The URL can be used to link to this page

Home My WebLink About20200625Reply Comments.pdfPreston N. Carter, ISB No. 8462 Givens Pursley LLP 601 W. Bannock St. Boise, Idaho 83702 Telephone: (208) 388-1200 Facsimile: (208) 388-1300 orestoncarter@ givenspursley. com Attorneys for Intermountain Gas Company BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION IN THE MATTER OF INTERMOT'NTAIN GAS COMPANY'S APPLICATION FOR AUTHORITY TO REYISE ITS GENERAL SERYICE PROVISIONS RELATED TO THE INSTALLATION AND EXTENSION OF NATURAL GAS MAINS AI{D SERYICES CASE NO. INT-G.20.01 ft[C EIVEE ir? jLiH 25 ?Ht?:23 ;i':.i::- 1:i,r:iLiC,r.1 ,i -:. 'iiirii.Jl$gjffii InrnRuouNTArN Gs CourAI{Y's Rrplv Cou*rnxrs 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') the city of Boise City ("Boise City"), and the Idaho Conservation League ("lCL"), as well as limited Reply Comments to public comments filed by the Rocky Mountain Propane Association ("RMPA"), Chad Worth and Craig Smith. Blcxcnouxo lntermountain filed an application on January 27,2020 requesting authority to revise the Company's General Service Provisions related to the installation and extension of natural gas mains and services ("Line Extension Policy''). On February 25,2020, the Commission issued Order No. 34560 setting a March ll , 2020 intervention deadline and suspending the Company's proposed April 1, 2020 effective date for the tariff for 30 days plus 5 months, or until October l, 2020. INTERMoT.INTAIN GAs Coupelw's Rgplv CouupNts - I The primary purpose of a Line Extension Policy as outlined in Staff comments, "is to assure equity between new and existing customers. A Line Extension Policy should assure that the costs of new interconnections are not unfairly shifted to existing customers, while also assuring that the new customers do not pay more for their interconnection than is necessary." Staff Comments at 2. Rrply To Sr.lrr Courvrpxrs Intermountain appreciates Staf|s Comments and the thorough review and input on the Company's proposed methodology in this case. As Staff mentions, the Company has offered to make refunds for projects completed between the conclusion of the last rate case (INT-G-I6-02) and the implementation of this tariff. StaffComments at 8. Intermountain recognizes there are good arguments for and against issuing refunds and does not take a firm position on either side. However, Intermountain does not believe there is any justification for requiring the Company to book a refund below the line as a penalty in this situation. Intermountain was following the approved Line Extension Policy at the time these projects were completed, and as illustrated throughout StafPs Comments, the Company has made a good faith effort to work through this complex revision with Staffin a timely maruler. As such, Intermountain requests that the Commission either allow refunds without booking them as a penalty, or that the Commission disallow refunds. Staff recommends an effective date of August 1,2020. lntermountain respectfully requests that the effective date remain at the suspended effective date of October 1,2020 that was established in Order No. 34560. Intermountain's traditional construction season runs from spring through fall. While it is impossible to set a date that provides a completely seamless transition between the two tariffs, a date at the end of the construction season will result in less confusion for customers than a date in the middle of the construction season. An effective date of INtenuouNrnrN Ges CoMpAl.ry's Rrpr.y CorrluBNrs - 2 October 1,2020 will allow the Company to adequately communicate impending changes with developers, builders, and customers prior to the start of the 2021 construction season. In addition, the Company has been referencing the October 1,2020 suspended effective date when discussing projects with customers to make sure those customers are informed that there will be a difference in the project costs if they wait to begin a project until after the new tariffis effective. The Company has also faced unexpected challenges in system development and training on the proposed tariff due to the challenges brought about by COVID-19. For these reasons, lntermountain believes that the October I,2020 effective date will avoid unnecessary confusion and requests an effective date of October 1,2020 rather than August 1,2020. Rrply ro BorsE Crry CoprprcNrs Intermountain agrees with Boise City regarding the important role natural gas plays in affordable housing, economic development, and the viability of reaching clean and renewable energy goals through the use of renewable natural gas. Boise City raises several questions throughout their comments. Intermountain would welcome the opportunity to discuss these points with Boise City in an informal setting. In this Reply, lntermountain will point Boise City to sources of information within the case that may address the questions. Boise City raises a question regarding the decrease in the allowable investment. As the Company's Application outlines beginning on Page 8, the proposed tariff will have varying impacts on the need for and amount of upfront payments from individual customers depending on whether the proposed project requires a service line only or if it is a combined main and service line extension. Additional information is also requested for the consffuction overhead percentage. As Staffindicates in their Comments, the Company provided a detailed description and work papers INrgnuouurerN Ges CotvtpAxv's Replv CotvttvtrNrs - 3 that outline the calculation of the construction overhead percentage in its response to Production Request Nos. l-3. StaffComments at 8. lntermountain has provided these materials to the City and would welcome the opportunity to discuss directly with the City. Boise City also requests an explanation of why the Exhibit No. 3 Musgrove Engineering study (Musgrove) includes the use of 80% efficient fumaces instead of 95o/o efficient fumaces. As outlined on Exhibit No. 3, Page 2, Section 2, the study modeled both an 80o/o efficient and a 95o/o efftcient furnace. The table "Load Factor Averaging Assumptions Per Climate Zone" on Page 6 of Exhibit No. 3 reports the weighting used between the two different furnace types. Although the Department of Energy submitted a proposal to raise the minimum effrciency level for fumaces from 80%, that rulemaking has received some challenges and is still making its way through the rulemaking process. There is not yet clear direction on whether the minimum efficiency level will be increased, and, if it is increased, to what level. Therefore, 80o/o fumaces are still being installed routinely in new construction and are thus appropriately included in Exhibit No. 3. Rprr,v ro ICL CounnrNrs Intermountain appreciates the opportunity to address ICL's concerns that the proposed Line Extension Policy uses assumptions that may overstate methane consumption. The Company believes ICL's concerns are based on misinterpretations of the Musgrove study. The Musgrove study is based on the current new construction environment across the Company's service territory. As Staffindicates in their Comments, the Musgrove study was calibrated and validated using actual consumption data from homes constructed during the 2015 and 2016 calendar years. StaffComments at 5. Thus, the Musgrove study does not assume that customers will build homes to meet minimum code levels or install minimally efficient appliances as ICL asserts. Rather, it assumes that some customers will build to code, but that others will go beyond code INtenvomlrerN GeS CoupeNy's Rrply CorrluENTs - 4 and install energy efficiency upgrades as the actual building mix demonstrates. ICL also states that the modeling assumes a full suite of gas appliances in the homes modeled. While the Musgrove study does include an analysis of non-heating as well as heating load, as noted on Exhibit No. 3, Page 6, "The non-heating appliance gas usage was separated from the overall building heating consumption." This allowed for the development of the heating consumption factor of 0.234 (Exhibit No. 3, Page 6) as well as the non-heating appliance annual gas consumption found on Exhibit No. 3, Page 1 l. The modeling that resulted in the heating consumption factor, therefore, does not assume customers will install a full suite of gas appliances. Staffreviewed both calculations and found them to be reasonable. Staff Comments at 5 and 6. Additionally, ICL expresses concem that the Company proposes the use of an average allowable investment across its system. While the Musgrove study did find differences in temperature, code, and building practices across the Company's service territory, these differences were offsetting and thus produced results that were similar regardless of location. As noted in StaffComments, "Although winter temperatures are generally cooler inZone 68 than they are inZone 58, more stringent Zone 6B IECC building standards result in consumption that is similar in both zones." Staff at 5. While Intermountain agrees that precision is important, when simple calculations result in a similar answer to extrernely complex calculations, the simpler calculations generally result in a tariffthat is easier to explain and understand. For this reason, lntermountain chose to use the simple, but accurate, allowable investrnent factor proposed in its application. Application at 5. Finally, ICL argues that the line extension policy should encourage efficiency through a tiered cost methodology. Intermountain believes that its Energy Effrciency program is a better INTERMoUNTATN Ges CoMPANY'S REpI-v CouruBNrs - 5 mechanism to encourage customers to consider efficiency improvements than a complicated, punitive line extension policy. Rnplv ro CoMMENTS REGARDTNG Eeurry The Comments submitted by Boise City, ICL, RMPA, Chad Worth and Craig Smith all note the importance of equity in setting line extension policy. Boise City expresses concern that the proposed tariff may increase the costs of residential and commercial construction projects. Boise City at 2. Craig Smith states that the proposed tariffwill "create an undue hardship on developers/builders and in return future homeowners." Craig Smith at l. Both Boise City and Craig Smith are concerned that the increase in costs from this proposal will impact housing prices and affordability. On the other hand, ICL, RMPA, and Chad Worth raise concerns about the possibility of existing customers subsidizing line extensions to new customers by not imposing enough costs on new construction. RMPA encourages the Commission to "closely scrutinize any proposals which would result in the subsidized extension of their gas delivery system to new applicants." RMPA Comments at2. ICL recommends that, "the Commission direct Intermountain to develop a line extension policy that directly assigns all of the costs to the entity requesting new service." ICL Comments at 2. These comments illustrate the difficulty in balancing the dual objectives of ensuring that both existing and new customers are treated fairly. Because part of any customer's monthly charges are designed to recover a portion of the distribution system required to serve them, it would be unfair to require new customers to pay the entire cost of a project up front and then pay for their distribution system again through their base rates. However, not charging a new customer enough up front will result in upward pressure on rates and existing customers subsidizing the costs of system expansion. As StaffComments discuss, the embedded cost INrpnuouNrerN Ges Coupelw's Rnply CorraurNrs - 6 methodology proposed by the Company appropriately balances the equities between new and existing customers. StaffComments at 2. Coxcr,usrox In summary, lntermountain believes its proposed Line Extension Policy strikes an appropriate balance of ensuring equity between new and existing customers, results in a tariff that is simpler and easier for customers to understand and includes important update provisions that will keep the tariffcurrent. Intermountain respectfully requests the Commission: a) approve Intermountain's Line Extension Policy as filed, b) determine whether or not customer refunds are appropriate and if appropriate instruct Intermountain to make those refunds above the line, c) establish an October 1,2020 effective date for the tariff. Dated: Jwe25,2020 GTVENS PURSLEY LLP / -----:-e--'l Preston N. Carter Givens Pursley LLP Attornqts for Intermountain Gas Company IrvrrnuounrnrN Ges Colrapeuv's REPLY Couurmrs - 7 CERTIFICATE OF SERVICE I certi$ that on June 25, 2020, a fue and correct copy of INTERMOLJNTAIN 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 710 N. 66 Steet Boise, ID 83702 botto@ idahoconservation. ors Boise City Abigail R. Germaine Deputy City Attorney Boise City Attomey's Office 150 N. Capitol Blvd P.O. Box 500 Boise, ID 83701-0500 agermaine@ cityofboise. ore Commission Staff 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 Matt Hunter Deputy Attorney General Idaho Public Utilities Commission 11331 W. Chinden Blvd., Bldg. 8, Suite 201-A Boise, ID 83714 matt. hunter(a)puc. idaho. eov dnkBhM Electronic Mail Electronic Mail Lori A. Blattner INTERMoUI.IArN Gas CoupRlw's Rgpry CoutvtgNrs - 8