20210415Comments.pdf

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EDWARD J. JEWELL
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-0074
[phone]
IDAHO BAR NO. 10446
IN THE MATTER OF INTERMOUNTAIN GAS )
COMPANY'S APPLICATION FOR AN )
EXTENSION OF THE ACCOUNTING ORDER )
AUTHORIZING A REGULATORY ASSET TOR )
THE COSTS ASSOCIATED WITH CUSTOMER )
PAYMENT TRANSACTIONS HAI\DLED BY )
WESTERN UNION )
-', i ;'I;; i5 Pit lr: l9
Street Address for Express Mail:
I I33I W CHINDEN BLVD, BLDG 8, SUITE 2OI-A
BOISE, ID 83714
Attorney for the Commission Staff
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
CASE NO. INT.G.2I.Oz
EouunNTS oF THE
COMMISSION STAFF
COMES NOW the Staff of the ldaho Public Utilities Commission, by and through its
attomey of record, Edward J. Jewell, Deputy Attorney General, and in response to the Notice of
Modified Procedure issued in Order No. 34965 on March 19,2021, in Case No. INT-G-2I-02,
submits the following comments.
BACKGROUND
On February 19,202l,Intermountain Gas Company ("Company") requested 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. The Commission authorized the Company to defer costs into the regulatory asset for
recovery in the Company's annual Purchase Gas Cost Adjustment ("PGA") mechanism
beginning in20l9 until February 1,2021, or until the Company files a general rate case,
whichever comes first. The Company requested that the Application be processed by Modified
Procedure and the effective date of the extension be retroactive to February 1,2021.
1STAFF COMMENTS APRIL I5,2O2I
The Company states that Order No. 34099 anticipated a general rate case prior to
February 1,2021but did not anticipate the disruption caused by the worldwide Covid-l9
pandemic. Application at 3. The Company further claims that due to the pandemic,2020
revenues and expenses upon which a general rate case would be based are far from normal, and
therefore the Company is not planning to file a general rate case based on a2020 testyear. Id.
Due to these unforeseen circumstances, the Company is requesting an extension of Order
No. 34099, which would allow the Company to continue to defer the costs associated with in-
person customer pay station transactions handled by Westem Union and to seek recovery of
those costs in the PGA until such time the Company is able to file a general rate case.
STAFF REVIEW
Staff reviewed the Company's Application and recommends the Commission deny the
Company's request for an extension of the regulatory asset to capture the costs associated with
customer payment transactions handled by Western Union at authorized pay stations. Staff
recommends the Company expense these costs in the period in which they are incurred, and
recovery of any transaction costs should be embedded in base rates during the Company's next
general case.
In INT-G-16-02,the Commission declined to implement Staff s free payment proposal
because adequate cost estimates and benefit analyses were not provided. The Commission
"encouraged 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 38-39. The
Company did not act on the Commission's encouragement in Order No. 33757.
On March 30,2017, following a formal complaint by a customer who objected to the
$1.99 convenience fee charged to customers who use a debit or credit cards to pay their
Intermountain Gas bill, a summons was issued to the Company initiating Case No. INT-G-17-02.
In the ensuing Order No. 33805, the Commission directed the Company to meet with Staff within
60 days of the issue date of the Order (June 30,2017) to discuss alternatives to convenience fees.
As a result of those discussions, the Company filed an Application in Case No. INT-G-18-01
requesting an Accounting Order allowing the Company to pay, and defer, the costs associated
with customer pay station transactions processed by Westem Union. The Company has yet to
submit a plan to eliminate convenience fees associated with debit and credit card transactions. [n
Order No. 34099, the Commission approved the Application and accepted the Company's
2STAFF COMMENTS APRIL I5,2O2I
proposal that the deferral should expire in three years (February 1,2021) or until such time as the
Company files a general rate case, whichever comes first.
In its comments filed in Case No. INT-G-18-01, Staff expressed general support for the
creation and deferral ofa regulatory asset for future recovery if: (l) the expenses are beyond the
Company's control; (2) mandated by a regulatory authority; and (3) significant enough in
magnitude as to incur financial hardship for the Company. Staff further stated:
Staff does not believe that the Company's payment of transaction fees to
Western Union would cause a significant financial burden to the Company
and does not warrant deferral treatment. However, because Staff continues
to work with the Company toward the elimination of all transaction fees,
Staff believes creating a regulatory asset now for later recovery is a fair
compromise.
Staff Comments,INT-G-18-01, at 6. The amount recorded to the regulatory asset and recovered
in the PGA in 2019 was $93,21l. Ln2020, an additional $66,565 was deferred and recovered
through the PGA. These amounts are on the lower end of the estimates provided by the
Company in Case No. INT-G-I8-01, and Staff maintains that they are not significant in
magnitude as to cause financial hardship. On the Company's 2019 FERC Form 2,the Company
reported net earnings of $16,046,721. The amounts defened in2018-2020 are approximately
0.5% of the Company's net earnings.
Additionally, Staff s support for the creation of the regulatory asset in INT-G-18-01 was
contingent upon the Company's efforts to eliminate transaction fees for its customers. Staff has
not been provided any evidence that the Company has made any attempts to do so.
Industry Standards and Impact of Convenience Fees on Customers
In the past, the customers who used debit or credit cards to pay utility bills paid for the
privilege of using such service. This was because debit and credit card use was viewed as a
convenience rather than a necessity, and utility companies were reluctant to absorb the cost of
handling these transactions.
However, in recent years, these past practices have changed. According to the 2019
Federal Reserve's Payment Study, there has been a significant growth in the use of debit and
credit card for the payment of goods and services by consumers. This growth far exceeded the
usage of the paper check, which used to be the commonly used non-cash payment system. Using
a debit or credit card to pay for goods and services is now a routine practice, and most businesses
JSTAFF COMMENTS APRIL I5,2O2I
and service providers, especially in the retail sector, no longer charge convenience fees. As more
customers come to rely on payment by debit and credit cards, they become frustrated by and
object to paying an extra charge to pay utility bills using their preferred method.
More importantly, convenience fees have significant impact on society's most vulnerable
population, including low-income individuals who struggle to meet the basic necessities of daily
living. Many low-income people are unbanked, lacking access to a checking or savings account.
While other low-income people are underbanked, relying on costly altemative financial services
even though they may have a checking or savings account. Both unbanked and underbanked
households rely on non-bank financial services for an array ofproducts such as check cashing
services, payday loans, tax refund advance loans, rent-to-own services, pawn shop loans and auto
title loans, all of which charge high interest rates. They may use credit and prepaid debit cards to
pay their bills. Unbanked households have limited options to avoid paying a convenience fee
since most fee free payment options require readily available cash.
, Staff acknowledges that all financial mediums fo.r payment of utility services have
transaction costs. These costs have always been a prudent cost of doing business. Staff believes
it is inappropriate to charge some individuals for their method of payment, while embedding the
costs associated with other methods into rates. Provided that the Company is prudent in its
selection criteria of a third-party vendor and minimizes its costs, the transaction costs associated
with receiving payment for services should be included in base rates.
CUSTOMER COMMENTS
The City of Boise was the only customer to file comments in this case. The City supports
lntermountain Gas's application for continued deferral of Western Union customer payment
transactions costs granted in Order No. 34099. The City cited concerns about the increase in
unbanked and underbanked customers relying on costly altemative financial services and the
unprecedented economic situation due to COVID-19. The City recommended that in-person bill
payments at Western Union pay stations continue unintemrpted until costs can be assessed
during Intermountain Gas's next rate case.
STAFF RECOMMENDATIONS
Staff recommends the Commission deny the Company's Application and beginning
February 1,2021, order the Company to expense the Westem Union transaction fees in the
4STAFF COMMENTS APRIL I5,2O2I
a
period in which they are incurred. Similar to other operating costs, the eompany can request to
recover costs associated with processing Westem Union customer payment tansactions in its
next general rate case.
Respectfu lly submitted this $P day of April,2ozl.
'*- (r,--U
Edward J. Jefdll
Deputy AttohJy General
Technical Staff: Johan Ifulala-Kasanda
Kevin Keyt
Curtis Thaden
i:rrnisc/comrrents/intg2l.2riikl*ct comments
5STAFF COMMENTS APRIL I5,2O2I
CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS 15th DAY OF APRIL 2021,
SERVED THE FOREGOING COMMENTS OF TIIE COMMISSION STAFtr" IN
CASE NO. INT-G-21.02, BY E.MAILING A COPY THEREOF, TO THE
FOLLOWING:
LORI BLATTNER
DIR _ REGULATORY AFFAIRS
INTERMOUNTAIN GAS CO
PO BOX 7608
BOISE ID 83707
E-MAIL : [e-mail]
PRESTON N CARTER
GIVENS PURSLEY LLP
60I W BANNOCK ST
BOISE ID 83702
E-MAIL : prestoncarter@ givenspursley.com
kendrah@ givenspursley. com
Y
CERTIFICATE OF SERVICE