20040510_835.pdf

DECISION MEMORANDUM
TO:CO MMISSI 0 NER KJELLAND ER
COMMISSIONER HANSEN
COMMISSIONER SMITH
COMMISSION SECRETARY
COMMISSION STAFF
LEGAL
FROM:LISA NORDSTROM
DATE:MAY 7, 2004
RE:IN THE MATTER OF THE APPLICATION OF INTERMOUNTAIN GAS
COMPANY FOR AUTHORITY TO INCREASE ITS PURCHASED GAS
COST ADJUSTMENT (PGA) RATE. CASE NO. INT-04-
On May 5, 2004, mtennountain Gas Company filed its annual Purchased Gas Cost
Adjustment (PGA) Application with the Commission for authority to place into effect on July 1
2004 new rate schedules that will increase its annualized revenues by $22.1 million. If its
Application is approved, mtennountain states that customer rates will increase on average by
approximately 10%. Because of changes in Intennountain s gas-related costs, mtennountain
states that its earnings will not be affected as a result of the proposed decrease in prices and
revenues.
THE APPLICATION
With its Application, mtennountain Gas seeks to pass through to each of its customer
classes a change in gas-related costs resulting from: 1) changes in Intennountain s finn
transportation and storage costs resulting from Intennountain s management of its storage and
finn capacity rights on pipeline systems, 2) an increase in Intennountain s weighted average cost
of gas (W ACOG), 3) an updated customer allocation of gas-related costs pursuant to the
Company s Purchased Gas Cost Adjustment provision, and 4) the inclusion of temporary
surcharges and credits for one year relating to gas and interstate transportation costs from
Intennountain s deferred gas cost account. Application at 3-
According to its customer notice, mtennountain states that residential customers
using natural gas for both space and water heating could experience an average monthly increase
of $6.02 (9.9%). Those residential customers using natural gas for space heating only could
DECISION MEMORANDUM
experience an average monthly increase of $4.08 (8.7%). Moreover, commercial customers
could experience an average monthly increase of$26.19 (10.5%).
mtennountain proposes increasing the W ACOG from the $0.47500 per thenn
currently included in the Company s tariffs to $0.55492 per thenn. The Company states it
believes that current future prices, subject to the laws of supply and demand, are poised to soften.
Although current commodity future prices dictate the use of this $0.55492 per thenn W ACOG
Intennountain states that it is committed to come before the Commission prior to this winter
heating season to amend these proposed prices if forward prices materially deviate from the
$0.55492 per thenn. Id. at 5.
The Company s Application requests approval of other changes to its tariffs
including:
Elimination of temporary surcharges and credits in its July 1 , 2003 prices
that collected or passed back to customers deferred gas cost charges and
benefits;
fixed cost collection adjustment for updated customer class sales
volumes and purchased gas cost allocation pursuant to the Company
approved cost of service methodology;
A per thenn credit for $2.4 million in finn capacity release benefits;
A per thenn surcharge for $2.7 million in interstate pipeline capacity costs
and true-up of expense issues previously ruled on by the Commission; and
A per thenn credit for $1.1 million in Account No. 186 deferred gas cost
credits attributable to Intennountain s management of variable gas costs
since July 1 , 2003.
The proposed decrease in the T -1 tariff is fixed cost related and therefore a cents per
thenn decrease was made only to the first two blocks of the tariff. Likewise, the proposed
decrease for the T -2 tariff is fixed cost related so a cents per thenn decrease was only applied to
the T-2 demand charge. !d. at 7.
mtennountain Gas infonned Staff that all of its customers will have received
individual notice (i., bill stuffers) of the proposed rate increase by June 6, 2004. The Company
requests that this matter be handled under Modified Procedure pursuant to Rules 201-204 of the
Commission s Rules of Procedure. !d. at 9.
DECISION MEMORANDUM
STAFF RECOMMENDATION
Staff recommends that this case be processed under Modified Procedure. Although
Staff is certainly willing to conduct workshops, Staff believes they are not essential in this case
because: 1) it is a tracker case where Staff has little discretion to recommend disallowance of
prudently incurred purchased gas costs or modify expected future costs, 2) the increase, while
large, is smaller than in years past, and 3) ratepayers may not attend because they are unlikely to
see a noticeable increase until late fall.
COMMISSION DECISION
1. Does the Commission wish to process this case under Modified Procedure?
2. Pursuant to Commission Procedural Rule 125 , does the Commission wish to have
Staff conduct public workshops to dispense information concerning the Company s Application
and receive public comment prior to Staff filing comments in this case?
;GoV *(Lisa ordstrom
M: INTGO402 In
DECISION MEMORANDUM