20210429Reply Comments.pdf

1';-i I
Preston N. Carter, ISB No. 8462
Givens Pursley LLP
601 W. Bannock St.
Boise,Idaho 83702
Telephone: [phone]
Facsimile: (208) 388-1 300
prestoncarter@ qi venspurslev. com
IN THE MATTER OF
INTERMOUNTAIN GAS
COMPAI{Y'S APPLICATION FOR
AN EXTENSION OF TIIE
ACCOUNTING ORDER
AUTHORIZING A REGULATORY
ASSET FOR THE COSTS
ASSOCIATED WITH CUSTOMER
PAYMENT TRANSACTIONS
HANDLED BY WESTERN UNION
frrt A. - | c') filJ:q,
Attorneys for Intermountain Gas Company
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
CASE NO. INT.C..}I.O2
IxrnnuouxrArN GAs Corupnxy' s
Rppr,y Covr*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 ').
BlcxcRouxr
Intermountain filed an application on February 19,2021requesting the Commission
extend authorization of the regulatory asset established in Order No. 34099 to capture the costs
associated with in-person customer pay station transactions handled by Western Union.
On April 15,2021, Staff filed Comments in the case. Pursuant to the Notice of Modified
Procedure issued by the Commission in Order No. 34965, lntermountain submits its Reply
Comments.
IxreRrraotrurerx Gns CoMpeNv's Rrplv CoMMENTS - I
Rnplv To Surr Couunxrs
1. Areas of agreement
While the Company disagrees with StafPs ultimate recommendation, the Company
agrees with Staffin a few key areas. First, Intermountain appreciates, and agrees with, Staff s
position that ultimately recovery of the costs associated with Western Union pay station
transactions should be embedded in base rates. Intermountain does not disagree with the premise,
but only with the timing.
As the Company noted in its Application, the Covid-I9 pandemic has caused disruption
to many normal business processes. Because a2020 test year would be challenging to normalize,
the Company decided not to file a general rate case prior to the expiration of the Accounting
Order on February 1,2021. Granting an extension of the Accounting Order would rec'ognze
Intermountain's good-faith eftorts to rsmove a barrier to timely payments that unfairly impact
low-income and under-banked customers. It would also acknowledge the unusual circumstances
that surround2020.Intermountain agrees that when it files a general rate case, in-person
customer pay station transactions should be included in base rates.
Second, Intermountain agrees with Staff s observations that some customers that use
payments types that incur fees are low-income customers that may not be able to afford the
transaction fees. Concern regarding these customers is what motivated Intermountain's original
application to pay the pay-station transaction fees at issue in this case and have them accrue as a
regulatory asset. Concern regarding these customers is also what motivates lntermountain to
continue that heatment during the disruption of 2020 and what appears to be an economic
recovery in202l.Intermountain shares Staffs concern regarding these customers but disagrees
that compelling Intermountain to absorb these fees is the correct solution.
INTERMoUNTnnT Ges CoupAr.ry's REpLy CoMMen-rs - 2
2. Additional details regarding the Company's efforts, and the Commission's
statements, regarding convenience fees.
StaffComments provide a review of the timeline of the cases surrounding the issue of
convenience fees. To complete the record Intermountain adds the following important details to
that timeline.
The Commission issued a surlmons to Intermountain in Case No. INT-G-I7-02 on
March 30,2017. The issue of convenience fees was raised as part of that case, which dealt
primarily with the timing of AutoPay withdrawals.
The Commission issued Order No. 33757, Case No. INT-G-16-02 on May 10, 2017-
afterthe sunmons was issued in CaseNo. INT-G-17-02.In OrderNo. 33757 the Commission
'oencouraged the Company to explore the possibility of removing these fees in the future to keep
pace with what appears to be an emerging industry standard." Order No. 33757 at 38 and 39.
StafPs Comments state, "The Company did not act on the Commission's encouragement
in Order No. 33757." StaffComments at2.To the extent this statement refers to the Company's
actions between Case No. INT-G-16-02 and INT-G-17-02, the Company notes that NT-G-17-02
started before OrderNo. 33757 was issued. The Company did not disregard the Commission
Order, but simply had not had time to act.
At the conclusion of INT-G-I7-02, onJune 30, 2017 the Commission issued Order No.
33805, which stated:
We recently addressed Ms. Rothenberger's concern about
convenience fees charged for paying bills with debit or credit cards.
In Order No. 33757, the Commission declined to eliminate the fees
"at this time," but encouraged the Company "to explore the
possibility of removing these fees in the future to keep pace with
what appears to be an onerging industry standard." Order No. 33757
at 38 and 39. This issue is not up for reconsideration in Case No.
INT-G-16-02. Consequently, the Company is directed to meet with
INrnRraorrNraN Gns CoMpnNy's REpLy CoMNaer.rrs - 3
Staff within 60 days after this Order issues, to develop a proposed
action plan that more closely aligns with the industry standard.
Order No. 33805 at 4.
Following the issuance of Order No. 33805, the Company and members of Staff had
several phone calls and met on September 12,2017 to discuss the issue of convenience fees.
INT-G-18-01 Application at 3. The Company began to pay the costs associated with customer
payment transactions handled by Westem Union on February 1, 2018. In Order No. 34099, the
Commission "approved the creation of a regulatory asset to capture the costs associated with in-
person pay station transactions handled by Western Union." The Commission further authorized
the Company to "seek recovery of those costs in the Company's PGA beginning in 2019 until
February 1,2021, or until the Company files a general rate case, whichever comes first." In that
Order, the Commission also encouraged the Company and Staff to "continue to collaborate on
how to best address transaction fees." Order No. 34099 at 3.
Following the issuance of Order No. 34099, the Company and Staff continued to meet
regarding the remaining transaction fees. As those meetings were in process, the Commission
issued Order No. 34405 in Suez Water Idaho [nc.'s Case No. SUZ-W-19-01. Although the
Commission approved Suez's request to assume responsibility for the transaction costs, the
Commission noted:
The Commission approves this request with some trepidation,
however, as it continues to adhere to the principles of cost causation.
We also expect cost reductions in other areas to offset at least a
portion if not all of these transaction costs. While we have approved
similar requests in the past, we are increasingly concemed that
making all ratepayers bear the cost of transaction fees they might
have otherwise avoided by using a different payment method is
inconsistent with the principles of cost causation to which we
adhere. In this particular case, we are willing to approve Suez's
INtnnuorxrenq Gas CoMpANy's REpLy CoNaMeNrs - 4
request because the projected cost to Suez forbearing the fransaction
costs is fairly small (and thus will not significantly affect rates), and
because we have granted similar requests in the past. We continue
to evaluate, however, whether socializing transaction costs is
consistent with cost causation principles.
Order No. 34405 at 5.
Taking all the facts into account including the guidance from Order No. 34405, the
Company considered whether to eliminate the remaining transaction fees. In December 2019, the
Company filed a letter explaining the results of its analysis. As stated in the letter:
Given this guidance from the Commission, Intermountain agrees that
it is not in the best interest of its customers to socializethe remaining
transaction fees. Intermountain is committed to continuing to pay the
transaction fees for customers that pay their bill in-person through
Western Union's Convenience Pay locations. This addresses the
concem that convenience fees unfairly impact low-income and under-
banked customers. Allowing customers to pay their bills in-person
without incurring additional fees benefits all customers by
encouraging timely payments and thus minimizing uncollectible
expenses.
The remaining hansaction fees, however, are for discretionary
credit/debit card use to make bill payments ov€r the phone or online,
which is the most expensive payment option for Intermountain's
customers. There are several payment options available to customers
that do not incur additional fees for them or the Company, including
paylng online using a checking or savings account withdrawal or
payrngbymail.
Intermountain has obserued that as other utilities rernoved the
fransaction fee for credit/debit card payment options, there has been a
steady increase in the use of these payment options that incur a fee.
This growth is driven in large part by customers that were previously
using a fee-free payment option. In 2018, 72% of Intermountain's
customers payed thefubill using an electronicpaymentmethod. Ofthe
72% that used on electronic payment method, 4o/o incl.nred a
transaction fee. If ftansaction fees for credit/debit card payments were
INrnnuouNrnnr Gns CoMplNY's RBpt v CotuuENrs - 5
removed, Intermountain would expect to see a significant portion of
its customers that pay electronically begin to use their credit cards as
a way to take advantage of credit card opportunities for points or cash
back. Removing the true cost of the payment option removes the
incentive for customers to choose the least-cost bill payment option.
Accurate cost signals will continue to help keep Intermountain's prices
low for all customers.
Based on the above analysis, lntermountain does not plan on filing
an application to request its customers bear the cost of the ronaining
crediUdebit card transaction costs at this time.
Intermountain letter filed l2ll3ll9 n Case No. INT-G-18-01, attached as Exhibit 1.
Staff Comments note that "The Company has yet to submit a plan to eliminate
convenience fees associated with debit and credit card transactions." Staff Comments at 2. It is
true that the Company has not submitted a plan to eliminate all convenience fees. But the
Commission never directed the Company to submit such a plan-it directed the Company to
"explore the possibility of removing these fees." Order No. 33805. The Letter submitted in
response to Order No. 33805, explains the Company's conclusions after it explored the
possibility of removing the remaining transaction fees. It is not that the Company disregarded
the Commission's order; the Company did as it was ordered to do. It just came to a difflerent
conclusion - based in part on the Commission's statement in Order No. 34405 - than Staff
reaches in its comments in this case.
The StaffComments make several statements in opposition to continuing accrual as a
regulatory asset. Staffnotes that, in recent years, customers have increased the use of credit and
debit cards such that use of credit and debit cards is "routine." StaffComments at 3.
Intermountain acknowledges that, in recent years, many retail outlets have chosen to roll the
convenience fees into the cost of their products. However, lntermountain submits that many
retailers make this choice, at least in part, for the convenience of their customers. Some retailers,
INrnnuotmtnnt Gas CoMpANy's Rsply CoN,II\rENrs - 6
such as Winco, have chosen not to roll fees into their product prices in an effort to keep prices
low for consumers. In addition, govemment agencies such as the Deparhnent of Motor Vehicles
and the Idaho Departrnent of Fish and Game, have decided to pass along to the customer any
transaction fees that are incurred rather than increase prices or socialize the transaction fees by
payrng the costs with tax dollars. Accordingly, while usage of credit and debit cards has
increased, cost-conscious private and public entities still recognizefhe high costs associated with
these payment types, and either refuse to accept this high-cost form of payment or place the costs
with the customer that selects that method of payment.
It should be noted that this proceeding does not address all fees for payment, such as
credit and debit cards, but rather only the fees related to in-person payment. As such,
Intermountain submits that the Commission does not have to-and should not-address the
larger universe of transaction costs in this case. lntermountain offers these comments about the
use of credit and debit cards only in response to Staff s comments, which raise these issues
although they are outside the issues raised in this proceeding.
3. Intermountain respectfully submits that the Western Union fees should continue to
accrue as a regulatory asset until all issues surrounding convenience fees can be
addressed in a general rate case.
For the reasons expressed above, and set forth in its application, Intermountain submits
that the regulatory asset should continue to accrue and be collected through the PGA until all
issues surrounding convenience fees can be addressed in a general rate case.
StaffComments spent a considerable amount of time discussing the potential removal of
credit and debit card transaction fees which are not at issue in this case. Staff, the City of Boise,
and Intermountain all agree on the importance of the Company continuing to pay the fee for
customers that pay their bills using a Westem Union pay station. As previously discussed, this
addresses the concern that convenience fees unfairly impact low-income and under-banked
INrrruaouNten Gns CoMPANY's Rnplv CoMMENTS - 7
customeni by providing a method of payment that does not impose the fees back on consumers.
At the same time, this solution avoids the problern of incenting customers to use high-cost
payment methods when those costs could be avoided.
In light of all the circumstances, Intermountain submits that it is fair, just, and reasonable
to extend the curre,nt heatnent of costs associated with customer payment hansactions handled
by Western Union until all issues regarding ffansaction fees can be addressed in a general rate
case.
Dated: Apil29,202l
GMENS PURSLEY LLP
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Preston N. Carter
Givens Pursley LLP
Attorneys for Intermountain Gas Company
INrrnuouNrenr Gns CoMpANy's Rpply Colaraurrs - 8
CERTIf,'ICATE OF SERVICE
I certiff that on Apil29,202l, a true and correct copy of INTERMOUNTAIN GAS
COMPANY'S REPLY COMMENTS was served upon all parties of record in this proceeding
via the mannetr indicated below:
Commission Staff
Jan Noriyuki, Commission Secretary
Idaho Public Utilities Commission
11331 W. ChindenBlvd., Bldg.8, Suite20l-A
Boise, lD 83714
Matt Hunter
Deputy Attorney General
Idaho Public Utilities Commission
ll33l W. ChindenBlvd., Bldg.8, Suite20l-A
Boise, ID 83714
,,
Via Electronic Mail
j an.noriyuki@puc. idaho. gov
matt.hunter@puc. idaho. gov
Preston N. Carter
INTERMoUNTAnq Ges CoMpANy's RnrlvCouuuvrs - 9
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EXHIBIT 1
E(ECT.ITIYE OFFICES
lxrenuouNTAtn Gns ComparuY RECETVED
SSOSOUTHCOLEROAD. p.O.BOX7608. BOISE,lDAllOBI,TOT r 1208)$/7-6000. FA)C3z-fl)97
013 0EC I 3 PH 2: 32
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December 13,2019
tvls. Diane Hanian
Commission Secretary
Idaho Public Utilities Commission
P.O. Box 83720
Boise,lD 83720-0074
RE: Idalro Public Utilities Commission OrderNo. 34099 (CaseNo. INT-G-18-01)
DearMs. Hanian:
Following a collaborative process with the Idaho Ptrblic Utilities Commission Staff, Intermourtain
began paying the Convenience Pay tansaction fees for customers that pay their bills in-person
tbrough Western Union effective February l, 2018. In OrderNo.34099,issued on July 2, 2018 in
Case No. INT-G-18-01 the Comrrission aulhorized Intermountain to create a regulatory asset to
defer the costs associated with the Company payuremt ofthese in-person customer tansactions. As
put ofthat Order, the Commission encouraged the Company and Staffto "@ntinue to collaborate
on how to best address tansaction fees'. Id. at3
Duing the time tbat Staffand the Company were meeting on the remaining tansaction fees, the
Commission issued Order No. 34l+05 in Sus Water Idaho Inc's Case No. SUZ-W-19-01. dlthough
the Commission approved Suez's reqtrcstto asume responsibility for the tansaction costs, they
noted:
"TIu Commission aryroves this request with some tepidotiott, hovtever, as it confitrues to adlure
to tle prirciples of ast catuation We also eryect cost reductioru in otlur treas to offset at least a
portion if rut all of tlrcse transaction costs. While we have apprwed similar reqtests in tlu past, we
we increasingly concerned tlat making all rqteg)Ers bew the cost of tronsactionfees tluy might
lwne otheruise avoided by usW a diferent pyment metlod ts inconststent with tlu principles of
cost cmtsation to which we odhere. In this putianlo ca se, we oe willing to qprove Suez's rcquest
becanse the projected cost to Suezfor beoing the transaction costs is fairly small (md thus will tot
sigflificantly ffect rotes), and becanse we harc groted simllw requests in the past. We contitue to
evahtate, hou,ever, whether socialtztng lransacfion cosfs rs cottsistent with cost causation
principles" Id at5
Given this guidance from the Commissiorq Interrrountain egrees that it is not in the best interest of
ib customers to socialize the remaining tansaction fees. Intennorurtain is committed to continuing
to pay the tansastionfoos for customo,rsthdpoy their bill in-personttuoughWestsrnUnion's
EI(ECI'TIVE OFFICES
I rutenuouNTAlN Gns Corrr Panv
555 SOUTH COLE ROAD . P.O. BOX 7608 . BOISE IDAHO 8C707 e (&8!377-6000 o FN(: 377€097
Convenience Pay locations. This addresses the concem that convenience fees unfairly impaot low-
income and under-banked customers. Atlowing customers to pay ttreir bills in-person without
incuning additional feesbenefits all customers by encouragingtimely payments andthus
minimizing uncollectible expenses.
The remaining transaction fees, however, me for discretionary credit/debit cmd use to make bill
payments over the phone or online, which is the most experuive payment option for Intermountain's
custome$. There are several palmoent options available to customers that do not incu additional
fees for the,m or the Company, including paying online using a checking or savings account
withdrawal orpaying by mail.
Intermountain has observed that as other rtilities removed the tansaction fee for qedit/debit card
palurent opions, there has been a steady increase in the use of these payment options that incur a
fee. This growth is driven in large part by customers that were previously using a fee-free payment
option. In 2018, 72% of Intermountain's customerc payed their bill using an eleckonic payment
method. Ofthe 72o/othfr,used on electonic payment method, 4% inourred atransaction fee. If
tansastion fees for credit/debit card payments were removed, Intermountain would expect to see a
significant portion of its customers that pay electronically begin to use their credit cards as a way to
take advantage of credit card opportunities for points or eash back. Removing the true cost of the
paymen! option r€moves the inceirtive for customers to choose the least-cost bill payment opion.
Accurate cost siguals will continue to help keep Intermountain's prices low for all customers.
Based on the above analysis, Intermountain does notplan on filing an application to request its
customers bear the cost of the remaining credit/debit card transaction costs atthis time. However,
as technology and market conditions change, the Company is committed to continue discussions
with Staffon this issue. Should you have any questions, please don't hesitate to contact me at
Q08)377-6015.
Sincerely,
Lori A. Blathrer
Director, Regulatory Affairs
Intermourtain Gas Company
Cc: Mark Chiles