20010905Application.pdf

BEFORE THE IDAHO PÚBLICUTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION )CAS]p No.$ÚÑ'
OF QUESTAR GAS COMPANY FOR AÑ )ORDER GRANTING A PERMANENT EX-)APPLICATION
EMPTION UNDER IDAHO CODE §61 09.)
Questar Gas Company ("QGC"or the "Company")hereby applies for an order from the
Idaho Public Utilities Commission ("Commission")exempting QGC from the provisions of Idaho
Code,Title 61,Chapter 9.Specifically,the Company requests a utility-based exemption from the
requirements of IdahoCode,Sections 61-901,61-902,and 61-905.In the alternative,QGC requests
an exemption from the same Code provisions regardingthe proposed issuance and sale by QGC for
cash of up to $100,000,000 in medium-term notes.In support of this Application,QGC states as
follows:
1.QGC is a Utah corporation with its principal place of business at 180 East 100 South Street,
Salt Lake City,Utah 84145.QGC is a Public Utility,as defined in Idaho Code §61-127 and a Gas
Corporation as defined in Idaho Code §61-117.QGC is engaged in the distribution of natural gas
to customers in the states of Wyoming,Utah and Idaho.Copies of QGC's Articles of Incorporation
and its tariff are on file with the Commission.QGC serves over 700,000 residential,commercial and
industrial customers in its service territory,includingapproximately 3,000 customers in and around
Preston,Idaho.
2.During the 1997 Legislative Session,the Idaho Legislature added a new section to the
Security Issuance Laws for Public Utilities,Idaho Code §61-909.This new section,which became
effective on July 1,1997,authorized the Commission to exempt certain securities or public utilities
from provisions of the Security Issuance laws if such exemption is in the public interest.Section
61-909 provides that:
The Commission from time to time by order or rule,and subject to such terms and
conditions as may be prescribed herein,exempt any security or any class of securitiesforwhichanapplicationisrequiredunderthischapteroranypublicutilityorany
class of public utility from the provisions of this chapter if it finds that theapplicationthereoftosuchsecurity,class of securities,public utility or class of
public utility is not required by the public interest.
3.On August 8,1990,the Commission issued Order No.23282,granting a Certificate of Public
Convenience and Necessity to Mountain Fuel Supply Company (since renamed Questar Gas
Company)to provide natural gas service in and around Preston,Idaho.In this Order,the
Commission noted a regulatory compact with the Utah Public Service Commission ("UPSC")which
allows the utility to provide natural gas service to Idaho customers under the Company's existing
Utah tariffs,with one-time extension area rules placed in effect.In the Order,the Commission
stated:
The Idaho Commission by contract will permit the UPSC to perform the regulatory
duties for the Idaho expansion-area served by Mountain Fuel.Affected Idaho
residents will have full rights of participation in the hearings conducted by the UPSC,
as well as the same rights that customers in Utah have to pursue service related
issues.The full spectrum of consumer representation in Utah before the UPSC isperformedbytheDivisionofPublicUtilitiesandtheCommitteeofConsumerServices.All findings,decisions and orders of the UPSC will be accorded thepresumptionthattheyarebothreasonableandcorrect.All remedies with Mountain
Fuel and the UPSC must be exhausted before the Idaho Commission will entertainanyreview;and the Idaho Commission will only review in instances where
discriminatory,preferential or otherwise unlawful treatment of Idaho customers by
the UPSC is alleged.
Since that time,the Company has provided natural gas service to its Idaho customers in the Preston
area,with primary regulation undertaken by the UPSC with final QGC accountability to the Idaho
Commission.
4.In addition,QGC has filed aimual reports with the Commission and the Commission Staff
For more than a decade,the Company believes that this regulatory compact has provided effective
regulatory oversight for Preston customers with direct ratemakingresponsibility undertaken by the
UPSC with ultimate supervisoryjurisdiction retained by the Commission.
5.On May 30,1997,the Commission issued its Order No.26959 allowing for exemption
applications consistent with Idaho Code §61-909.This Order set forth the general requirements of
any such exemption application and procedural guidelines to be undertaken by an applicant utility.
This Application is filed under Order 26959 guidelines.
6.By this Application,QGC requests that the Company be granted an exemptionfrom the filing
requirements of Idaho Code §61-909 with respect with to security issuances.In this regard,the
Company notes that the UPSC maintains a comprehensive regulatory oversight in all facets of
QGC's rates and service regulations.Every line item of the Company's results of operations is
reviewed and scrutinized in the context of a general rate case,includingall components of the cost
of capital.In each case,the UPSC provides for an allowed return on equity along with maintaining
authority to approve or deny other aspects of the Company's actual capital costs.
7.Under the regulatory compact,QGC has filed annual reports with the Commission so that
the Commission can maintain comprehensive final oversight of utility operations for Idaho
customers.In addition,the Companykeeps the Commission abreast of general regulatory issues and
customer issues with respect to the Preston area during regular visits with the Commission and its
Staff.
8.Counsel for the Company,after communication with Terri Carlock and Don Howell of the
Commission Staff,believes that granting the exemption as described in this Application is in the
public interest.The exemption will reduce the regulatory burden on the Commission Staff,and will
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not impair the Commission's ability to supervise and review all Company activities.Moreover,
granting the Application will be consistent with the guidelines of Commission Order No.23282 and
is in the public interest.
9.Notice of this Application will be filed in the Preston Citizen on September 7,2001,for
publication on September 12,2001,and the Company will furnish any other information required
by the Commission.
10.Attached as Attachment I is a Proposed Order Granting the Application which the Company
believes is suitable for adoption by reference if the Application is granted.
11.If the Commission determines that an exemption to QGC in general is not in the public
interest,the Company requests an exemption with respect to the proposed issuances and sale by
QGC for cash for up to $100,000,000.00in medium-term notes.The Company requests that such
exemption remain in effect until all of the notes have been issued.
12.Attached as Attachment II is a copy of QGC's financial statements as of June 30,2001.As
of that date,the capital structure of QGC is as follows:
JUNE 30,2001
AMOUNT PERCENTAGE
(DOLLARS IN THOUSANDS)
LONG-TERM DEBT $225,000 45.2%
COMMON SHAREHOLDER'SEQUITY $273,248 54.8%
TOTAL CAPITALIZATION $498,248 100.0%
SHORT-TERMDEBT $136,600
13.The projected costs of this proposed issuance are estimated to be approximately $990,000.
14.The Company seeks an order of the Commission exempting from the provisions of Idaho
Code §§61-901,61-902 and 61-905 for the proposed issuance and sale of the medium-term notes
for cash.These sections of the Idaho Code regulate the issuance of securities by public utilities,
including requirements for certain authorizations and approvals from the Commission.The
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Company requests that such exemption remain in effect until all of the notes have been issued and
sold.
15.QGC believes that the grant ofthe exemption requested by QGC is consistent with the public
interest.The net proceeds from the sale of the $100 million in medium-term notes will be used to
finance a portion of capital expenditures estimated to be $74.9 million for 2001 and to repay a
portion of short-term debt owed to Questar which,at June 30,2001,totaled $136.6 million and
which carried an interest rate of 4.17%per annum.This short-term debt was incurred for general
utility purposes includinginvestment in working capital.In addition,the requested exemptionwould
not constitute a determination by the Commission of any utility ratemaking issues or acceptance of
expenditures by the Company.Those matters would be reserved for decision until they are presented
in a general rate case.
16.Therefore,the Company believes that the proposed exemption would not affect the ability
of the Commission or of the UPSC to protect the public interest in rate proceedings or otherwise.
The Commission would benefit from a reduction in the administrative burdens associated with the
filing,processing and updating of securities applications for the issuance of the notes.Based on the
foregoing,the Company believes that the application of Idaho Code §§61-901,61-902 and 61-905
to the issuance of medium-term notes is not required by the public interest.
NOW,WHEREFORE,Questar Gas Company requests that the Commission enter its order
in this matter,effective upon issuance,exemptingthe utilityfrom the provisions of Idaho Code,Title
61,Chapter 9.In the alternative,QGC requests that the Commission grant an order exemptingfrom
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the provisions of Idaho Code,Title 61,Chapter 9,the proposed issuance and sale for cash,from
time-to-time,of medium-term notes of up to $100,000,000.00.In this regard,QGC requests that
such exemption remain in effect until all of the notes have been issued and sold.
Respectfully submitted this 5*day of September,2001.
QUESTAR GAs COMPANY
NATHAN M.DUKE
D01-109\APPLICATION COUNSEL FOR THE COMPANY
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ATTACHMENT I
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MA ER OF THE APPLICATION )CASE No.
OF QUESTAR GAS COMPANY FOR AN )ORDER GRANTINGA PERMANENTEX-)PROPOSED ORDEREMPTIONUNDERIDAHOCODES61-609.'
l.On September 5,2001,Questar Gas Company ("QGC"or the "Company"),a Utah
corporation qualified to do business in the State of Idaho,filed an Application with the Idaho Public
Utilities Commission ("Commission")requesting an exemption from the provisions of Idaho Code
Title 61,Chapter 9.Specifically,QGC requests that an exemption from Sections 61-901,902 and
905.Under the Application,QGC would be given a permanent exemption from filing for approval
from the Commission prior to issuing securities for sale to the public.In support ofits Application,
QGC took note of the Commission's August 8,1990 Order wherein QGC's predecessor entity,
Mountain Fuel Supply Company,was granted a Certificate of Public Convenience and Necessity.
Pursuant to a regulatory compact with the Utah Public Service Commission ("UPSC"),the
Commission ceded primary regulatory jurisdiction to the UPSC,with ultimate review and
responsibility retained by the Commission.
2.QGC noted in its Application that all aspects of the Company's financial statements and
results of operations are scrutinized by the UPSC.The Commission also pointed out that,in the
Context of a general rate case,the Utah Division of Public Utilities and the Committee of Consumer
Services regularlyscrutinize any aspect ofQGC'sApplication to adjust its rates and charges.Also,
under the regulatory compact,QGC has filed annual reports with the Commission and maintained
regular contact with the Commission to report on not only its operations but current developments
and customer issues in the Preston,Idaho area.
3.The Commission by Order and Notice No.issued ,preliminarilyfound that the
public interest regarding the requested application would not require a public hearing to consider the
issues presented.The Commission further found it reasonable to process the application under
modified procedure,i.e.,by written submission rather than by hearing.We therefore find it
reasonable to decide this matter and issue our order in Case No.on the basis of the filings of
record.
4.The Commission,based on its review of the findings of record in Case No.makes the
followingfmdings:
i.That the UPSC has primary regulatory jurisdiction over QGC and reviews every aspect of the
Company's results of operations,including its cost of capital.
ii.That Idaho §61-909 allows for the Commission to grant a permanent exemption from the
securities filing requirements of Idaho Code Title 61,Chapter 9.
iii.That granting the primary exemption requested by QGC is in the public interest as securities
regulation is already undertaken by the UPSC,and will ease the regulatory burden on the
Commission and the Commission's Staff.The Commission notes that we and our staff have
ultimate review and supervisoryauthority over QGC's utilityoperations in the state ofIdaho,which
review can be undertaken on an ad hoc basis as deemed necessary by the Commission.
iv.That notice of this application was submitted to the Preston Citizen on Friday,September 7,
2001,and was published in its September 12,2001 issue.
In consideration of the foregoing,the Commission finds it reasonable to issue a permanent
exemption to Questar Gas Company from the filingand reporting requirements of Idaho Code Title
61,Chapter 9.This will allow the Company to issue securities without prior approval of the
Commission based on the regulatory compact entered into by and between the Commission and the
UPSC.
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ORDER
In consideration ofthe foregoing,and as more particularlydescribed above,IT IS HEREBY
ORDERED that the Application ofQuestar Gas Company in Case No.for an Exemption from
the Requirements Idaho Code Title 61,Chapter 9,be granted.
THIS IS A FINAL ORDER.Any person interested in this Order (or in issues finally decided
by this Order)may petition for reconsiderationwithin twenty-one (21)days of the service date of
this Order with regard to 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 §061-626.
DONE by Order of the Idaho Public Utilities Commission at Boise,Idaho,this day of
September 2001.
PAUL KJELLANDER,PRESIDENT
MARSHA SMITH,COMMISSIONER
DENNIS HANSEN,COMMISSIONER
D01-109-ORDER
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ATTACHMENTII
PAGE 1 OF 2
Questar Gas Company Page iBalanceSheetJune2001
increase or DecreaseAssetsAndOttrerDebitsAmountMonth Six Months101GeneralPlantinService1.050,562,645.39 1,747.487.39 9.500.015.52105GasPlantHeldforFutureUse586.732.50106CompletedConstructionNotClassified-Gas 7.830.526.90 268,546.57 5,135,730.54107ConstructionWorkinProgress-Gas 29.733.347.03 1,965,332.28 7,707.958.71108AccumProvforDepreciationofGasPlantinService(454,289,292.13)(2,199,929.83)(16,163,637.38)111 Accum Prov forAmartization of Gas Plant in Service (8.638.546.85)(4,598.47)(25.701.54)114 Gas Plant Acquisition Adjustments 992,000.00115AccumProvforAmortizationofGasPlantAccuisitionAdjustments(786,995.73)(4,999.77)(29,998.58)Net Gas Plant 625.990,417.11 1.771,838.17 6.124.367.27128OtherFundsorinvestments3,309,688.86 -
131 Cash (1,722,894.10)(1.271.840.15)(2,367,430.71)134 Other Specraf Deposits 146.28135WorkingFunds210,460.32 (75.91)(6,864.68)136 Temporary Cash investments
141 Notes Receivable 10,079.49 (3,336.13)(13,851.21)142 Customer A/R 56,305,546.87 (22,360.284.62)(58.245,649.19)143 Misc.Accounts Receivable 1,807,372.27 78.514.26 (465.241.67)144 Accum.Provision for Bad Debt (2,366,181.37)379.354.76 (1,180,709.97)14S Notes Rec.fromAffiliates
146 Accounts Rec.fromAffiliates 335.321.07 1.638.25 898.004.87154PlantMaterialsandOperatingSupplies4,640,452.33 (207,106.86)974,610.80163StoresExcenseUndistributed(302,265.81)(29,926.91)(178,376.96)164 Gas Stored Underground 28,790,940.75 1,477,051.12 6,347,096.77165PrepaidExpenses264,299.86 (85,654.39)(508,814.22)171 Interest and Dividends Rec.174 Mjsc.Current &Accrued Assets
Net Current and Accrued Assets 87.973.277.96 (22.021.666.58)(54,767,226.17}181 Unamortized DebtExpense ,596OS.0Ò (9.286.00)(55.716 OD)182 Other Regulatory Assets 16.783.660.16 1T2,362.63 (1,171,87347)184 Cleanng Accounts 21,414.08 (539,375.92)266,530 84186Misc.Deferred Debits 268.199.68 240.279.72 209.088.34189UnamortLossonReacqDebt7,374,142.00 (41,146.00)(246.876.00)190 Accum Deferred income Tax 3,101.177.39 (19.410.52)(116,463.12)191 Unrecovered Purchased Gas Costs -Utah 45.238.682.51 1,749.984.00 10,992,452.24191UnrecoveredPurchasedGasCosts-Wyoming 1,635,365.41 11.007.80 316,362.16NetDeferredDebits76,019,066,11 1,504,415.71 10.193.504.99TotalAssetsandOtherDebits793.292,450.04 (18,745,412.70)(38,449,353.91)Liabilitiesand Other Credits
201 Common Stock issued 22.974,065.00204PreferredStockissued207PremiumonCommonStock81.875,000.00214PreferredStockExpense
a216UnappropriatedRetEamings168.397.835.83 (1,968,905 41)9,191.748.65TotalProprietaryCapital273.246,700.83 (1,968,905 41)9,191,748.65221Bonds-Long Term 225.006,000.00224Long-Term Notes225UnamortPremium -LT Debt226UnamortDisc-LT DebtTotalLong-Term Debt 225,000,000 00232AccountsPayable-General 16.820.531.76 (2,814,528 37)(74,940,494.99)233 Notes Payable to Affiliates 136,600,000.00 1,600.000.00 31,000,000.00234AccountsPayabletoAffiliates21,901.525.11 516.395.80 (3,236,773.54)235 Customer Deposits 1,505,949.45 (124.710.00)79,173.00236TaxesAccrued(947,649.59)(9,555,191.99)4,721,780.08237interestAccrued4,582,198.45 1,440,383.33 (628.25)238 Dividends Deciared
-(6.000,000.00)-241 Tax Collections Payable 3,754,361.12 123,013.65 (5,397,420.89)242012 Miscofianeous Cunent &Accrued Liabilities 1,161,395,89 (2.279,332.74)(2,655,218.22)253003 Oth Def Credit -Retainage 993.849.02 -37.749.17TotalCurrentandAccruedLiabilities186.372,161.21 (17,093.970.32)(50,391.833.64)242000 Miscellaneous Long Terrn LiabilÏties 3 708 8 Ò1.Ë ÈßÏ 4253OtherDeferredCredits-253-1 UncL 27.T31.81 {2,378.04)(1,693.61)255 Accum Deferred investment Tax Cr -Utility 5,059,819.70 (31,669.79)(190,018.74)254 Other Regulatory Uabilities 3.101.177.39 (19.410.52)(116,463.12)Total Misc.Long Term Liab.&Deferred Credits 8,584,437.59 (93.279.36)(390.536.88)282000 Deferred Taxes-Federal 71.603,751.63 (238 031.77)119.033.05282100DeferredTaxes-State 6.345,168.66 (20.402.72)211,124.44282002DeferredTaxes-Full Deferred 2,685.555.00 -(921.470.00)282003 Deferred Taxes-Regulatory Asset Adjustment 1.645.976.00 -(564,769.00)282006 Defened Taxes-Federal Minimum Tax Carryover (3.439.00)283 Deferred Taxes-Purchase Gas Adjustment 17.812.138.12 689,176.88 4,297,349.47TotalLiabilitiesandOtherCredits793.292.450.Ö4 (18,745.412.70)(38,449.353.91)
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ATTACHMENTII
PAGE 2 OF 2
Questar Gas Company
Comparative Statement of
income and Retained Earnings
Page 9
June 2001
Utility Operating income Six Months increaseThisYearLastYear(Decrease)400 Operating Revenues 420,833,520.91 268,694.148.99 152.139,371.92
Utility Operating Expenses
401 Gas Purchases 306,753,813.58 158,209,177.95 148,544.635.63401OperatingExpense45.103,553.03 45,829,897.72 (726,344,69)4D2 Maintenance Expense 2,962,289.42 3,304,988.09 (342,698.67)403 Depreciation Expense 17,125,032.00 18,001,065.90 (876,033.90)404 Amortizatilon and Depletion 25,701.54 36,443.92 (10,742.38)408 Taxes OtherThan Income Taxes 5,541,855.97 6,527,140.97 (985,285.00)409101 income Taxes-Federal Util Oper income 6,361,541.00 9,393,783.00 (3,032.242.00)409111 Income Taxes -State Util Oper income 1,004,230.00 1.425,303.00 (421,073.00)410101 Provision for Deferred Income Taxes -Util 4,627,506.96 (675,294.21)5,302,801.17411100ProvisionforDetIncomeTaxesCredit-Util
411400 investment Tax Credit Adjust -Utility Oper ---
Total Utility Operating Expenses 389,505,523.50 242,052,506.34 147,453,017 16
Net Operating income 31,327,997.41 26,641,642.65 4,686,354.76
Other Income and Deductions
Other income
--409201 Federal income Tax -Other Income &Deductions (814,122.00)(371,201.00)(442,921.00)409211 State income Tax -Other Income &Deductions (112,551.00)(51,318.00)(61,233.00)410201 Deferred income Taxes-Otherincome &Deduction -419000 Interest and Dividend income 1,015,101.74 29,163.14 985,938.60419100AllowforOtherFundsUsedDuringConstruction-
-419002 Interest Income from Associated Companies --420000 investment Tax Credit 190,018.74 190,205.34 (186.60)421000 MiscellaneousNon-Operating Revenue 1,311,690.00 1,067,607.24 244,082.76421100GainonDispositionofProperty573,107.47 265,500.52 307,606.95
Total Other income 2,163,244.95 1,129,957.24 1,033.287.71
Other Income Deductions421200LossonDispositionofProperty 96,227.37 68,759.35 27,468.02425MiscellaneousAmortization29.998.58 29,998.58 -426 Donations and Other Deductions 335,061.03 151,617.04 183,443.99
Total Other income Deductions 461,286.98 250,374.97 210.912.01
Total Other Income and Deductions 1,701,957.97 879,582.27 822,375.70
interest Charges427Interest-Long term Debt 8,711,898.00 8,711,898.00428AmortizationofdebtDiscount&Expense 302,592.00 305,438.43 (2,848.43)430 interest on Debt to Affiliates 3,098,445.32 1,156,007.12 1,942,438.20431001OtherinterestExpense-431009 interest on Short Term Debt 46.252.19 370,575.83 (324,323.64)432 Allow for Borrowed Funds Used During Const -Cr (320,98078)(408,066.33)87,085.55
Total interest Charges 11,838,206 73 10,135,853.05 1,702.353.68
Net income 21,191,74865 17,385,371.87 3,806,376.78
Retained Eamings
Retained Eamings (Beg of Period)
216 UnappropnatedRetained Eamings 159.205,887 18 158,542,596.82 663,290.36433BalanceTransferredfromincome21.191,748 65 17,385,371.67 3,806,376.78434MiscCredits-RetainedEamings
437 Dividends on Preferred Stock
438 Dividends Declared -Common (12,000.00000)(11,750.000.00)(250,000.00)439 Adjustments to Retained Eamings
Retained Eamings (End of Period}168.397.635.83 164,î77,968.69_Äit9 667 14
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