20200609Rocky Mountain Propane Association Comments.pdf

Date June, gth 2020
To: Commission Secretary
!daho Public Utilities Commission
P.O. Box 81720
Boise,lD 83720-0074
Re: lN THE MATTER OF INTERMOUNTAIN GAS COMPANY'S APPLICATION FOR AUTHORITYTO REVISE
lTS GENERAL SERVICE PROVISIONS REIATED TO THE INSTALTATION AND EXTENSION OF NATURAL GAS
MAINS AND SERVICES; Case No. INT-G-20-01.
COMMENTS OF THE ROCKY MOUNTAIN PROPANE ASSOCIATION
On behalf of the Rocky Mountain Propane Association (RMPA), which represents propane marketers
and suppliers across ldaho, we appreciate the opportunity to submit comments in this proceeding.
Like lntermountain Gas Company (lntermountain), our members provide clean-burning and critical
energy to residential and commercial customers in the state. As a competing energy provider, the
propane industry has a unique interest in lntermountain's application to revise policies governing the
extension of natural gas mains and service lines.
When evaluating proposed changes to how and when lntermountain may extend mains and service lines
to new customers, as is the case in docket INT-G-20-01, it is crucial that the Commission reject practices
that are harmful to the utility's captive ratepayers and contrary to good ratemaking principles.
Specifically, the Commission should reject policies that permit lntermountain to finance the extension of
natural gas service to new customers by increasing rates on current customers to pay for it.
Commissioners should ensure lntermountain's revised line extension policies properly protect energy
consumers and prohibit the practice of forcing incumbent customers to subsidize new ones.
lntermountain should only engage in expansion projects that are truly economic and prudent
investments from which the estimated revenues will cover the costs, including a profit for the utility in a
reasonable time frame, without requiring financial subsidies from its captive customer base. Connecting
new consumers to a utility's distribution system, to the financial benefit of the utility, is a different type
of infrastructure investment than a pipeline placed into service for the purpose of increasing fuel
reliability or system security, and it should be treated differently.
To be clear, we have no issue with the extension of gas service to new areas of the state so long as
prospective customers pay their own way. And if that requires an applicant to pay a contribution in aid
of construction (CIAC), then the CIAC levied should generate sufficient monies to cover all revenue
deficiencies stemming from the uneconomic portion of the line extension. Captive customers should not
be on the hook to cover any shortfall between the cost to provide new service and expected revenue
generation. lf a proposed line extension is not economically viable on its own, the project should not be
undertaken. As such, the Commission-approved extension policies that result from this proceeding
should guarantee that lntermountain expands its service territory only when the economics of a
proposed line extension are cost justified and free of contributions from existing ratepayers.
An important principle of utility ratemaking is cost causation. This principle dictates that utility costs
should be assigned to the customers who cause the utility to incur them. ln other words, those who are
responsible for the costs, should pay for them. Compelling captive gas customers to pay for line
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extensions to new ones unfairly shifts this cost burden and saddles existing ratepayers with higher
energy bills even though they do not require an investment from the utility, nor are they responsible for
it incurring a cost. Preferred rate design avoids subsidies and inter-customer cost shifting to ensure rates
are fair, equitable and nondiscriminatory. The Commission should ensure the line extension policies
under consideration in this proceeding reflect these goals and costs are appropriately assigned.
Forcing captive ratepayers, including households of limited means and those on fixed incomes to pay
higher utility rates to finance the extension of gas mains and service lines to new customers is wrong.
And since utilities operate as monopiles in defined geographic areas, energy consumers cannot shop
around for competing service, which means they are forced to swallow price increases. lnstead,
extension infrastructure should be paid for by the party receiving new service and to the degree
appropriate, the utility itself. To do otherwise sends improper price signals to consumers and distorts
utility decision making. Notably, the issue of protecting lntermountain's customers from rate hikes due
to revised line extension polices was also made by the ldaho Conversation League in their petition to
intervene in this docket.r
Ratepayers are not the only parties harmed by subsidized gas expansion. This anti-competitive behavior
is also detrimentalto competing energy sources, including ldaho's propane marketers, who do not force
current customers to finance the extension of service to new ones. Propane's delivery infrastructure is
properly paid for by the industry and the customer receiving service. Given this, if it is uneconomic to
bring service to a potential applicant, then it likely will not happen.
To reiterate, we have no objections to lntermountain bringing natural gas service to new customers or
expanding its service territory. We do object to the use of ratepayer subsidies to accomplish it. These
subsidies are unfair to the utility's captive customer base and distort the marketplace for competing
energy providers. As the Commission evaluates modifications to the rules and regulations that govern
lntermountain's line extension policy in this proceeding, we encourage them to closely scrutinize any
proposals which would result in the subsidized extension of their gas delivery system to new applicants
Thank you again for the opportunity to provide comment.
Respectfully subm
Tom Clark
Executive Director
Rocky Mountain Propane Association
P.O. Box 9362
Ogden, UT 84409
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