20220428Comments.pdf

RILEY NEWTON
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-0074
[phone]
IDAHO BARNO. II2O2
Street Address for Express Mail:
11331 W CHINDEN BLVD, BLDG 8, SUITE 2OI-A
BOISE, IDAHO 83714
Attomey for the Commission Staff
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF INTERMOUNTAIN
GAS COMPANI-Y'S 2O2I . 2026 INTEGRATED
RESOURCE PLAN
CASE NO.INT.G.2I-06
COMMENTS OF THE
COMMISSION STAFF
STAFF OF the Idaho Public Utilities Commission, by and through its Afforney of record,
Riley Newton, Deputy Attorney General, submits the following comments.
BACKGROT]ND
On December 2},2lzl,Intermountain Gas Company ("Company") filed its Integrated
Resource Plan ("IRP") for the years 2021-2026. The Company files an IRP every two years to
describe its plans to meet its customers' future natural gas needs. The IRP must discuss the
subjects required by several Commission Ordersr and Section 303(bX3) of the Public Utility
Regulatory Policies Act ("PURPA"), l5 U.S.C. 5 3202. The Idaho Public Utilities Commission
("Commission") reviews the IRP to ensure that it discusses these subjects and represents a
diligent effort by the Company to plan for the anticipated supply and demand for natural gas.
I See Order N os. 253 42, 27 024, 27 098, 3285 5, 333 I 4 and 33997
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ISTAFF COMMENTS APRIL 28,2022
IRP Requirements
In Order No. 25342, the Commission adopted IRP requirements for local gas distribution
companies in response to amended Section 303 of PURPA.
In Order No.27024, the Commission shortened the IRP's planning horizon from 20 years
to 5 years. Order No. 27098 removed any requirement that IRPs formally evaluate potential
demand-side management ("DSM") programs, and instead directed the companies to explain
whether cost-effective DSM opportunities exist.
In the Company's 2013 IRP case, the Commission: 1) directed the Company to continue
to work to improve public participation in the IRP process; and 2) allowed the Company to stop
filing semi-annual lost and unaccounted for gas ("LAUF Gas") reports. See Order No. 32855.
The IRP's LAUF Gas section must explain the Company's: (a) framework for how it has tested
for, identified, and remediated equipment measurement errors or leaks; and (b) business process
for alleviating measurement errors through its financial accounting of nominations, scheduling,
measurements, flow volume allocation, and billing. See Order No. 32855.
In summary, these orders direct the Company to file an IRP every two years that includes:
l. A forecast of future gas demand in firm and interruptible markets for each
customer class, which includes the number, type, and efficiency of gas
end-users as well as effects from economic forces on gas consumption;
2. An analysis of gas supply options for each customer class, which includes a
projection of spot market versus long-term purchases for both firm and
intenuptible markets, an evaluation of the opportunities for using
company-owned or contracted storage or production, an analysis of
prospects for company participation in a gas futures market, and an
assessment of opportunities for access to multiple pipeline suppliers or
direct purchases from producers;
3. A comparative analysis of gas purchasing options and improvements in the
efficient use of gas, and an explanation of whether there are cost-effective
DSM opportunities;
4. The integration of the demand forecast and resource evaluations into a
long-range (at least a five-year) plan describing the strategies designed to
2STAFF COMMENTS APRIL 28,2022
meet curent and future needs at the lowest cost to the utility and its
ratepayers;
5. A short-term (e.g., two-year) plan outlining the specific actions to be taken
by the utility in implementing the IRP;
6. A progress report that relates the new plan to the previously filed plan; and
7. Public participation.
The 2021-2026IRI
In the 2021-2026IRP, the Company explains that it regularly forecasts the demand of its
growing customer base and determines how to best meet the load requirements brought on by this
demand. 2021-2026IRP at 2-3. The Company's IRP represents a snapshot in time of the
Company's ongoing planning process; it describes the anticipated conditions over a five-year
planning horizon, the anticipated resource selections, and the process for making resource
decisions. Id. at l.
The Company sells natural gas to two major markets: the residential/commercial market
and the large volume market. Id. at2. Throughput on the Company's system is roughly a 50/50
split between the two major markets. At the end of 2020, the Company served 387,000
customers. Id. at l.
The Company states that much of the demand for natural gas is strongly influenced by the
agricultural economy and the price of alternative fuels. Id. at2. The Company alleges that, in
2020, industrial sales and transportation accounted for 50% of the throughput on its system. 1d
at. 2.
The Company calculated peak-day delivery under base, low growth, and high growth
scenarios against current available natural gas delivery system capacity to project the magnitude
and timing of delivery deficits on a regional and a total Company perspective.
STAFF ANALYSIS
Staff examined the Company's IRP to determine whether it meets the Commission
requirements and orders, and adequately plans for the capability to meet demand from202l
through 2026. Staff believes that the Company's IRP satisfies Commission requirements, is
reasonable, and should be acknowledged.
JSTAFF COMMENTS APRIL 28,2022
Demand Forecast
The Company's demand forecast is used to determine the timing and capacity of new
plant additions. The demand forecast is an important driver of expenditures that will eventually
be included in the Company's rate base. Staff reviewed the Company's methodology for
estimating future demand and believes it is adequate.
The Company's demand forecast is based on three separate components: 1) a prediction
of the number of customers;2) a forecast of weather sensitive customers' response to
temperatures; and 3) an estimate of the weather customers may experience. .See Id. at 10. The
Company also includes contracted maximum deliveries to industrial customers in its demand
forecast.
The Company forecasted changes in its peak-day loads due to customer growth under its
low growth, base case, and high growth economic scenarios. Id. The Company forecasted total
residential, commercial, and industrial peak-day loads to increase each year for five years by an
average of l.l4%o (low growth),2.18yo (base case) and 3.l|Yo (high growth). See Id. at 123 .
The Company identified deficits on both a total system perspective and within its Areas of
Interest ("AOI"). For each potential deficit, timing and magnitude were identified. The Company
evaluated and compared potential capacity improvement alternatives, for each identified capacity
deficit in its optimizationmodel. The Company calculated and compared the net present value
("NPV") cost, the amount of capacity, and capacity gain for each potential capacity improvement,
which are described in greater detail in the Deficits and AOI Summaries sections below.
In the 2019 IRP, Staff recommended that the Company validate the accuracy of peak
estimates obtained from the per customer usage models during the next IRP cycles. The
Company performed this validation in the 2021IRP. This topic is discussed in more detail in the
Peak Consumption Validation section below. Second, Staff recommended that the Company
quantiff the effects of new building codes and the Company's energy efficiency programs and
incorporate estimates into its per customer usage models. This improvement was not
incorporated into the 2021 IRP, but Staff still believes the Company should work towards
including these effects into the models in future IRPs.
4STAFF COMMENTS APRIL 28,2022
Deficits and AOI Summaries
Over the 2021- 2026 IRP planning period, the Company projects the following deficits in
its service territory: l) Canyon County AOI; 2) State Street Lateral; 3) Central Ada County; 4)
Sun Valley Lateral; and 5) Idaho Falls Lateral. Id. at 120 - 125. In this IRP, the Company
provided capacity analysis, identified when deficits will occur, and described enhancements to
resolve identified deficits. Staff recommends that the Company provide Staff capacity and cost
information as enhancement projects are completed and brought online.
Canyon County Area
The Canyon County Area ("CCA") located in southwest Idaho from Star Road west to
Highway 95 serves residential, commercial, and industrial customers. Comparing peak firm day
delivery capacity in the CCA, the Company shows capacity enhancements are required in202l
and2023 to satisff IRP growthpredictions. See Id. at96. The Company considered four
alternatives to meet growth predictions as shown in Table No. 1.
Table No. 1: Canvon County Area Capacitv Alternatives
In the 2019 IRP, the Company selected alternative number one (Ustick Phase II) while
alternative number two was selected in this IRP. The combination of alternatives one (Ustick
Phase II) and two (Ustick Phase III) provides the greatest amount of capacity and supports the
Company's plans for the Ustick HP system to operate at 500 pounds per square inch gauge
("psig"). The Company explained that pressure testing (Ustick Uprate) altemative 3 presents
uncertainty and cost risk. The Ustick Phase III project is targeted to come online in2023.
5
Alternative #Alternative
Description
NPV Cost ($)Alternative
Capacity (ttrldav)
Alternative
Capacity GainP/o\
I Ustick Phase II $3.2ss.074.s9 1.032.000 0o/o
2 Ustick Phase III $8.613.402.92 1,390,000 35%
J Ustick Uprate $1,300,00.00 1.178,000 t4%
4 8-inch HP Extension
north of Ustick
$6,551,492.43 1,232,000 r9%
STAFF COMMENTS APRIL 28,2022
State Street Lateral
The State Street Lateral ("SSL") located in southwest Idaho serves primarily residential
and commercial customers in the Star, Eagle, Meridian, and northwest Boise areas. Comparing
peak firm day delivery capacity in the SSL, the Company shows acapacity enhancement is
required in 2023 to meet IRP growth predictions . See Id. at 100.
The Company considered two alternatives to meet growth predictions as described in
Table No. 2.
Table No. 2: State Street AOI Capacity Alternatives
The Company selected alternative one (State Street Phase II Uprate) as the lowest cost
option, primarily because the Company implemented the uprate of State Street Phase I which was
completed in 2019. The Company does not expect any issues associated with implementing this
uprate predicted for completion in 2023.
Central Ada County
The Central Ada County ("CAC") located in southwest Idaho primarily serves the Boise
area. The area includes both high pressure and distribution pressure systems in high growth areas
of the county. See Id. at 104. Comparing peak firm day delivery capacity in the CAC, the
Company shows capacity enhancement is requiredin2022 to meet IRP growth predictions. See
Id. The Company considered three altematives to meet growth predictions as described in Table
No.3.
6
Altemative #Altemative
Description
NPV Cost ($)Altemative
Capacity (th/dav)
Alternative
Capaciff GainUo\
I State Street Phase Il
Uprate
$2,030,591.75 950,000 t6%
2 Replace 12-inch HP
on State St and
Linder
$5,536,656.65 950,000 t6%
STAFF COMMENTS APRIL 28,2022
Alternative #Alternative
Description
NPV Cost ($)Altemative
Capacity (thldav)
Alternative
Capacity Gain9o\
I l2-inch South Boise
Loop
$r0,32t,364.12 870,000 170
2 Uprate l0-inch on
Meridian and
Victory Road
$2,034,763.35 817,000 t0%
J Compressor Station
Victory and
Cloverdale
$12,807,602.46 817,000 t0%
Table No. 3: Central Ada AOI Capacitv Alternatives
The Company selected alternative one (l2-inch South Boise Loop). The Company
explained that constructing a new line with known costs is preferred to uprating which presents
uncertain cost risks. Additionally, this altemative provides additional system connections and
looping. The Company expects completion in 2022.
Sun Valley Lateral
The Sun Valley Lateral ("SVL") located in central Idaho serves residential, commercial,
and industrial customers. The SVL is a 68-mile long, 8-inch high-pressure pipeline, with a
compressor station located near the city of Jerome. Most of the demand on this lateral is furthest
from its source. Comparing peak firm-day delivery capacity on the SVL, the Company shows a
capacity enhancement is required to meet growth predictions to increase pressure in the Ketchum
area.
Installation of a second compressor station on the lateral located near the city of Shoshone
was selected in this IRP. This project was also examined in the 2019 IRP. A second compressor
will provide247,500 therms per day capacity meeting projected growth requirements through
2026. The installation is expected to be completed in 2022 and the Company estimates NPV cost
of the project to be $5,807,602.
Idaho Falls Lateral
The Idaho Falls Lateral ("IFL") located in eastem Idaho serves cities between Pocatello on
the south to St. Anthony on the north. The IFL utilizes a Liquefied Natural Gas ("LNG") facility
located in Rexburg to supplement the lateral's capacity during a peak demand day. The Company
7STAFF COMMENTS APRIL 28,2022
trucks LNG to the Rexburg facility from its Nampa, Idaho LNG facility. Comparing peak firm
day delivery capacity on the IFL, the Company requires a capacity enhancementin2023 to meet
IRP growth predictions. The Company considered two alternatives to meet growth predictions as
described in Table No. 4.
Table No. 4: Idaho Falls Lateral Canacity Alternatives
The Company selected alternative one (Idaho Falls Lateral Compressor Station) located
near the City of Blackfoot as the lowest cost option. The Idaho Falls Compressor Station will be
designed in2022 and construction is planned for 2023. See IRP at I 15. In the 2019 IRP, the
Company planned to add a second LNG storage tank in2022. The Rexburg facility was
constructed to accommodate three LNG storage tanks, one of which was built and is operational.
Supply Options
The Company's service territory is located between the Western Canadian Sedimentary
Basin ("WCSB") located in Alberta and British Columbia and the Rockies region located in
Wyoming, Colorado, and Utah. A bi-directional interstate pipeline operated by Northwest
Pipeline runs through the Company's territory and enables purchases from both regions. The
WCSB supplies approximately 79oh of the Company's natural gas. See Id. at 49.
The Company utilizes natural gas storage as a capacity resource. Currently, the Company
has storage capacity in four facilities. Two of the facilities, one at Jackson Prairie and the other at
Plymouth, Washington are operated by Northwest Pipeline. A third facility, the Dominion
Energy storage field ("Clay Basin"), is located near the Utah and Wyoming border. The fourth
storage facility, the Company-owned LNG facility, located in Nampa, Idaho, is described in
greater detail below.
8
Altemative #Altemative
Description
NPV Cost ($)Alternative
Capaciry (th/dav)
Alternative
Capacity Gain(%)
1 IFL Compressor
Station
$15,807,602.46 1,093,000 2t%
2 Phase VI dsecond
LNG tank Rexburg
$23,246,006.08 963,000 7%
STAFF COMMENTS APRIL 28,2022
Nampa LNG Facility
The Nampa LNG plant is primarily used to supplement gas supply onto the Company's
distribution system. The plant is capable of storing up to 600 million cubic feet of LNG. The
plant can re-gasi$ approximately 60 million cubic feet per day and inject the gas into the
Company's Canyon County and Ada County distribution systems when needed.
During off-peak months, the Nampa LNG facility obtains pressurized natural gas from the
Canyon County lateral, liquifies it, and then stores it in a large steel storage tank with a capacity
equivalent to 600 million standard cubic feet of gas (about 600,000 Dth). The liquified gas is
withdrawn to supply the Company's non-utility customers, and during winter months, liquified
natural gas is trucked from the Nampa LNG facility to the Company's gasification facilities along
the Idaho Falls Lateral. Natural gas liquification is an energy intensive process and using
liquified natural gas to meet demand for purposes beyond needle peaking events can be costly.
However, gas trucked from the Nampa facility to the Company's degasification facilities along
the Idaho Falls lateral is essential for meeting that lateral's needle peak demand.
Demand Side Management (DSM)
In the 2021 IRP, the Company continued to use the 2019 Conservation Potential
Assessment ("CPA") that was conducted by Dunsky to estimate the DSM therm savings for the
2019 IRP. In Staff Comments in INT-G-20-06, Staff outlined numerous occasions where
measure savings values from the 2019 CPA may be overstated. The Company expressed that due
to timing they were unable to provide a new CPA study for the 2021 IRP. See Response to
Production Request No. 16. However, the Company will begin to align the future CPAs with the
IRP timeline and plans to have a new CPA study for the 2023 IRP filing. 1d Staff is concerned
that the Company's estimated therm savings may be overstated as a result of the use of the 2019
CPA.
Despite the previous CPA study being used in the202l IRP, the Company should be
vetting the results of the CPA for accuracy. The Company could have used known information,
such as verified savings assumptions from Evaluation, Measurement and Verification ("EM&V")
studies to update the results for the Dunsky 2019 CPA and to ensure the DSM therm savings
estimates used in the 2021 IRP are accurate and achievable. As a general practice, Staff
recommends the Company vet future CPA results for accuracy to ensure the savings estimates
9STAFF COMMENTS APRIL 28,2022
and assumptions are reasonable and achievable. As the Company's DSM portfolio matures and
begins to achieve higher levels of savings, the Company's DSM portfolio will begin to have a
bigger impact on avoiding costly upgrades to the Company's system. Thus, having accurate CPA
results is important.
DSM Avoided Cost
In Order No. 333l4,the Commission directed the Company to include more detail in
future IRPs about how the Company calculates avoided costs and uses those calculations to
determine whether natural gas DSM opportunities are cost-effective. See Order No. 33314 at9.
In Order No. 33997, the Commission directed the Company to describe how avoided costs change
because of the IRP. In describing the avoided cost calculation in the202l IRP, the Company
clearly identified how the avoided costs are calculated and how they change because of the IRP.
See IRP at 90-91.
In the 2021 IRP the avoided cost calculation does not include distribution costs. The
Company's Energy Efficiency Stakeholder Committee ("EESC") avoided cost subcommittee is
addressing the distribution cost component of the avoided cost calculation. On March 9,2022,
the Avoided Cost Subcommittee met to discuss the Company's proposed modeling for the
distribution cost component of the avoided cost calculation. Staff continues to work with the
Company and Company's EE stakeholder group in refining the avoided cost calculation as
ordered in Commission Order No. 34536 and expects resolution in the future.
Renewable Natural Gas
Renewable Natural Gas ("RNG") is pipeline quality gas that is fully interchangeable with
conventional natural gas.2 RNG is produced from the decomposition of organic material aka
biomass3 and is processed to meet purity standards. After processing RNG to industry purity
standards, the gas can then be used within the Company's system. See IRP at73.
The Company is involved with the growth and development of the RNG industry in Idaho
In2020,the Company filed an application with the Commission for authority to facilitate RNG
2 https: / / afdc. energy. gov/fu els/natural_gas_renewable.html3 Biomass is any biodegradable organic material that can be derived from plants, animals, animal byproduct,
wastewater, food/production byproduct and municipal solid waste.
STAFF COMMENTS l0 APRIL 28,2022
access. In Order No. 34693, the Commission approved the Company's RNG facilitation plan.
The Company's RNG Facilitation agreement allows RNG producers access to the Company's
distribution system to transport RNG to end use customers. See Id. Currently, the Company has
multiple RNG producers located in the Magic Valley supplying RNG from dairy operations and
expects additional RNG producers to come onto its system.
Progress Since the Previous IRP
In Order No.34742, the Commission acknowledged Staff s comments and
recommendations and stated:
In particular, we find it reasonable that the Company include an analysis of all
options the Company considered to resolve identified deficits and achieve the
most cost-effective, least risk solutions; and validate the peak consumption
estimates obtained from DNV GL's Customer Management Module using
actual peak information from the Company's AMI meters. Finally, we
commend the Company on forming and operating the [Intermountain Gas
Resource Advisory Committee] IGRAC and we recognize that this new group
will evolve. In that evolution, we encourage the Company to seek, inform, share
scenario analyses, and allow diverse stakeholders to participate in the IGRAC.
The Company addressed each of StafPs recommendations in the 2021 - 2026 IRP.
C o s t - Effe ct ive Le as t Ri s k Soluti ons
In comments filed in Case No. INT-G-19-07, Staff stated that it would like to see the
altematives considered by the Company to resolve identified deficits and an analysis that
demonstrates selection of least cost, least risk solutions. In this IRP, the Company described each
AOI, capacity limitations, capacity improvement alternatives considered, and selected capacity
enhancements. Staff appreciates the additional information provided by the Company in this IRP.
This type of information facilitates a greater level of transparency for stakeholders on alternatives
considered by the Company to resolve deficiencies.
P e ak C ons umpt ion Val i dation
In comments filed in Case No. INT-G-19-07, Staff stated concem with the per customer
usage models not being sufficiently granular to accurately estimate per-customer consumption for
a peaking event and that the Company should validate the peak consumption estimates obtained
from DNV GL's Customer Management Module ("CMM") using actual peak information from
STAFF COMMENTS l1 APRIL 28,2022
the Company's Advanced Metering lnfrastructure ("AMI") meters. In this IRP, the Company
performed a model validation that compared customer usage predicted in the CMM model to the
actual customer usage obtained from the Company's AMI database. From the validation process,
the Company found that the AMI meter actual usage and the CMM predicted usage were within
12.3% for the sample taken and the Company believes this to be reasonable given best practices
for model verification.4 Staff appreciates the Company incorporating model validation into this
IRP and encourages the Company to continue to enhance this validation process as more AMI
data becomes available.
Int ermount ain G as Re s our c e A dv i s ory C ommi t t e e P ar t i cip ati on
In Order No. 33997, the Commission directed the Company to convene an IRP advisory
group and work with it to develop future IRPs that comprehensively and transparently consider
demand, existing resources, and potential supply and demand-side options for meeting any
deficits.
The Company established the IGRAC. Id. at 4. The intent of IGRAC is to provide a
forum through which public participation can occur as the IRP is developed. 1d. Advisory
committee members were solicited from across the Company's seryice territory as representatives
of the communities served by the Company. The Company stated that it held three IGRAC
meetings in202l on a virtual platform. The Company states it provided a comment period after
each meeting to ensure feedback was timely and could be incorporated into the IRP. Id. Staff
members attended each of the meetings. Staff recognizes the Company's efforts to enhance
public participation, appreciates the opportunity to participate in the IGRAC, and looks forward
increased public involvement in future IRPs.
Staff believes the Company can continue to enhance public participation by continuing to
increase members of the IGRAC, providing materials to members prior to meetings, and making
IRP information available on its website.
a See Response to Staffls Production Response No. 2.
STAFF COMMENTS t2 APRIL 28,2022
Lost and Unaccounted for Gas (LAUF)
In Order No. 32855, the Commission directed the Company to describe how LAUF is
managed and explain how results were achieved. The Commission permits the Company to
recover a maximum of 0.85% of its total throughput as LAUF.S The Company's IRP reports that
its three-year average LAUF rate of -0.1193% is one of the best in the industry and details how
those results were achieved. Id. at75. Staff recognizes the Company's efforts in this area and
believes the Commission requirements were satisfied in this filing.6 Additionally, Staff
scrutinizes LAUF in the Company's annual PGA filings.
Conclusion
The Company's IRP analyzed residential, commercial, and industrial customer growth and
its impact on the Company's system under multiple scenarios. The IRP results show that there
are peak day delivery deficits when forecasted growth is matched against existing resources for
the 2021 through 2026 IRP period. The Company provided sufficient information to describe
how deficits were determined, selected alternatives and resource enhancements to resolve them.
STAFF RECOMMENDATIONS
Staff believes the Company's IRP meets the Commission requirements and recommends
the Commission acknowledge the Company's2021-2026IRP. Staff also recommends that the
Company:
1. Provide capacity enhancement project costs and NPV information when capacity
improvement projects are completed and placed in service, and
2. Continue to enhance public participation by continuing to increase members of the
IGRAC, providing materials to members prior to meetings, and make IRP
information available on the Company's website.
5 Order No. 30649.6 Order No. 32855 ordered the Company to discontinue its semi-annual LAUF gas reports and include an exhibit in
its PGA summarizing the statistics that had historically been reported in its LAUF semi-annual reports. That Order
further ordered the Company to include a LAUF gas section containing the above information in future IRPs.
STAFF COMMENTS l3 APRIL 28,2022
Respecttully submitted this ?{day of April 2022.
Riley Newton
DeputyAt0omey General
Technical Staff: Kevin Keyt
Michael Eldred
Taylor Thomas
i:umloc:omrmentilinlg! l.Skskmett.comnmB
STAFF COMMENTS l4 APRIL 28,2A22
CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS 28th DAY OF APRIL 2022,
SERVED THE FOREGOING COMMEI{TS OF THE COMMISSION STAFF, IN
CASE NO. INT.G-21-06, 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
601 W BANNOCK ST
BOISE ID 83702
E-MAIL : prestoncarter@ givenspursley.com
stephaniew@ givenspursley. com
CERTIFICATE OF SERVICE