove Bank Salary Adj Non Based on Target Center Held for Romano Damages Nomialization
No. Description Present #178 Return Working Capital Fees Union Profitability Future Use Adjustments Adjustment Adjustment Staff Proposal
1 Gas Operating Revenues $ 251,900,147 $ 530,595 $ 4,531,743 $ 256,962,485
2 Other Revenues 2,900,363 63,008 $ 2,963,369
3 Total Operating Revenue 254,800,510 593,601 4,531,743 $ 259,925,854
4 Operating Expenses
5 Cost of Gas 168,822,659 364,389 2,518,228 $ 171,705,276
6 Operation & Maintenance $
7 Production 46,565 36,254 $ 82,819
Natural Gas Storage, Temiinaling, and Processing 1,383,094 (177,180) $ 1,205,914
Transmission 492,741 (37,813) $ 454,928
10 Distribution 18,736,256 180,560 (37,028) (3,669) $ 18,876.119
11 Customer Accounts 9,267,200 275,429 (2,684) s 9,539,945
12 Customer Service and lnfomiational 202,610 (7,131) (9,670) s 185,809
13 Sales 1,236,871 (19,143) (8,135) (17,681) $ 1,191,912
14 Administrative and General 13,819,684 (408,147) (47,830) (213,123) (32,589) (188,642) (107,239) $ 12,824,114
15 Other $
16 Depreciation 21,707,112 (268,492) (9,620) $ 21,429,000
17 Payroll Taxes 1,641,942 7,670 $ 1,649,612
18 Property Taxes 3,198,871 (7,645) $ 3,191,226
19 Franchise Taxes
20 Interest Expense
21 Total Operating Expense
22 Before Income Taxes 240,555,605 (59,249) (47,830) (213,123) (90,108) (9,620) (209,992) (107,239) 2,518,228 $ 242,336,674
23 Income Taxes 2,750,218 282,767 s 3,032,985
24 Total Operating Expenses 243,305,823 223,518 (47,830) (213,123) (90,108) (9,620) (209,992) (107,239) 2,518,228 245,369,659
25 Net Operating Income $ 11,494,687 $ 370,083 $ $ 47,830 $ 213,123 $ 90,108 $ 9,620 $ 209,992 $ 107,239 s 2,013,515 $ 14,556,195
26 Gas Plant in Service:
27 Original Cost s 596,085,559 $ (1,216,587) $ (647,626) $ 594,201,346
28 Less Accumulated Depreciation (308,450,846) 1,308,526 $ (307,142,320)
29 Net Gas Plant in Service 287,614,713 91,939 (647,626) $ 287,059,026
30 Materials & Supplies Inventory 3,149,131 46,160 $ 3,195,291
31 Gas Storage Inventory 3,195,613 29,731 $ 3,225,344
32 Cash Working Capital 1,032,688 105,055 (1,137,743) $ 0
33 Accumulated Deferred Income Taxes (50,172,477) 210,485 $ (49,961,992)
34 Advances in Aid of Construction (7,893,171) (129,341) $ (8,022,512)
35 Rate Base $ 236,926,497 $ 354,029 $ (1,137,743) $ $ $ $ (647,626) $ $ $ $ 235,495,157
36 Rate Base $ 236,926,497 $ 354,029 $ (1,137,743) $ $ $ $ (647,626) $ $ $ $ 235,495,157
37 Operating Income at Present Rates 11,494,687 370,083 47,830 213,123 90,108 9,620 209,992 107,239 2,013,515 14,556,195
38 Earned Rate of Return 4.852%
39 Cost of Capital 7.420% -0.320% 7.100%
40 Operating Income at Proposed Rates 17,579,946 26,269 (758,165) (80,780) (45,981)
41 Operating Income Deficiency 6,085,259 (343,814) (758,165) (80,780) (47,830) (213,123) (90,108) (55,601) (209,992) (107,239) (2,013,515) $ 1,408,929
42 Gross Revenue Conversion Factor 1.67055 1.67055 1.67055 1.67055 1.67055 1.67055 1.67055 1.67055 1.67055 1.67055 1.67055
43 Deficiency in Operating Revenue $ 10,165,700 $ (574,214) $ (1,266,552) $ (134,947) $ (79,902) $ (356,033) $ (150,527) $ (92,885) $ (350,802) $ (179,148) $ (3,363,677) $ 3,617,012
44 Percent Increase 4.0356% --0.2280% ..0.5028% -0.0536% -0.0317% -0.1413% ..(),0598% --0.0369% -0.1393% -0.0711% -1.3353% 1.4359%
45 Total Revenue Requirement 264,966,210 263,542,866
46 Base Rate Revenue Requirment 93,243,188 88,874,221
N ~ (') t'!1
:::: """""3 ~ & 47 Capital Structure
O"\ (t) (t) CT 48 Total Debt 50.00% 50.00% :;:::-~ Z ~· 49 Cost of Debt 4.94% 2.47% 4.94% 2.50%
O"\ ,.. 9 Z 50 Total Equity 50.00% 50.00% ~ z O 51 Return on Equity 9.90% 4.95% 9.25% 4.60%
~ · 52 Total Cost of Capital 7.42% 7.10%
Hj 7' 0 Cl w
..'...
0\ I 0 N
Average
Occupation Annual
State Code Occupation Title Salary
us 00-0000 All Occupations 48,320
us 11-1021 General and Operations Managers 119,460
us 13-1071 Human Resources Specialists 63,710
us 13-2051 Financial Analysts 95,320
us 17-0000 Architecture and Engineering Occupations 82,980
us 43-5041 Meter Readers, Utilities 40,900
us 51-4121 Welders, Cutters, Solderers, and Brazers 40,970
Average
Occupation Annual
State Code Occupation Title Salary
Idaho 00-0000 All Occupations 40,810
Idaho 11-1021 General and Operations Managers 84,040
Idaho 13-1071 Human Resources Specialists 59,120
Idaho 13-2051 Financial Analysts 74,230
Idaho 17-0000 Architecture and Engineering Occupations 78,450
Idaho 43-5041 Meter Readers, Utilities 39,810
Idaho 51-4121 Welders, Cutters, Solderers, and Brazers 35,710
Average
Occupation Annual
Code Occupation Title Salary
00-0000 All Occupations 84.46%
11-1021 General and Operations Managers 70.35%
13-1071 Human Resources Specialists 92.80%
13-2051 Financial Analysts 77 .87%
;3 :-n rn 17-0000 Architecture and Engineering Occupations 94.54% .:::: -l ~ ~
0\ ('p ('p -· 43-5041 Meter Readers, Utilities 97 .33% .::::~ 2'. g:
O\• ~ 2'. 51-4121 Welders, Cutters, Solderers, and Brazers 87 .16% C/l -0 s 2'. . 86.36% ::ii -l -' 0 0 .p..
' -0\
b N
CASE NO. INT-G-16-02
EXHIBIT NO. 105 PREPARED AND SPONSORED
BY JOSEPH TERRY
IS
CONFIDENTIAL AND ONLY AVAILABLE TO THOSE
PERSONS WHO HA VE SIGNED PROTECTIVE AGREEMENTS
Confidential Exhibit No. 105
Case No. INT-G-16-02
J. Terry, Staff
12/16/16
Line
No.
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
Assets that are Partly Held for Future Use
Description
Building -Project (390)
Land (389)
Plant Allocation
IGC
Depreciation
IGC
Adjustment
Net Book Value Dep Rate
3,610,700 2.31%
2,004,555 0.00%
5,615,255
Book Value
5,615,255
83,407
Allocation%
34.60%
34.60%
Annua1Dep
83,407
83,407
Amount Allocated to IGC
1,942,878
28,859
Rate Base (647,626)
(9,620)
1/3 of book value allocated to IGC
Depreciation
Allocation Factor
Customer Counts
MDU Electric, Gas, Combo 354,324
IGC 332,506
CNG 273,012
Total 959,842
%
36.90%
34.60%
28.40%
Exhibit No. 106
Case No. INT-G-16-02
J. Terry, Staff
12/16/16
CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS 16TH DAY OF DECEMBER 2016,
SERVED THE FOREGOING DIRECT TESTIMONY OF JOSEPH TERRY, IN CASE
NO. INT-G-16-02, BY MAILING A COPY THEREOF, POSTAGE PREPAID, TO THE
FOLLOWING:
MICHAEL P McGRATH
DIR -REGULA TORY AFFAIRS
INTERMOUNT AIN GAS CO
PO BOX 7608
BOISE ID 83707
E-MAIL: mike. mcgrath(a),intgas.com
Confidential Information
BRADMPURDY
ATTORNEY AT LAW
2019 N 17TH STREET
BOISE ID 83702
E-MAIL: [e-mail]
Non-Confidential Information
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]
Confidential Information
BENJAMIN J OTTO
ID CONSERVATION LEAGUE
710 N 6TH STREET
BOISE ID 83702
E-MAIL: [e-mail]
Confidential Information
RONALD L WILLIAMS
WILLIAMS BRADBURY
1015 W HAYS ST
BOISE ID 83702
E-MAIL: [e-mail]
Confidential Information
EDWARD A FINKLEA
EXECUTIVE DIRECTOR
NW INDUSTRIAL GAS USERS
545 GRANDVIEW DR
ASHLAND OR 87520
E-MAIL: [e-mail]
Confidential Information
ELECTRONIC ONLY
MICHAEL C CREAMER
GIVENS PURSLEY LLP
E-MAIL: [e-mail]
Non-Confidential Information
F DIEGO RIV AS
NW ENERGY COALITION
1101 3TH AVENUE
HELENA MT 59601
E-MAIL: [e-mail]
Non-Confidential Information
CERTIFICATE OF SERVICE
PETER RICHARDSON
GREGORY MADAMS
RICHARDSON ADAMS PLLC
515 N 27TH STREET
BOISE ID 83 702
E-MAIL: [e-mail]
[e-mail]
Confidential Information
KEN MILLER
SNAKE RIVER ALLIANCE
PO BOX 1731
BOISE ID 83701
E-MAIL: [e-mail]
Non-Confidential Information
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]
Thomas. j emigan.3 @us.af.mil
[e-mail]
Non-Confidential Information
SCOTT DALE BLICKENSTAFF
AMALGAMATED SUGAR CO LLC
1951 S SATURN WAY
STE 100
BOISE ID 83709
E-MAIL: [e-mail]
Confidential Information
ANDREW J UNSICKER MAJ USAF
AFLOA/JACE-ULFSC
139 BARNES DR STE 1
TYNDALL AFB FL 32403
E-MAIL: [e-mail]
Non-Confidential Information
CERTIFICATE OF SERVICE