20220707Comments.pdf

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''-''t'iILuCLAIRE SHARP
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-0074
(208) 334-03s7
IDAHO BAR NO. 8026
-'i Pli 3'r+9
Street Address for Express Mail:
I 1331 W CHINDEN BLVD, BLDG 8, SUITE 2OI-A
BOISE, ID 83714
Attorney for the Commission Staff
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF INTERMOUNTAIN
GAS COMPANY'S APPLICATION FOR
AUTHORITY TO CHANGE ITS PRICES
CASE NO. INT.G.22-02
COMMENTS OF THE
COMMISSION STAFF
STAFF OF the Idaho Public Utilities Commission, by and through its Attomey of
record, Claire Sharp, Deputy Attomey General, submits the following comments.
BACKGROI'ND
On May 3l,zl22,Intermountain Gas Company ("Intermountain" or "Company") filed
an "interim" or "out of cyclel" Purchased Gas Adjustment ("PGA") requesting authority to place
into effect on August 1,2022, new rate schedules for its Residential Service ("RS"), General
Service ("GS-l"), Large Volume Firm Sales Service (" LV-l"), Residential Intemrptible
Snowmelt Service (.'IS-R"), and Small Commercial Intemrptible Snowmelt Service ("IS-C")
customer classes that would increase its annualized revenues by $67 million, or approximately
25.2%. The Company represents that the average residential customer would see a monthly
I Intermountain's PGAs are normally filed in August of each year with and October I effective date
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ISTAFF COMMENTS ruLY 7,2022
increase of $10.55 or approximately 24.loh, and the average commercial customer would see a
monthly increase of $51.87 or approximately 27Yo.
Table No. I summarizes the impact of the proposed changes on customer classes.
Table No. 1: Proposed Chanse bv Customer Class
Change in Average Average AverageClass Change in Percent Price
Customer Class: Revenue $/Therm Change $/Therm
RS Residential $43,966,037 $0.16405 24.05% $0.84624
GS-l General Service 521,221,290 $0.16405 26.96% $0.77260
LV-l Large Volume $ 1,845,168 $0.16405 40.97% $0.56446
IS-R Res Snowmelt - $0.16405
IS-C Sm Comm Snowmelt - $0.16405TOTAr $67.032.4q
The 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 and other related costs. The
Company defers these costs into its PGA account and then passes them on to customers through
an increase or decrease in rates.
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's costs for equipment and facilities to provide service - and it
infrequently changes. The Commission approved the Company's current base rates in Order
No.33757.
The gas-related costs of the Company's Weighted Average Cost of Gas ("WACOG") rate
is at issue in this case. The Company seeks to pass through higher gas-related costs to customers
through an increase in rates due to: (l) demand for natural gas exceeding supply as COVID-I9
restrictions have been reduced; (2) national gas storage levels being lower than the 5-year
average putting upward pressure on forward pricing; (3) increased natural-gas fired power
generation ; and (4) national and global supply chain issues affecting the supply and price of
natural gas. If approved, the WACOG would increase $0.16405 per therm from the currently
approved rate of $0.26002 per therm to $0.42405 per therm.
2 Approved in Order No. 35182
2STAFF COMMENTS ruLY 7,2022
STAFF ANALYSIS
Staff reviewed the Company's Application, workpapers, and exhibits for this case and
confirmed: (l) the PGA proposal would not affect the Company's earnings; and (2) the
Company's WACOG request is reasonable. Staff recommends that the Company's Application
be approved.
Staff explored ways to mitigate the proposed rate increases. Specifically, Staff reviewed
the cost components contained in RS rates. One component of the RS rate is the ("EEC-RS"
Residential Energy Efficiency Charge) which funds the Company's Residential Energy
Efficiency ("EE") programs. The Company's current EEC-RS rate is over collecting and has
resulted in a surplus of approximately a $4.9M for the Company's Residential EE Tariff Rider
balance. An adjustment to the Residential Energy Efficiency Rider is necessary to address the
balance and could help in offsetting the impact of the requested PGA increase for RS customers
only. This case is focused on the WACOG and changes to the EEC-RS charge or Residential EE
Tariff Rider should be addressed in a subsequent filing.
Weighted Average Cost of Gas - WACOG
The WACOG is the Company's average variable cost to buy and transport natural gas to
meet estimated customer annual requirements. The WACOG components include the city gate
natural gas cost, the transport variable cost, the IGI Resources administrative fees, and the Gas
Technology Institute (GTI) charges. The gas transportation cost and temporary purchased gas
cost adjustment components of customer rates approved in the last regular PGA are not changing
with this proposal and if approved will be addressed in the next regular PGA filing.
The proposed WACOG of $0.42405 per therm is an increase of 63.09o2 from the202l
WACOG of $0.26000 per therm. This increase in the WACOG represents an approximate $67
million increase to the Company's billed revenues. Chart No. 1 below shows the Company's
historical WACOG price trend.
JSTAFF COMMENTS ruLY 7,2022
lcc PGA wAcOG ($/Therm)
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Chart No. 1: Weiehted Averase Cost of Gas (Per Therm)
Market Fundamentals & Price Analysis
Although the Company hedges or stores a portion of its forecasted supply at fixed prices,
market fluctuations impact the WACOG. Staff analyzedthe Company's projected cost to
purchase natural gas by comparing the Company's price projection to forecasts from several
national and regional orgarizations, including the Energy Information Administration ("EIA")3
and the Northwest Gas Association ("NWGA").
There is currently volatility in natural gas futures. In the EIA June 7,2022, Short-Term
Energy Outlook ("STEO"), it states;
"We expect the Henry Hub spot price to average $8.69 per million British
thermal units (MMBtu) in 3Q22. up from an average of $8.13/MMBtu in
May. Natural gas prices are rising mainly because of three factors: natural
gas inventories that are below the five-year average. steady demand fbr U.S.
liquefied natural gas (LNG) exports, and high demand for natural gas from
the electric power sector given limited opportunities fbr natural gas-to-coal
switching.r"
Based on review of the market fundamentals, trends, and current EIA data, Staff believes
that the Company's estimated cost of forward-looking purchases are reasonable.
3 EIA Natural Gas Weekly https://www.eia.sov/natural gas/
4 https://www.eia. gov/outlooks/steo/report/natgas.php
4STAFF COMMENTS ruLY 7,2022
Line Break Rate
The Company charges a Line Break Rate to parties who are responsible for damage to the
distribution system causing a gas leak. The Company proposes to increase the Line Break Rate
from the current rate of $0.424$s per therm to $0.58848 per therm. The proposed Line Break
Rate includes a $0.16443 Fixed-Cost Component (Transportation Cost) per therm and a
$0.42405 Variable-Cost Component (WACOG) per therm for a total of $0.58848. Staff
concludes that the Company calculated the proposed Line Break Rate consistent with Order
No. 33139.
CUSTOMER NOTICE AND PRESS RELEASE
The Company's press release and customer notice were included with its Application.
Staff reviewed the documents and determined that both meet the requirements of Rule 125 of the
Commission's Rules of Procedure. IDAPA 3 I .01 .0 I . I 25. The notice was included with bills
mailed to customers beginning June 2,2022, and ending July 1, 2022.
The Commission set a comment deadline of July 7,2022. Some customers in the last
billing cycles will not have received/and or had adequate time to submit comments before the
deadline. Customers must have the opportunity to file comments and have those comments
considered by the Commission. Staff recommends that the Commission accept late filed
comments from customers. As of July 6,2022, one comment had been filed in opposition to the
Company's proposed increase
STAFF RECOMMENDATIONS
Staff recommends the Commission:
l. Approve the Company's Application and the proposed WACOG amount of
$0.42405 Per therm;
2. Approve the Company's proposed Schedules RS, GS-l, IS-R, IS-C, and LV-l as
filed with the Application;
3. Direct the Company to continue filing quarterly reports reflecting deferred gas
costs and WACOG projections;
s See Order No. 3 5 I 82
5STAFF COMMENTS ruLY 7,2022
4. Order the Company to file an adjustnent to its PGA-related rates, if gas prioes
signifi canfly deviate ftom projections; and
5. Accept late-filed comments from customers.
Respecffirlly submitted this
-7*ul
day of July 2022.
S
Claire Sharp
Deputy Attomey General
Techuical Staff: Kevin Keyt
Curtis Thaden
i:umhdcomrnent/ints22.2ostkct oomments
6STAIry COMMENTS JULY 7,2022
CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS 7th DAY OF ruLY 2022,
SERVED THE FOREGOING COMMENTS OF TIIE COMIIISSION STAFF, IN
CASE NO. INT-G.22.02, 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:
stephaniew@ givenspursley.com
CERTIFICATE OF SERVICE