AARP Comments.pdf

AARP Idaho
3080 Gentry Way, Suite 100
Meridian ID 83642-3599
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Commission Secretary
Idaho Public Utilities Commission
472 W. Washington Street
Boise, ill 83702-5983
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION OF )
INTERMOUNTAIN GAS COMPANY FOR
AUTHORITY TO INCREASE ITS RATES FOR)SERVICE.
CASE NO. INT -02-
COMMENTS OF
AARP IDAHO
Filed: June 26, 2002
AARP Idaho, on behalf of over 143 000 members in the state ofldaho, submits these
comments in response to the Notice of Application, Notice of Modified Procedure and
Notice of Comment Deadline issued in Order No. 29042 on June 3, 2002 in the above-
referenced proceeding. AARP's membership has a vested interest in ensuring that energy
services are readily available for consumption and at prices that are just, reasonable and
affordable. For this reason, public participation in this proceeding is extremely important
and we appreciate this opportunity to present our views regarding this matter.
AARP specifically seeks to comment on Intermountain Gas Company s proposal to over-
collect $8.2 million in rates to mitigate a possible rate increase next year. If the
company s application is approved in its current form, Intermountain states that customer
rates will decrease by an average by 24%. If the over-collection were not permitted
however, customer rates would decrease by an average of 28%. We have reviewed
Intermountain s application and urge the Commission to reject the company s proposal.
In the alternative, should the Commission determine that sufficient evidence is presented
by the company to justify the proposed over-collection, AARP contends that any future
refunds due to customers from the over-collection should be credited with interest. We
also urge the Commission to hold public hearings to allow customers, especially those
who are not expected to receive notices of the company s proposal in their bills until June
, an adequate opportunity to participate in this proceeding before the Commission
reaches a final decision.
According to the comments filed by Commission staff, disallowance of the over-
collection would ensure that all costs and savings associated with the weighted average
cost of gas (W ACOG) are directly passed through to customers when they occur.
Lowering the W ACOG is also consistent with past Purchased Gas Cost Adjustment
practices that establish the W ACOG based on the company s anticipated actual cost of
gas.
Scarcely one month ago, in Order No. 29026, the Commission was faced with a utility
proposal to delay the flow through of a power cost adjustment. That case involved a rate
increase; this, a rate decrease. Still, the principles remain the same. The Commission
voiced "concern for uncertainties the future may hold " including potential volatility in
the western wholesale power markets for electricity. The crystal ball for wholesale gas
prices is no less murky.
Furthermore, as the Commission noted: "the longer power supply cost recovery is
delayed, the greater the risk that the customers taking service when the deferred costs
were incurred will not be the same customers that will later pay for them." In short, a
mismatch between customers who overpay this year and customers who underpay next
year is very likely to result. Finally, as Commission staff correctly notes, an over-
collection will not guarantee overall lower natural gas rates and may not eliminate all
increases that could occur in the future.
Undoubtedly, rising utility rates are having an overwhelming impact on Idaho citizens
especially older persons - many ohyhom are living on low and fixed incomes. National
numbers indicate that although older Americans consume approximately the same
amount of energy as do younger people, they devote a higher percentage of total spending
to residential energy. This may be due to the fact that older Americans spend a greater
proportion of income on home energy costs. Low-income older families, in fact, spend
an average of 16 percent of their income on residential energy. Alarmingly, about one
out of every four low-income older households spends 19 percent or more of their entire
income on home energy bills. Too often, these families are forced to choose between
risking their health and comfort by cutting back on energy expenditures and reducing
spending for other basic necessities.
Thus, we also urge the Commission to adopt Commission staff s recommendation to
order Intermountain Gas Company to continue its efforts to educate consumers about
energy assistance and conservation programs in an ongoing effort to help consumers
reduce their energy needs. According to Commission staff, recent rate hikes have had a
dramatic impact on customers and their ability to pay higher utility bills. Although rates
will decrease as a result of the company s proposal, there will continue to be customers
who cannot pay their bills. Accordingly, AARP strongly recommends that the
Commission also adopt automatic enrollment to effectively increase participation rates in
available low-income energy assistance programs. Funding for energy assistance
programs should also be expanded to meet customer needs. AARP welcomes the
opportunity to work with the Commission to implement automatic enrollment and to
educate our members on the existence of available energy assistance programs.
For the above-stated reasons, AARP urges the Commission to reject Intermountain Gas
Company s proposal to over-collect natural gas rates by $8.2 million, to schedule public
hearings, and to require the company to expand low-income energy assistance efforts to
help customers reduce their energy burdens. We appreciate this opportunity to comment
and trust that the Commission will take these comments into consideration during
deliberations on the merits of Intermountain Gas Company s request.
Respectfully submitted
State Director
~~.
President