20220729Final_Order_No_35479.pdf

ORDER NO. 35479 1

Office of the Secretary
Service Date
July 29, 2022

BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION

On May 31, 2022, Intermountain Gas Company (“Company”) requested approval of
new rate schedules with an August 1, 2022, effective date, that would increase its annualized
revenues by $67 million through an interim Purchased Gas Cost Adjustment (“PGA”) filing.1 The
Company asserted that if its request is approved its earnings would not increase.2 If approved, the
average residential customer would see a monthly bill increase of $10.55 or approximately 24.1%,
and the average commercial customer would see a monthly bill increase of $51.87 or
approximately 27%. The Company’s Application includes supporting exhibits and proposed rate
schedules and tariff sheets that show the overall price changes by customer class.
On June 16, 2022, the Commission issued a Notice of Application and Notice of
Modified Procedure establishing public comment and Company reply deadlines. Order No. 35432.
Commission Staff (“Staff”) and members of the public submitted comments. The Company did
not file a reply.
Having reviewed the record, the Commission now issues this Order approving the
Company’s Application.
BACKGROUND
The Company’s rates include a base-rate component and a gas-related cost component.
The base rate component is intended to cover the Company’s fixed costs to serve its customers.
For example, the Company incurs fixed costs for equipment and facilities to provide service which
generally do not frequently change. The gas-related cost component of the Company’s rates is
more variable and is at issue here. The Company’s PGA is a Commission approved mechanism
that adjusts rates up or down to reflect changes in the Company’s costs to buy natural gas from
suppliers—including changes in transportation, storage, and other related costs. The Company

1 The proposed rate increases would impact the Company’s RS, GS-1, IS-R, IS-C and LV-1 customer classes.
2 The Company also requested authority to increase the Line Break Rate from $0.42443 per therm to $0.58848 per
therm.
IN THE MATTER OF THE APPLICATION
OF INTERMOUNTAIN GAS COMPANY
FOR AUTHORITY TO CHANGE ITS
PRICES
)
)
)
)
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CASE NO. INT-G-22-02

ORDER NO. 35479
ORDER NO. 35479 2

defers these costs into its PGA account and then passes them on to customers through an increase
or decrease in rates. The Commission approved the Company’s current rates in Case No. INT-G-
21-04, Order No. 35182.
THE APPLICATION
With this Application, the Company seeks to pass through to each of its customer
classes changes in gas-related costs resulting from an increase in the Company’s Weighted
Average Cost of Gas (“WACOG”). The Company proposed to increase the Commodity WACOG
from $0.26000 per therm currently embedded in rates to $0.42405 per therm. The Company
asserted that the primary drivers of the proposed WACOG increase include macroeconomic forces
and geopolitical events increasing the price of wholesale natural gas. Application at 4-5. The
Company represented that natural gas demand has exceeded supply throughout the Covid-19
pandemic as many producers have shifted from additional drilling activity to paying down debt,
and that the United States’ export rate of liquefied natural gas has diminished domestic supplies.
Id. Additionally, the Company cited diminishing national gas storage levels, which are projected
to drop below ideal levels by November 1, 2022. Id. at 5. The Company also stated that
notwithstanding increased gas prices, lower coal stockpiles have bolstered the demand for natural-
gas-powered resources to generate electricity. Id. Finally, the Company stated that significant
global events, including the war in Ukraine and lockdowns in China, have exacerbated supply-
chain issues. Id.
The Company noted that pursuant to the Commission’s directive in Order No. 35182,
the Company made the filing to ensure the approved WACOG rate reflects the current natural gas
costs, and it hoped this interim PGA would reduce the amount of deferred gas costs in the
Company’s subsequent, regular PGA filing. Id.
The Company stated that although the proposed WACOG reflects a significant price
increase for all customers, the Company is hopeful that this interim filing will mitigate the build-
up of deferrals as well as provide a price signal that will allow customers extra time to budget for
the increased costs before the winter heating season arrives. Id. at 6,
The Company also does not propose to change its gas transportation cost or temporary
purchased gas cost adjustment rates at this time. Id. These rates, along with an updated estimate of
Last, the Company asserted that this Application has been brought to the attention of its customers
through a Customer Notice and by a Press Release sent to daily and weekly newspapers, and major
ORDER NO. 35479 3

radio and television stations in the Company’s service area. The Company attached the Press
Release and Customer Notice to its Application. Id.
STAFF COMMENTS
Staff reviewed the Company’s Application and Exhibits No. 1-3, and recommended
that the Commission: (1) approve the Company’s Application and the proposed WACOG amount
of $0.42405 per therm; (2) approve the Company’s proposed Schedules RS, GS-1, IS-R, IS-C, and
LV-1 as filed with the Application; (3) direct the Company to continue filing quarterly reports
reflecting deferred gas costs and WACOG projections; (4) order the Company to file an adjustment
to its PGA-related rates, if gas prices significantly deviate from projections; and (5) accept late-
filed comments from customers. Staff’s analysis indicated that the PGA proposal would not affect
the Company’s earnings, and the Company’s proposed WACOG of $0.42405 per therm was
reasonable.
Staff recognized that market fluctuations impact the WACOG and analyzed the
Company’s projected costs to purchased natural gas costs by comparing the Company’s price
projection to forecasts from several national and regional organizations, including the Energy
Information Administration (“EIA”) and the Northwest Gas Association. Based on the current
volatility in natural gas futures, a review of the market fundamentals, trends, and current EIA data,
Staff concluded that the Company’s estimated cost of forward-looking purchases were reasonable.
Staff explored ways to mitigate the proposed rate increases. Staff identified that the
EEC-RS Residential Energy Efficiency Charge (“EEC_RS”) is over-collecting and there is an
estimated $4.9 million surplus in the Company’s Residential EE Tariff Rider. Staff suggested that
an adjustment to the Residential EE Tariff Rider could offset the requested PGA impact for RS
customers and that the Company could address changes to the EEC-RS charge or Residential EE
Tariff Rider in a subsequent filing.
Staff reviewed the Company’s proposed Line Break Rate increase from the current rate
of $0.42443 per therm to $0.58848 per therm for parties responsible for damage causing a gas leak
and concluded that the proposed Line Break Rate increase was consistent with Commission Order
No. 33139.
Staff reviewed the Company’s Press Release and Customer Notice and determined that
both meet the requirements of Rule 125 of the Commission’s Rules of Procedure. IDAPA
31.01.01.125. Staff noted the Customer Notice was included with bills mailed to customers
ORDER NO. 35479 4

beginning June 2, 2022, and ending July 1, 2022. Due to the comment deadline of July 7, 2022,
some customers in the last billing cycle will not have received/and or had adequate time to submit
comments before the deadline. Thus, Staff recommended that the Commission accept late filed
comments from customers.
PUBLIC COMMENTS
Four public comments were received, all opposing the Company’s requested rate
increases due to the financial impact of the increase.
COMPANY COMMENTS
On July 8, 2022, Company’s Counsel notified Commission Staff informally that the
Company had received and reviewed Staff’s comments and would not be submitting any reply
comments.
COMMISSION FINDINGS AND DECISION
The Company is a gas corporation and public utility, and the Commission has
jurisdiction over it and the issues in this case under Title 61 of the Idaho Code, and more
specifically, Idaho Code §§ 61-117, 61-129, 61-307, 61-501, and 61-502. The Commission must
establish just, reasonable, and sufficient rates for utilities subject to its jurisdiction. Idaho Code §
61-502. Based on our review of the record, we find that the Company’s proposed rate changes to
the Commodity WACOG from the $0.26000 per therm currently embedded in rates to $0.42405
per therm for the Company’s RS, GS-1, IS-R, IS-C, and LV-1 customer classes accurately capture
the Company’s prudently incurred variable, gas-related costs. The primary drivers of the proposed
WACOG increase include macroeconomic forces and geopolitical events increasing the price of
wholesale natural gas. The Company’s new Line Break Rate is also consistent with Commission
Order No. 33139. We thus find it fair, just, and reasonable to approve the Company’s proposed
schedule changes, as filed, effective August 1, 2022. The Commission notes that the approved
revenue increase for the Company in this case does not increase the Company’s earnings. The
PGA mechanism is designed to pass through prudently incurred commodity costs in a timely
fashion. Costs the Company had to incur to provide safe and adequate service to its customers.
The Commission believes that the Company’s decision to file the “out-of-cycle” PGA Application
will help mitigate the impact on customer bills and limit surcharge deferrals. We also find that
quarterly WACOG and monthly deferred cost reports provide useful information and assist Staff
ORDER NO. 35479 5

with determining whether to audit earlier than planned and whether an interim filing might be
needed.
The Commission also finds that the Company’s press release and customer notice both
meet the requirements of Rule 125 of the Commission’s Rules of Procedure. See IDAPA
31.01.01.125.
Although the Commission has found that the proposed WACOG increase is fair, just,
and reasonable, the Company should explore all options to reduce future increases, including
potentially adjusting the Residential EE Tariff or the EEC-RS Residential Energy Efficiency
Charge. Further, the Commission also appreciates the public comments received in this case. We
understand that many customers struggle to pay utility bills, and we remind these customers they
may qualify for financial assistance through programs like the federally-funded Low Income
Home Energy Assistance Program. The Company also has assistance programs for its customers.
More information about these programs can be found on the Company’s website at
www.intgas.com/customer-service/low-income-assistance-programs/.

ORDER
IT IS HEREBY ORDERED that the Company’s Application to increase the
Commodity WACOG to $0.42405 per therm for the Company’s RS, GS-1, IS-R, IS-C, and LV-1
customer classes, with new rates to take effect on August 1, 2022 is approved, as filed.
IT IS FURTHER ORDERED that the Company’s proposed Line Break Rate increase
to $0.58848 per therm is approved.
IT IS FURTHER ORDERED that the Company shall continue filing quarterly reports
reflecting deferred gas costs and WACOG projections.
IT IS FURTHER ORDERED that the Company shall file an adjustment to its PGA-
related rates, if gas prices significantly deviate from projections and the Company is directed to
explore all options to reduce future increases, including potential adjustments to the Residential
EE Tariff of the EEC Residential Energy Efficiency Charge.
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. Idaho Code § 61-626.
ORDER NO. 35479 6

DONE by Order of the Public Utilities Commission at Boise, Idaho this 29th day of
July 2022.

ERIC ANDERSON, PRESIDENT

JOHN CHATBURN, COMMISSIONER

JOHN R. HAMMOND JR., COMMISSIONER

ATTEST:

Jan Noriyuki
Commission Secretary

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