20230815Final_Order_No_35891.pdf

ORDER NO. 35891 1

Office of the Secretary
Service Date
August 15, 2023
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION

On June 9, 2023, Intermountain Gas Company (“Intermountain” or “Company”)
applied to the Commission for authority to modify its Renewable Natural Gas (“RNG”)
Facilitation Plan in three ways: (1) by instituting a new maintenance fee applicable to RNG
producers requiring facilities to export natural gas to an interstate pipeline; (2) by establishing a
method for calculating monthly access fees; and (3) by clarifying that the Interruptible Distribution
Transportation Service (“Schedule T-3”) tariff rate will apply to the transport of RNG using the
Company’s distribution system to any interconnection point with Northwest Pipeline. The
Company’s application included several supporting exhibits and requested an effective date of July
1, 2023.
On June 28, 2023, the Commission issued a Notice of Application and Modified
Procedure and Notice of Suspension of Proposed Effective Date, setting a July 1, 2023 comment
deadline and an August 2, 2023, reply comment deadline. Order No. 35830. In Order No. 35830
the Commission also suspended the Company’s proposed effective date until September 1, 2023,
unless an earlier order issued. Commission Staff, the Company, and Shell USA filed comments.
No other comments were received.
The Commission now issues this Order approving the Company’s Application as
discussed below.
BACKGROUND
In Case No. INT-G-20-03, the Commission granted the Company authority to facilitate
RNG producers accessing the Company’s distribution system. Order No. 34693. The Company’s
approved Facilitation Plan includes monthly fees—consisting of a monthly maintenance fee and
monthly access fee. The Company anticipated annual updates to the maintenance fee to ensure
RNG producers cover necessary costs for operating and maintaining required RNG facilities while
the intent of the access fee was to provide a return to the Company as non-utility revenue. Despite
IN THE MATTER OF INTERMOUNTAIN
GAS COMPANY’S APPLICATION FOR
AUTHORITY TO UPDATE THE
RENEWABLE NATURAL GAS
FACILIATION PLAN
)
)
)
)
)
)
CASE NO. INT-G-23-03

ORDER NO. 35891
ORDER NO. 35891 2

approving monthly fees for RNG producers that include an access fee component, the final order
in Case No. INT-G-20-03 did not set the amount of the access fee or adopt a method for calculating
it.
Since approval and implementation of the Facilitation Plan, the Company has received
requests from RNG producers to access interstate markets using the Northwest Pipeline. According
to the Company, facilitating these requests requires a new compressor station and related facilities.
In its Application, the Company seeks to defray these costs and obtain a rate of return for delivering
RNG to interstate markets via the Company’s distribution system while insulating general retail
customers from the costs of transporting RNG. Because RNG producers have expressed interest
in accessing the interstate markets, the Company indicated it plans to apply to the Federal Energy
Regulatory Commission (“FERC”) for authorization to transport RNG across state lines following
a final order in this case.
THE APPLICATION
I. Access Fee Methodology
As stated, the Company’s approved Facilitation Plan authorizes the imposition of a
monthly access fee without fixing the amount of the fee or a method for its calculation. The
Company’s proposed method for calculating the access fee focuses on Return on Equity (“ROE”)
value. The proposed method compares the ROE calculated under FERC methodology1 and the
ROE derived from a utility ROE method to get a risk premium percentage. The risk premium
would be multiplied by the cost of an RNG facility to determine a risk factor amount, which is
then grossed-up for any applicable charges to determine the access charge. In its Application, the
Company used an ROE from recent FERC Staff testimony2 for the FERC methodology ROE and
the 9.5 percent ROE from the Stipulated Settlement of its current general rate case3 for the utility
ROE, generating a proposed access charge of $8,000 a month.
II. Export Facility Maintenance Fee
Currently, RNG producers deliver RNG to a point in the Company’s distribution
system, and it is consumed in Idaho. To insulate the Company’s retail utility customers in Idaho
from the costs of facilitating requests to transport RNG to the Northwest Pipeline, the Company
seeks to expand the existing Facilitation Plan with an additional Export Facility Maintenance Fee

1 See FERC Docket No. PL19-4-000, issued May 21, 2020.
2 See FERC Docket No. RP22-1033-000, FERC Staff Witness Alexander Gill, p. 7.
3 See Stipulation and Settlement submitted May 4, 2023, Case No. INT-G-22-07.
ORDER NO. 35891 3

(“EFMF”) for certain RNG producers. Specifically, the Company proposes imposing an EFMF of
$5,400 upon only RNG producers located in areas within the Company’s distribution system where
retail load is insufficient to absorb produced RNG. The EFMF will be charged in addition to
Maintenance, Access, Startup and Extraordinary Operation & Maintenance fees that RNG
producers already pay.
The proposed EFMF would be updated annually to recover the actual cost from the
previous twelve months using a method like that used to update the maintenance fee that RNG
producers already pay. The proposed update methodology would divide the total expenses incurred
in operating export facilities over a given twelve-month period by twelve to determine the next
year’s monthly EFMF. The new EFMF would be subject to an adjustment up or down equal the
average difference between the actual expenses incurred operating Export Facilities and the
revenue generated by the EFMF over the same period. The Company proposed calculating the new
EFMF based upon expenses and revenue generated between September 1st and August 31st with
the new EFMF taking effect October 1st of each year.
III. Schedule T-3 Tariff Rate
End-use customers pay a tariffed distribution rate for any RNG consumed on the
Company’s system. However, the Facilitation Plan approved in Case No. INT-G-20-03 does not
include provisions allowing the Company to charge RNG producers a tariffed rate for using the
Company’s system to transport RNG to the Northwest Pipeline. The Company sought to revise its
Rate Schedule T-3 so that gas produced at an RNG facility and exported to the Northwest Pipeline
is assessed at Rate Schedule T-3 monthly rates. Revenue generated from RNG producers paying
this tariff rate will be treated as an offsetting revenue credit in the Company’s next general rate
case.
IV. Income Tax Gross Up
In Case No. INT-G-20-03, the Commission issued the Company a limited waiver to
Order No. 21933, which prohibits the Company from grossing up a Contribution in Aid of
Construction (“CIAC”) to cover the additional income tax generated by CIAC payments from
RNG producers. The income tax gross up is booked as utility revenue to offset additional income
tax from CIAC revenue and avert financial impact to utility customers. The Company proposes
continuing this treatment of CIAC revenue and extending it to CIAC payments related to export
facilities required to inject RNG into the Northwest Pipeline.
ORDER NO. 35891 4

STAFF COMMENTS
Staff’s major objectives in reviewing the Company’s proposed modifications to the
Facilitation Plan were protecting the Company’s retail customers and ensuring RNG producers
cover the cost of transporting RNG. Staff Comments at 3. Based upon a review of the Company’s
Application and discovery responses and independent research, Staff concluded the Company’s
proposed modifications would protect core retail customers by ensuring that RNG producers
would cover all production and transport costs related to gas they produce.
However, Staff did express concern regarding a proposed revision of Schedule T-3.
Despite generally supporting application of Schedule T-3 tariff rates to RNG producers exporting
gas to the Northwest Pipeline, Staff expressed concern with proposed language related to an annual
minimum bill for RNG production facilities proposed in the Company’s Application. The proposed
change to Schedule T-3 indicated that “[a]n annual minimum bill may not apply if the customer is
a renewable natural gas production facility . . . .” See Application Exhibit No. 4. In response to
Staff’s Production Request No. 12, inquiring when the minimum bill would apply, the Company
proposed modifying the language to indicate that “[a]n annual minimum bill may not apply if the
customer is a renewable natural gas production facility.” Staff supported the Company’s proposed
update to Schedule T-3 but recommended the use of the language proposed in the Company’s
response to Production Request No. 12 as Staff believed no minimum bill for RNG facilities is
reasonable as such facilities are covering their system costs through other charges and fees. With
the recommended revision to Schedule T-3, Staff concluded the Company’s proposed
modifications to the Facilitation Plan were reasonable.
COMMISSION FINDINGS AND DECISION
The Commission has jurisdiction over this matter under Idaho Code § 61-501. The
Commission has broad authority to regulate the practices and operations of public utilities and may
prescribe rules and regulations. Idaho Code §§ 61-501 and 61-507. Notably, the Commission is
authorized to set quality, safety, and service standards, and may regulate a public utility’s
accounting practices. Idaho Code §§ 61-520 and 61-524. The Company is a Commission-regulated
public utility under Idaho Code § 61-129 and a gas corporation under Idaho Code § 61-117. As a
public utility, the Company must provide service that is “in all respects adequate, efficient, just
and reasonable,” and at rates that are just and reasonable. See Idaho Code §§ 61-301 and 61-302.
ORDER NO. 35891 5

The Commission has reviewed the record, including the Application and the comments
of Staff, the Company, and the Shell USA. We find the Company’s proposed modifications to the
Facilitation Plan with Staff’s recommended language to the Schedule T-3 tariff reasonable. The
Company’s proposed updates to the Facilitation Plan adequately address how the Company intends
to insulate utility customers from risks associated with facilitating the requests of RNG producers
to access the Northwest Pipeline. We are confident the updated Facilitation Plan’s proposed fees
and accounting mechanisms are structured to protect retail utility customers from bearing the cost
of RNG producer access to the Northwest Pipeline. Likewise, the Company has acceptable
standards for ensuring the continued quality and safety of its utility service.
We also find it reasonable to allow the Company to gross up CIAC payments from
RNG producers to cover the income tax generated by such payments, including those made for
export facilities delivering RNG to the Northwest Pipeline. The income tax liability from a CIAC
payment should be borne by the RNG producer, not utility customers. Therefore, the limited
waiver of Order No. 21933 granted in Order No. 34693 for purposes of grossing upon CIAC
payments for RNG production is continued and extended to cover CIAC payments made for export
facilities required to deliver RNG to the Northwest Pipeline.
The fast-growing RNG market remains a phenomenon sustained by the incentives and
policies of numerous states. We continue to believe the Company’s RNG Facilitation Plan
satisfactorily protects Intermountain and its utility customers from sudden shifts in the RNG
production industry which may occur as the new industry matures. Therefore, we direct
Intermountain to continue conforming future RNG producer contracts to its Facilitation Plan.
O R D E R
IT IS HEREBY ORDERED that the Company’s request for authority to update its RNG
Facilitation Plan is approved as described above, effective on the service date upon this Order.
IT IS FURTHER ORDERED that the Company is authorized to update the Schedule
T-3 tariff rate as proposed in its Application with Staff’s additional recommended language.
IT IS FURTHER ORDERED that the Company shall submit a compliance filing with
the updated language to Schedule T-3 within 14 days of receiving final tariff sheets in the
Company’s most recent general rates case (Case No. INT-G-22-07).
ORDER NO. 35891 6

IT IS FURTHER ORDERED that the Company shall gross up each CIAC payment
from RNG producers, including those made for export facilities necessary to transport RNG to the
Northwest Pipeline, to cover the income tax generated by the CIAC payment.
IT IS FURTHER ORDERED that the Company shall make all future RNG producer
contracts consistent with its updated Facilitation Plan. This directive also applies to renewals of
RNG producer contracts already in effect.
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 about 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. See Idaho Code § 61-626.
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this 15th day
of August 2023.

ERIC ANDERSON, PRESIDENT

JOHN R. HAMMOND, COMMISSIONER

EDWARD LODGE, COMMISSIONER

ATTEST:

Jan Noriyuki
Commission Secretary

I:\Legal\GAS\INT-G-23-03_RNG\orders\INTG2303_Final_at.docx