20180926final_order_no_34154.pdf

omce of the Secretary
Service Date
September 26,2018
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION )CASE NO.INT-G-18-02
OF INTERMOUNTAIN GAS COMPANY FOR )
AUTHORITY TO CHANGE ITS PRICES (2018 )PURCHASED GAS COST ADJUSTMENT).)ORDER NO.34154
On August 10,2018,Intermountain Gas Company applied to the Commission for
authorityto change its rates,effective October 1,2018,to reflect changes in gas-related costs.If
approved,the Company's Application would decrease the Company's revenues by $24.5 million.
Application at 2-3.On September 4,2018,the Commission issued a Notice of Application and
Notice of Modified Procedure setting comment and reply deadlines.Order No.34137.
Commission Staff timely submitted comments,and supported the Company's request.No other
comments were received.
Having reviewed the record,the Commission approves the Company's Application.
The Commission's decision is more fully set forth below.
THE APPLICATION
The Company's rates include a base rate component and a gas-related cost component.
The base rate component is intended to cover the Company's fixed costs to serve its customers -
for example,the Company's costs for equipment and facilities to provide service -and rarely
changes.The current base rates were approved in Order No.33887,Case No.INT-G-17-05.See
id.The gas-related cost component of the Company's rates is at issue here.
With this Application,the Company seeks to change its rates to pass through to
customers changes in gas-related costs.These changes would decrease rates for Residential (RS)
customers by 10%,General Service (GS-1)customers by 11.9%,and Large Volume (LV-1)
customers by 17.25%.Rates would increase for Transportation (T-3)customers by 6.84%,and
Transportation (T-4)customers by 2.3%.Id.at 4,and Exhibit No.1.The proposed rate changes
would decrease the Company's annualized revenues by $24.5 million (about 10.2%),but would
not impact earnings.Id.at 2.
The proposed changes in gas-related costs result from:(1)costs billed to the Company
from firm transportation providers (including Northwest Pipeline LLC);(2)a decrease in the
ORDER NO.34154 1
Company's Weighted Average Cost of Gas (WACOG);I (3)an updated customer allocation of
gas-related costs pursuant to the Company's PGA;(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;(5)benefits resulting from the Company's management of
its storage and firm capacity rights on various pipeline systems;(6)costs accrued related to the
Company's general rate case;and (7)benefits generated by changes to the federal and state income
tax codes.Id.at 3-4.The Company also seeks authority to eliminate the temporary surcharges
and credits included in its current prices during the past 12 months pursuant to Case No.INT-G-
17-05.Id.
The Application explained these changes.See id.at 4-8.For example,the WACOG
reflected in the proposed prices is $0.22724 per therm,compared with the WACOG of $0.26020
currentlyincluded in rates.Id.at 5.This decrease of $0.03296 per therm reflects robust natural
gas supplies attributed to shale gas wells,growing storage balances,and the Company's efforts to
manage its natural gas storage assets.Id.The Application further explained other adjustments
and treatment of various deferred costs.Id.at 4-8.
While prices for RS,GS-1,and LV-1 customers would decrease,prices for T-3 and T-
4 customers would increase because the Company adjusted the T-3 and T-4 tariffs to reflect:(a)
removal of existing temporary price changes;(b)the Lost and Unaccounted for (LAUF)Gas
decrease (outlined in Exhibit No.10);(c)for the T-4 tariff,the Liquefied Natural Gas (LNG)Sales
Credits (see Exhibit l 1);(d)a temporary adjustment to recover the Company's general rate case
related expenses;and (e)deferred credits associated with federal and state income tax reform.Id.
The net change of these adjustments for the T-3 and T-4 customers is a rate increase.Id.at 8.
Exhibit 13 to the Company's Application provides an overall view of price changes by
class of customer.Id.The Company also included proposed rate schedules and tariff sheets.See
id.at Exhibit Nos.1-2.
I 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 charges.It does not include fixed-capacity costs for interstate
transportation,liquid storage,and underground storage.See Staff Comments at 4.
ORDER NO.34154 2
STAFF COMMENTS
Staff reviewed the Company's Application,workpapers,and exhibits,and verified that
the PGA proposal "would not impact earnings,that the deferred costs are prudent and properly
calculated,and that the Company's WACOG request is reasonable."Staff Comments at 2.Staff
suggested no adjustments to the Company's proposal,and thus recommended the proposed tariffs
be approved as filed.Id.
Staff provided a detailed analysis of the Company's filing and its work in reviewing
the application.Regardingthe WACOG,Staff noted that the proposed price per therm of $0.22724
is a 12.7%decrease from the WACOG established in 2017.Id.at 4.Staff believed that the natural
gas forecasts were reasonable,and agreed with the Company that prices should remain relatively
stable in the near term.Id.at 4-5.Staff also believed the Company's risk management strategy
and its management of its resource portfolio provide price stability for customers.Id.5-6.
Staff reviewed and concurred with the Company's proposed LAUF Gas rate.This year,
the Company's estimated LAUF Gas rate of 0.0677%is below the maximum allowable level of
0.85%specified in Commission Order No.30649.Staff stated this calculation is correct and
reasonable.Id.at 8-9.Regarding the Line Break rates,Staff stated that the Company's proposal
to decrease the Line Break Rate from $0.45984 per therm to $0.41625 per therm was properly
calculated and in compliance with Commission Order No.33139.Id.This rate accounts for
differences between the volumes of natural gas delivered to the distribution system at the city gate
and the volume of gas billed to customers at the meter.Id.
Staff confirmed,consistent with Order No.32793,excess LNG capacity sales figures.
Pursuant to that Order,the Company provides a credit to ratepayers of 2.5 cents per every gallon
of LNG sold.Staff explained that this year it consists of $571,108from sales,plus $122 in interest,
minus $41,785 from the previous case's deferral for a net benefit of $529,445.Id.at 8.
Staff audited and confirmed that the amount proposed by the Company to be returned
to customers as part of the Tax Cuts and Jobs Act of 2017 were properly accrued and reported in
this filing.Staff confirmed that customers would receive benefits from the tax changes totaling
$2,731,841 spread across all customer classes,from January 1,2018,to May 31,2018.Id.
Staff confirmed that the Company's recovery of rate case expenses authorized in the
2017 PGA were properly amortized,and that the proposed recovery amount in this year's PGA
were properly calculated.Id.Staff further confirmed that intervenor funding from the Company's
a na wwo ).34154 3
2017 rate case is no longer a part of the PGA filing.Id.Finally,Staff stated that the Company's
press release and customer notice comply with the Commission's Rules of Procedure.Id.
COMMISSION FINDINGS
The Commission has jurisdiction over this matter under Idaho Code §§61-502 and 61-
503.The Commission has the express statutory authority to investigate rates,charges,rules,
regulations,practices,and contracts of public utilities and to determine whether they are just,
reasonable,preferential,discriminatory,or in violation of any provision of law,and may fix the
same by order.Idaho Code §§61-502 and 61-503.The Commission thoroughlyreviewed the
Application and comments and appreciates the parties'time in preparing them.
The PGA mechanism is used to adjust rates to reflect changes in the costs for the
purchase of gas from suppliers,including transportation,storage and other related costs of
acquiring and delivering natural gas.The Company's earnings are not to be increased from
changes in prices and revenues resulting from the annual PGA.The PGA mechanism is designed
to pass through prudentlyincurred commodity costs in a timely fashion.
We find the Company's methodology adheres to our prior Orders regarding the PGA.
Specifically,we find the Company's proposed WACOG of $0.22724 per therm to be just and
reasonable.We also find the Company's calculation of the PGA rate,including the calculation
and application of the LAUF Gas and Line Break rates,to be justand reasonable.
Regarding the recovery of external rate case expenses,we find the proposed deferred
general rate case expense recovery amount of $66,966 in this year's PGA was properly calculated.
We further find the tax case refund of approximately $2.7 million included in the PGA is justand
reasonable.Finally,we find it reasonable for the Company to continue filing quarterly Summary
of Deferred Gas Cost Balances reports and quarterlyWACOG calculations,as recommended by
Staff.
In sum,we approve a $24.5 million revenue decrease,and approve the conforming
tariffs filed with the Company's Application.
ORDER
IT IS HEREBY ORDERED that the Company's Application for authorityto change
its rates,with an adjustment to external rate case expenses,is approved -for a total revenue
decrease of $24.5 million,with new rates to take effect on October 1,2018.
i no n >34154 4
THIS IS A FINAL ORDER.Any person interested in this Order 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.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 gi
day of September 2018.
PAUL K LA ,PRESIDENT
KR INE RAPER,CGMMISSIONER
ERIC A DERSON,COMMISSIONER
ATTEST:
Diane M.Hanian
Commission Secretary
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