HomeMy WebLinkAbout20210818Final_Order_No_35134.pdfORDER NO. 35134 1
Office of the Secretary
Service Date
August 18, 2021
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF INTERMOUNTAIN
GAS COMPANY’S APPLICATION FOR
APPROVAL TO CHANGE DEPRECIATION
AND AMORTIZATION RATES
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CASE NO. INT-G-21-01
ORDER NO. 35134
On January 12, 2021, Intermountain Gas Company (“Company”) applied to the
Commission requesting authority to decrease its depreciation and amortization rates from a
combined 2.97% to 2.55%.
On February 8, 2021, the Commission issued a Notice of Application and Notice of
Intervention Deadline. Order No. 34914. No one petitioned to intervene.
On March 18, 2021, the Commission issued a Notice of Modified Procedure setting a
June 8, 2021 public comment deadline and a June 22, 2021 Company reply deadline. Order No.
34960. Subsequently, Staff and the Company entered into settlement negotiations. Staff and the
Company attended two settlement conferences which resulted in settlement.
On June 3, 2021, the Company filed a settlement and stipulation (“Settlement”) and a
Motion for Approval of Stipulation and Settlement requesting Commission approval of the
Settlement.
On June 14, 2021, the Commission issued a Notice of Proposed Settlement and Notice
of Amended Comment Deadlines. Order No. 35070. Staff and the Company filed comments in
support of the Settlement. No other comments were received.
Based on our review of the record, we now issue this Order approving the Settlement
THE APPLICATION
The Company’s Application requested an order approving changes to its depreciation
rates. The Company requested authority to decrease its depreciation and amortization rates from a
combined 2.97% (when weighted by December 31, 2019 assets) to 2.55%. The aggregate effect of
the proposal would be a decrease to the Company’s annual depreciation and amortization expense
by $2,858,965.
The Company’s Application proposed changes to selected accounts are summarized in
the following table:1
1 The full list of proposed changes is included in Exhibit No.1 to the Application.
ORDER NO. 35134 2
Account # Description Proposed Change(s) Change to Depreciation or
Amortization
367 Transmission Mains Slightly longer service life ($556,929)
376 Distribution Mains Slightly longer service life
and -50% net salvage value
($203,036)
380 Services Longer service life (56
years) and R3 Iowa Curve
($1,079,992)
381.2 ERT Units Slightly shorter service life
(15 years) and R3 Iowa
Curve
$318,215
397 Communication Equipment Change amortization rate
from 33.64% to 9.93% and
extend the service life to ten
years
($590,840)
The Company proposed to combine Accounts 381 and 382 into Account 381–Meters; Accounts
381.2 and 382.2 into Account 381.2–ERT Units; and Accounts 383 and 384 into Account 383–
Regulators. This would cause proposed Accounts 381, 381.2, and 383 to be handled like the rest
of the Company’s plant accounts. This change would not affect depreciation. According to the
Company, this change would increase efficiency and lower administrative costs.
The Company also proposed to separate the depreciation parameters for Account 361–
Structures and Improvements; Account 362–Gas Holders; and Account 363–Measure &
Regulating Equipment for its Nampa and Rexburg Liquified Natural Gas facilities.
THE SETTLEMENT
As a result of settlement negotiations, the Parties agreed to modified terms to update
the Company’s depreciation and amortization rates. The Parties agreed as follows:
1. The Parties agree to the depreciation and amortization rates as set forth on
Settlement Exhibit No. 1, Col. (o).
2. Settlement Exhibit Nos. 2 and 3 provide supporting calculations, including the
retirement rate analysis and detailed depreciation calculations, for the plant
accounts that changed from the original Application as a result of this Settlement,
including: Account 363 (including all the subaccounts listed in Settlement Exhibit
No. 3, Pages 2-6), Account 367, Account 376, Account 378, Account 380, and
Account 390. The Parties agree that the depreciation and amortization rates for all
other plant accounts should be approved as set forth in the Application.
3. If approved by the Commission, the rates would reflect an effective combined
depreciation and amortization rate of 2.41%. See Settlement Exhibit No. 1, Line
41, Col. (o).
4. The Parties agree that the rates reflected on Settlement Exhibit No. 1, Col. (o), if
ORDER NO. 35134 3
approved by the Commission, will be effective as of January 1, 2021.
5. The Parties agree that the reduction in accruals, as reflected on Settlement Exhibit
No. 1, Col. (q) shall be deferred starting on July 1, 2023, unless the reduction in
depreciation rates have previously been incorporated into base rates through an
Order from this Commission.
THE COMMENTS
Staff and the Company filed comments in support of the Settlement. No other
comments were received.
Staff Comments
Staff recommended the Commission accept the Settlement. Staff stated the Settlement
best reflects the average service life estimates, rates of projected retirements, and net salvage
percentages when compared to the Company’s original study.
Staff reviewed the Company’s request to change depreciation and amortization rates.
Staff’s analysis focused on the study’s estimation of service lives using plant historical data for six
of the largest asset accounts. Staff’s analysis for these accounts indicates a difference in the
accounts’ average service life estimate and rate of projected retirements when compared with the
study. Staff also reviewed the historical net salvage percentages for the Company’s asset accounts
to determine reasonable net salvage values to use until the next depreciation case. Staff believed
the Settlement best reflects the average service life estimates, rates of projected retirements, and
net salvage percentages for the following accounts:
Staff analyzed the effective date, the impact on customers, and the earnings impact on
the Company. Staff recommended the depreciation rates stipulated to in the Settlement should be
effective January 1, 2021. The reduction in depreciation accruals should be deferred beginning
ACCOUNT
#
DESCRIPTION ORIGINAL
COST
COMPANY
IOWA
CURVE
STIPULATION
IOWA CURVE
NET
SALVAGE
PERCENTAGE
363 MEASURE AND REGULATOR
EQUIPMENT - NAMPA
$15,371,800 37-R2.5 47-S4 -17%
367 TRANSMISSION - MAINS $69,500,532 58-R3 63-R4 -35%
376 DISTRIBUTION - MAINS $212,220,651 68-R4 70-R3.5 -48%
378 MEASURE AND REGULATOR
STATION EQUIPMENT
$13,035,034 42-R1.5 43-R1.5 -25%
380 SERVICES $182,314,583 56-R3 58-R3 -74%
390 STRUCTURES &
IMPROVEMENTS
$26,670,225 42-R2 50-R2 5%
ORDER NO. 35134 4
July 1, 2023, unless previously reflected in customer base rates. Staff believed these dates are
reasonable.
Company Comments
The Company filed reply comments and recommended the Commission adopt the
Settlement as filed, without modification, and authorize the terms of the Settlement with rates
effective January 1, 2021. The Company stated it believed the Settlement represents a reasonable
compromise on the average service life estimates, rate of projected retirements, and net salvage
percentages included in the case. The Company believed the depreciation and amortization rates
agreed to in the Settlement appropriately reflect the cost of the Company’s assets over time.
Additionally, the Company believed the Settlement is a reasonable resolution of the issues and is
in the public interest.
COMMISSION FINDINGS AND DECISION
The Company is a gas corporation under Idaho Code § 61-117, and a public utility
under Idaho Code §61-129. The Commission has jurisdiction over the issues in this case under
Title 61 of the Idaho Code, including Idaho Code §§ 61-501 and 61-503.
The Commission has reviewed the record including the Company’s Application, the
Settlement, Staff’s comments, and the Company’s reply. The Commission appreciates the parties
working together to reasonably settle the depreciation and amortization rates as more fully
described in the Settlement. The Commission accepts and approves the Settlement as filed.
O R D E R
IT IS HEREBY ORDERED that the Settlement is approved as filed, effective January
1, 2021.
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 regarding 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.
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ORDER NO. 35134 5
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this 18th day
of August 2021.
PAUL KJELLANDER, PRESIDENT
KRISTINE RAPER, COMMISSIONER
ERIC ANDERSON, COMMISSIONER
ATTEST:
Jan Noriyuki
Commission Secretary
I:\Legal\GAS\INT-G-21-01\orders\INTG2101_final_dh.docx