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Home My WebLink AboutINTG973.docxSCOTT WOODBURY DEPUTY ATTORNEY GENERAL IDAHO PUBLIC UTILITIES COMMISSION PO BOX 83720 BOISE, IDAHO 83720-0074 (208) 334-0320 Street Address for Express Mail: 472 W. WASHINGTON BOISE, IDAHO 83702-5983 Attorney for the Commission Staff BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION IN THE MATTER OF THE APPLICATION OF ) INTERMOUNTAIN GAS COMPANY FOR)CASE NO. INT-G-97-3 AUTHORITY TO CHANGE ITS PRICES.) )COMMENTS OF THE )COMMISSION STAFF _________________________________________) COMES NOW the Staff of the Idaho Public Utilities Commission, by and through its Attorney of record, Scott Woodbury, Deputy Attorney General, and in response to the Application filed by Intermountain Gas Company (IGC) on May 30, 1997, submits the following comments. Staff recommends that the Company’s Application and requested changes to tariffed rates be approved for effective date July 1, 1997. Intermountain Gas Company in Case No. INT-G-97-3 has applied for authority to implement new rates for the Company’s annual purchased gas cost adjustment tracker. The Commission Staff has reviewed the Company’s filing and performed a limited audit. Staff found the Company has: (1) moved fixed transportation cost out of the commodity charges (weighted average cost of gas (WACOG)) to the demand charges, (2) has continued to hedge gas supplies, (3) has actively pursued capacity release and segmentation (the capacity release of a segment of Intermountain Gas Company’s transportation rights), (4) has paid the termination cost of firm transportation on Northwest Pipeline’s Expansion II and is now passing the savings from firm transportation contracts purchased to cover additional needs for transportation to ratepayers (Order No. 26022, Case No. INT-G-95-2, dated May 24, 1995), (5) has used normalized volumes for fixed demand costs per Order 26019, Case No. INT-G-95-1, dated May 24, 1995, and (6) has properly added the T-2 tariff changes. Staff’s audit of gas supply, swaps, capacity release, segmentation, added firm transportation capacity, tariff allocations and PGA changes revealed no irregularities. Intermountain Gas Company included in INT-G-96-3 the WACOG transportation firm capacity costs on Pacific Gas Transmission Company, Alberta Natural Gas Company and Nova Gas Transmission Services Ltd. The Company also included in the WACOG costs for firm “supply area” storage at Clay Basin in Utah and AECO in Alberta, Canada used to provide load balancing and peak day service to all customer classes. After auditing and analyzing these costs Staff agrees the additional transportation, load balancing capability and peak day service benefits transportation customers as well as the core customers. Therefore, Staff agrees that in INT-G-97-3 these costs should be removed from the WACOG that is billed to core customers only and moved to fixed demand costs that are billed to all customers. If this adjustment had been made to the WACOG in INT-G-96-3 the WACOG would have been reduced by approximately $6.8 million and the fixed demand costs increased by approximately $6.8 million. In examining the WACOG for this case and comparing it with the WACOG in INT-G-96-3, Staff finds that with the fixed demand costs removed, the actual cost for gas on city gate volumes has increased by approximately 3.9%. This increase is consistent with the increase in gas costs through the 1996 heating year and reflects the approximate $5.9 million additional gas cost deferred in the 186-218 account. Intermountain Gas Company has made an adjustment for Fixed Cost Collection (Exhibit No. 4, line 36). This adjustment is necessary to correct for changes in the number of customers that cover the fixed costs. The annual therms shown on Exhibit No. 4, Column B, does not change but the number of customers have increased. The make up of customers has also changed. RS-2 customers account for approximately 84% of the core customer growth. This adjustment results in a RS-1 decrease of $1,061,699, a RS-2 increase of $1,002,701, a GS-1 decrease of $1,308,718, a T-1 decrease of $162,967 and a T-2 decrease of $214,615. Intermountain Gas Company has been entering into swap transactions for gas supply. In Staff’s comments in Case No. INT-G-95-3, Staff noted that this was a new event and there was not enough data available to determine the effect the swap contracts would have on ratepayers. Staff has examined the swap transactions and found that with the rise in gas prices in the 1996 heating season the swaps saved the core customers approximately $4 million in deferred gas costs. TRACKER IMPACT The overall effect of the proposed changes would be to increase Idaho revenues by $2,174,581. The net increase is made up of: Permanent Adjustments: Change in NWP rates/charges$ 119,388 Capacity costs discounts(3,033,378) 7/1/96-6/30/97 commodity costs 1,461,689 Commodity charges distribution cost removal(6,867,141) Incremental distribution cost from commodity 7,373,539 Fixed cost collection(1,745,298) Temporary Surcharges or Credits: Special Contract Shared Margin($ 222,532) Fixed Cost Collection Adjustment(2,904,228) Uncollected Gas Costs 5,747,429 Transportation Segmentation (2,720,219) NWP Surcharge Docket No RP91-116 353,264 Capacity Release & Purchase (591,959) Deferred Gas Balance 277,934 Deferred NWP Settlement offer Docket No. RP94-220 105,142 Deferred Account 186 Miscellaneous 37,876 Prior Year Temporary Charge: 4,783,075 Any over/ under collections will be trued up in the next tracker. The Staff computes the annualized increase/(decrease) by class of service per therm in the following manner: Average Average Average IncrementalIncremental Proposed Price Gas Sales Revenue ⊄/Therm% Change/Therm RS-1 Residential ($ 480,301) (1.373⊄) (2.21%) $0.60810 RS-2 Residential $1,582,842 1.798⊄ 3.75% $0.49802 GS-1 General Service ($455,380) (0.571⊄) (1.24%) $0.45394 T-1 Transportation $1,544,975 1.204⊄ 16.04% $0.08710 T-2 Transportation ($ 17,555) (0.075⊄) (2.14%) $0.03423 With the exception of the industrial class, Intermountain Gas Company proposes to allocate the increase (decrease) to each of its customer classes in accordance with its Purchase Gas Cost Adjustment tariff and approved cost-of-service methodology (Ref. Case Nos. INT-G-95-1, INT-G-88-2, and U-1034-137). Because there are no fixed costs currently recovered in the tailblock of Intermountain Gas Company’s T-1 tariff and because the proposed increase in the T-1 tariff is related to fixed costs (except for the TF-1 commodity charge), a cents-per-therm increase is made only to the first two blocks of the T-1 tariff. Two blocks of Intermountain Gas Company’s proposed T-1 tariff and the T-2 tariff have been adjusted to include a share of the demand charges removed from the WACOG. PERMANENT ADJUSTMENT The Tracker permanent adjustment transportation/storage fixed charges reflect increases in the transportation demand charge by NWP of $606,049, the addition of upstream capacity that was removed from the WACOG of $3,233,361, and discounts on contracted transportation pegged to NWP’s tariffs of ($3,033,378). While storage demand, reservation, liquefaction and vaporization costs had increases and decreases the largest dollar changes were for other storage facilities cost of $4,140,178 that were removed from the WACOG and added to transportation. After adjusting the 1996 WACOG for the removal of transportation cost of ($6,867,141) from the gas supplies, the cost for gas increased 3.9% or $1,461,689 due to increasing prices and the continued outlook of gas supply in the Northwest. TEMPORARY SURCHARGES OR CREDITS The temporary surcharges/credits reflect the true-up of prior period costs deferred in Intermountain Gas Company’s 186 accounts. The surcharges/credits are broken into fixed gas and transportation costs, variable gas and transportation costs, shared revenue, interest, NWP’s refunds, the removal of the prior year temporary adjustment and the sale of segmented space under Intermountain Gas Company’s transportation agreements. The largest adjustments contributing to holding costs down were the Market Segmentation at $2,720,219 and the Fixed Cost Collection Adjustment of $2,904,228. The deferred cost of gas was an increase of $5,747,429. DATED at Boise, Idaho, this day of June 1997. ___________________________________ Scott Woodbury Deputy Attorney General Technical Staff: Madonna Faunce SW:RPS:jo/comments\intg973.swm