HomeMy WebLinkAbout2000110_sw.docDECISION MEMORANDUM
TO: COMMISSIONER HANSEN
COMMISSIONER SMITH
COMMISSIONER KJELLANDER
MYRNA WALTERS
DON HOWELL
STEPHANIE MILLER
TONYA CLARK
RON LAW
SYD LANSING
WORKING FILE
FROM:
DATE: January 10, 2000
RE: CASE NO. INT-G-99-02 (Intermountain Gas)
PROPOSED INCREASE IN COMPOSITE DEPRECIATION RATE
Intermountain Gas Company (IGC; Company) filed an Application with the Idaho Public Utilities Commission (Commission) on December 23, 1999, requesting authority to increase its composite depreciation rate from 3.98% to 4.18%. The Company also proposes to convert the recovery of a number of its general plant accounts to amortization as opposed to the current depreciation rate procedures utilizing a service life and net salvage factor.
The Company’s presently authorized composite depreciation rate of 3.98% was approved by the Commission in Case No. INT-G-96-7, Order No. 26813 dated February 24, 1997. In its Order the Commission stated:
As before, our level of comfort with the reasonableness of such depreciation rates is enhanced by periodic review, which the Company previously stated is required for its depreciation study methodology. Therefore, we find it reasonable that the Company continue to examine its depreciation rates and practices on three year intervals.…We also find it important to monitor and revisit this matter in three years.
Based on an updated depreciation study by AUS Consultants, the Company concludes that the current rate is under-depreciating its assets. The effect of the requested higher rate would be to increase IGC’s depreciation accrual and decrease IGC’s rate base by $334,522 annually. As proposed, the total annual depreciation accrual would increase to $10,286,070. Although the Company’s depreciation expense would increase under its proposal, the present Application does not request a related increase in rates. The Company has requested that the increase to the annual composite depreciation rate be made effective at the beginning of its fiscal year, October 1, 1999.
A four page summary of the depreciation study was included with the Company’s Application. The complete depreciation study with workpapers, which the Company states are voluminous, are available for inspection at IGC’s general business office, which is located at 555 South Cole Road, Boise, Idaho (208-377-6097).
With this depreciation study, Intermountain Gas is proposing to convert the recovery of a number of its general plant accounts to amortization as opposed to the current depreciation rate procedures utilizing a service life and net salvage factor. In 1997 the Company states the Commission approved Idaho Power Company’s request for such an amortization in Order No. 26937 in Case No. IPC-E-97-4. In this case, the Company proposes to establish similar amortization for the following Intermountain Gas accounts:
Account Numbers Account Name 391
393
394
395
397
398 Furniture and office equipment
Stores equipment
Tool, shop, and garage equipment
Laboratory equipment
Communications equipment
Miscellaneous equipment
These accounts, the Company states, consist of numerous assets of relative low dollar value which are time consuming to track. Many of these assets are used throughout Intermountain Gas’s operation making the record keeping even more difficult. The Company contends that amortization of these assets will reduce the accounting and record keeping burden for the Company.
Intermountain Gas Company requests that its Application be processed pursuant to the Commission’s Rules of Procedure, i.e., by written submission rather than by hearing. Reference Commission Rules of Procedure, IDAPA 31.01.01.201-204. Staff has no objection to Modified Procedure but recommends that the comment period be extended to 30 days to permit sufficient time to obtain responses to production requests (formal and/or informal) and to provide adequate time for review and audit of the underlying depreciation study performed by AUS Consultants.
Commission Decision
Does the Commission find it reasonable to process this case pursuant to Modified Procedure in the manner proposed by Staff? If not, what is the Commission’s preference?
vld/M:INT-G-99-02_sw
DECISION MEMORANDUM 2