HomeMy WebLinkAbout20200504Reply Comments.pdfINTERMOUNTAIN GAS COMPANY’S REPLY COMMENTS - 1
Preston N. Carter, ISB No. 8462
Givens Pursley LLP
601 W. Bannock St.
Boise, Idaho 83702
Telephone: (208) 388-1200
Facsimile: (208) 388-1300
prestoncarter@givenspursley.com
Attorneys for Intermountain Gas Company
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF
INTERMOUNTAIN GAS
COMPANY’S 2019 – 2023
INTEGRATED RESOURCE PLAN
CASE NO. INT-G-19-07
INTERMOUNTAIN GAS COMPANY’S
REPLY COMMENTS
Intermountain Gas Company (“Intermountain” or “Company”) respectfully submits the
following Reply Comments in response to Comments filed by the Idaho Public Utilities
Commission Staff (“Staff”) as well as Comments filed by the Idaho Conservation League and the
Idaho Chapter Sierra Club, collectively referred to as the environmental groups.
BACKGROUND
On October 18, 2019 Intermountain company filed its biennial 2019 – 2023 Integrated
Resource Plan (“IRP”). As noted by Staff, the purpose of a natural gas IRP is to “describe[] a
company’s plans to meet its customers’ future natural gas needs.” Staff Comments at 2. The
Commission requires natural gas IRPs to include seven components. Staff Comments at 2-3
(discussing Order Nos. 25342, 27024, 27098, and 32855). Intermountain believes that its IRP
meets these requirements and provides a tool that is useful for the Company, the Commission,
and other interested parties to ensure that Intermountain can and will provide cost-effective, safe,
and reliable natural gas service throughout the year, and especially during an extreme cold
weather event.
RECEIVED
2020 May 4,AM11:10
IDAHO PUBLIC
UTILITIES COMMISSION
INTERMOUNTAIN GAS COMPANY’S REPLY COMMENTS - 2
REPLY TO STAFF COMMENTS
Intermountain appreciates Staff’s comments and agrees with Staff’s recommendations.
The Company looks forward to continuing several collaborative initiatives mentioned by Staff,
including the Avoided Cost review, that will contribute to the improvement of future IRPs.
Although Intermountain considers a variety of alternatives to resolve identified deficits
and determine the most cost-effective, least risk solutions, the Company did not include all of
that analysis in the filed IRP document. Intermountain will include that analysis in future IRPs.
As Staff noted, Intermountain is in the process of installing a fixed network that will
allow for daily reads of its meters. Through the end of 2019, Intermountain has completed 60%
of the project. Unfortunately, the project has been stalled in 2020 due to staffing changes. The
Company is hopeful it will be able to ramp the project back up throughout the rest of 2020 and
make significant progress on the installation of its fixed network. In the meantime, the Company
agrees that a sample from the portion of the fixed network that is completed could be used to
validate the DNV GL Customer Management Module results as Staff suggests.
REPLY TO ENVIRONMENTAL GROUP COMMENTS
In Order No. 27024, the Commission shortened Intermountain’s planning horizon from
20 years to 5 years. This planning horizon has proven adequate and useful. The five-year
planning horizon pairs relatively accurate forecasts1 with adequate time to act upon any capacity
issues identified in the IRP. Large electric generation projects can take many years to permit,
plan, and build. By contrast, natural gas projects take one year to plan, engineer, and permit and
a second year to complete. The most complex projects may require two years for the initial phase
with construction completed in the third year. But even the most complex natural gas distribution
1 Of course, no forecast is entirely accurate. But a five-year forecast is inherently more accurate than a twenty-year
one, particularly when forecasting issues related to a natural gas IRP.
INTERMOUNTAIN GAS COMPANY’S REPLY COMMENTS - 3
system upgrade can be completed comfortably within the five-year planning horizon. As such, a
five-year planning horizon provides adequate, actionable information and is appropriate for a
natural gas IRP.
The environmental groups suggest extending the planning horizon to twenty years.
However, twenty-year forecasts—particularly twenty-year forecasts of natural gas prices—are
inherently less accurate than five-year forecasts. Twenty-year forecasts are also more expensive
to conduct. And even if a twenty-year forecast estimated decreased demand growth towards the
end of the timeline, the Company has a legal obligation to serve existing customers in a non-
discriminatory manner. See Idaho Code § 61-302, § 61-315. Accordingly, the Company would
be required to meet the five-year forecasted demand even in a twenty-year forecast. A twenty-
year forecast is less accurate, more costly, and provides little or no actionable information
beyond that contained in a five-year forecast. Intermountain suggests that there is no reason to
move beyond the long-term status quo of a five-year forecast for purposes of the IRP.
The environmental groups request that Intermountain attempt, in the IRP, to assess the
likelihood of carbon regulation and the hypothetical carbon regulation’s impacts on customer
behavior.2 However, as noted above, the purpose of the IRP is to ensure that the Company can
meet its customers’ natural gas needs in a cost-effective manner. To that end, the IRP looks at a
base case scenario, which represents the Company’s most likely economic, customer growth and
pricing forecasts. To provide a helpful risk assessment, however, the Company also looks at high
growth and low growth scenarios. These alternate scenarios demonstrate the outcomes should a
2 Idaho Conservation League has requested to attach portions of Intermountain’s discovery responses to its
comments. Intermountain does not object to the request, though it is not clear what point ICL attempts to make.
Intermountain objected to certain discovery requests of ICL, but communicated and cooperated with ICL throughout
the process and did provide responses, documents, and the location of publically available information responsive to
the requests. Any issues surrounding ICL’s request appear immaterial, though the Company would be willing to
discuss or provide other information related to ICL’s request if helpful.
INTERMOUNTAIN GAS COMPANY’S REPLY COMMENTS - 4
wide variety of unknown risk factors affect the economy, customer growth, or natural gas
pricing. The degree of change between the base case, high-growth, and low-growth scenarios is
adequate to encompass the risk of a regulatory change during the forecast period. To take an
example, an economic downturn related to COVID-19 is actually more realistic right now than a
carbon tax in Idaho. By modeling a generic low-growth scenario rather than focusing on a single
policy issue, the Company is better suited to nimbly respond to the change in demand created by
whatever risks may materialize. Intermountain recognizes that the environmental groups have an
institutional and advocacy interest in carbon regulation. But that does not mean that
Intermountain can or should focus on that particular policy issue as opposed to low-growth,
high-growth, and base-case economic scenarios.
In addition, trying to prognosticate the potential outcome of the current policy debate
over greenhouse gas regulation would be speculative. Intermountain has no expertise in
predicting if such regulation will occur; if so, when it will occur; what form it will take; the
economic impact of any such regulation; or how customers will react. For example, it seems as
likely (or more likely) that regulations in other states will continue to increase the importance of
Renewable Natural Gas in reducing overall greenhouse gas emissions, which would increase
customer demand for natural gas, as it is that Idaho will pass carbon legislation that would
decrease carbon demand.
The environmental groups point to Avista’s natural gas IRP as an example of accounting
for carbon regulation. However, Avista’s analysis regarding regulatory risk in Idaho reads, in its
entirety, as follows:
INTERMOUNTAIN GAS COMPANY’S REPLY COMMENTS - 5
Consistent with Avista’s assessment of Idaho’s regulatory environment, Avista’s 2018
IRP does not appear to use a carbon adder for Idaho operations. Avista 2018 IRP, AVU-G-18-15,
at 130 (“The State or Idaho does not have a carbon adder as there is no current or proposed stated
or federal legislation associated with carbon in that jurisdiction.”). Avista’s use of a carbon adder
for its Oregon operations is based on California’s Cap-and-Trade Regulation, which in turn
appears to be selected because Oregon proposed similar cap-and-trade regulations. See Avista
2018 IRP at 130 (carbon adder for Oregon operations); id. at 116-117 (discussing policy
proposals in Oregon, including cap-and-trade legislation). Avista’s use of a carbon adder in
Washington is based on carbon legislation proposed by Governor Inslee. Id. at 130. All things
told, Avista’s consideration of carbon regulation in other states is driven by the regulatory
environment, and potential regulatory requirements, of those other states. Intermountain
respectfully submits that these Oregon- and Washington-specific analyses should not
automatically be carried over to Idaho.
Intermountain based its gas price forecast on the best available data. The companies that
provided the pricing inputs are some of the best in the business, but one of the requirements of
using their data is confidentiality. While the environmental groups request that the forecast be
based on publically available data, Intermountain does not believe using publically available data
will result in a better forecast. It is not Intermountain’s decision to make these data confidential;
Intermountain chooses them because of their accuracy and abides by the companies’
requirements to keep the data confidential. Intermountain believes its offer to facilitate a video
call to review the model, as well as the open discussions facilitated by its stakeholder group,
offer ample opportunity for public review and input on the Company’s gas price forecast and
reasonably balances the concerns of transparency with the requirement of accuracy.
INTERMOUNTAIN GAS COMPANY’S REPLY COMMENTS - 6
Finally, Intermountain has decided that the most appropriate place to thoroughly vet the
conservation resources that serve as an input to the IRP modeling is with its Energy Efficiency
Stakeholder Group. The focus of this committee is to review Intermountain’s growing Energy
Efficiency program. The discipline of energy conservation can be highly technical, and it’s
important to spend the time necessary to educate the stakeholders on the topic so they can
provide input. Intermountain hosted an Energy Efficiency Stakeholder Group meeting during
the preparation of this IRP entirely dedicated to discussing the results of its first Conservation
Potential Assessment. The conservation targets derived from that study served as inputs to the
IRP. Questions and comments from that Stakeholder Group meeting helped inform the final
version of the Conservation Potential Assessment.
CONCLUSION
In summary, Intermountain believes that its IRP meets Commission requirements, and
that the IRP adequately plans to meet demand from 2019 through 2023. Intermountain also
submits that the current requirements for its IRP result in a useful document that ensures the safe,
reliable, affordable supply of natural gas to its current and future customers. Intermountain
respectfully requests the Commission acknowledge the Company’s 2019-2023 IRP as filed and
accept the recommendations to improve future IRPs provided by Staff.
Dated: May 4, 2020
GIVENS PURSLEY LLP
Preston N. Carter
Givens Pursley LLP
Attorneys for Intermountain Gas Company
INTERMOUNTAIN GAS COMPANY’S REPLY COMMENTS - 7
CERTIFICATE OF SERVICE
I certify that on May 4, 2020, a true and correct copy of INTERMOUNTAIN GAS
COMPANY’S REPLY COMMENTS was served upon all parties of record in this proceeding
via the manner indicated below:
Idaho Conservation League
Benjamin J. Otto
Matt Nykiel
710 N. 6th Street
Boise, ID 83702
botto@idahoconservation.org
mnykiel@idahoconservation.org
Commission Staff
Electronic Mail
Diane Hanian, Commission Secretary
Idaho Public Utilities Commission
11331 W. Chinden Blvd., Bldg. 8, Suite 201-A
Boise, ID 83714
Diane.Hanian@puc.idaho.gov
Electronic Mail
John R. Hammond, Jr.
Deputy Attorney General
Idaho Public Utilities Commission
11331 W. Chinden Blvd., Bldg. 8, Suite 201-A
Boise, ID 83714
john.hammond@puc.idaho.gov
Electronic Mail
Preston N. Carter