20170320Petition for Funding.pdf

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CHAD M. SToKES [e-mail]
March 17,2017
VIA FEDERAL EXPRESS
Diane Hanian
Commission Secretary
Idaho Public Utilities Commission
472 W. Washington Street
Boise,ID 83702
Petition for Intervenor Funding of Northwest Industrial Gas Users
Case No. INT-G-16-02
Dear Ms. Hanian:
Enclosed for filing with the Commission please find an original and seven copies of the
Petition for Intervenor Funding of the Northwest Industrial Gas Users.
Please let me know if you have any questions. Thank you.
V yours,
Chad M. Stokes
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Enclosures
cc: Service List via E-Mail
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Suite 2000, I 001 SW Fifth Avenue, Portland, Oregon 97204-1 I 36 . Phone: [phone] r Fax: [phone] n www.cablehuston.com
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Chad M. Stokes (OSB No. 004007)
Tommy A. Brooks (OSB No. 076071)
Cable Huston LLP
1001 SW Fifth Ave., Suite 2000
Portland, OR 97204-1 136
Telephone: [phone]
Facsimile: [phone]
cstokes@cablehuston. com
tbrooks@cablehuston. com
Michael C. Creamer (ISB No. 4030)
Givens Pursley LLP
601 W. Bannock St.
Boise,ID 83702
Telephone: [phone]
Facsimile: (208) -388-l 300
mcc@ sivenspursley. com
Attorneys for Northwest Industrial Gas Users
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF
INTERMOUNTAIN GAS COMPANY
FOR THE AUTHORITY TO
CHANGE ITS RATES AND
CHARGES FOR NATURAL GAS
SERVICE TO NATURAL GAS
CUSTOMERS IN THE STATE OF
IDAHO
CASE NO.INT-G.I6-02
PETITION FOR INTERVENOR
FUNDING OF NORTHWEST
INDUSTRIAL GAS USERS
COMES NOW, the Northwest Industrial Gas Users ('NWIGU) pursuant to Idaho Code 61-6174.
and Rules l6l-165 of the Idaho Public Utility Commission's ("Commission") Rules of
Procedure with the following Petition for intervenor funding. NWIGU is an intervenor in this
case pursuant to Order 33611dated September 30,2016. This Petition is timely pursuant to the
Commission's instructions at the technical hearing to submit such petitions by March 20,2017.
PETITION FOR INTERVENOR FUNDING OF NORTHWEST INDUSTRIAL GAS USERS Page I
I.This Case Qualifies for Intervenor Funding under Idaho Code 6l-617A and Rule
31.01.01.161
Intervenors may apply for intervenor funding in any case involving regulated
utilities with gross Idaho intrastate annual revenues exceeding three million five
hundred thousand dollars ($3,500,000). Idaho Code 6l-6lTAandRule 31.01.01.161.
Intermountain Gas Company ("Intermountain" or the "Company") is a regulated natural gas
public utility with gross Idaho intrastate annual revenues exceeding three million five hundred
thousand dollars ($3,5 00,000.00).
II.NWIGU Meets the Commission's Standards for Granting Intervenor Funding
Under Rule 31.01 .01.162
Pursuant to Rule l62,the Form and Contents of Petition for Intervenor Funding,
NWIGU submits the following information demonstrating qualification for intervenor
tunding.
1. Itemized List of Expenses.
Consistent with Rule 162.01of the Commission's Rules of Procedure, an itemized list of
expert witness fees incurred by NWIGU in this proceeding is attached hereto as Exhibit A.
NWIGU is only asking for a portion of the expert witness fees of Mike Gorman, and is capping
its request at $10,000. NWIGU is not asking for any legal fees, travel expenses or any fees
associated with the testimony and participation of NWIGU's executive director Ed Finklea.
Exhibit A shows a portion of the time spent by Mr. Gorman reviewing the Intermountain case
and researching and drafting opening testimony on Return on Equity ("ROE") and revenue
requirement issues. NWIGU is not seeking any fees for Mr. Gorman associated with rate spread
or rate design issues.
PETITION FOR INTERVENOR FUNDING OF NORTHWEST INDUSTRIAL GAS USERS Page2
2. Statement of Proposed Findings.
The proposed findings and recommendation of NWIGU are as follows:
Based on NWIGU witness Mr. Gorman's detailed analysis of several aspects of the
operations of Intermountain, the Commission finds that the Company's revenue
requirement is overstated by at least $4,000,000. A summary of NWIGU's proposed
adjustments are as follows:
o
NWIGU's Adjustments to Intermountain's
Proposed Revenue Requirement
Catesorv of Adiustment
Amount of Reduction
(000)
Requested Increase $10,166
Adjustments:
1. Rate of Return ("ROE")
2. Other Revenues
3 Affiliate Costs
4. Incentive Compensation
5. Bonus Depreciation
6. Total Reduction
($1,689)
(206)
(1,381)
(704)
(.228\
($4"208)
7. Adjusted Increase $s.9s8
a The Commission finds that Mr. Gorman's recommended ROE of between 9.2 and9.4
percent is appropriate, and based on its most recent actual capital structure, the
Company's corrmon equity ratio and debt ratio should be set at 48.0Yo xfi 52.0oh,
respectively.
PETITION FOR INTERVENOR FUNDING OF NORTHWEST INDUSTRIAL GAS USERS Page 3
a The Commission adopts the Company's rate spread which is based on a current cost of
service study. Further, the Commission approves the Company's rate design proposal for
T-4 customers that implements a demand charge of $0.30 per therm to more accurately
reflect costs and to reduce the intra-class subsidies that exist today.
The Commission approves NWIGU's Petition for Intervenor funding.o
3. Statement of Showing Costs.
The costs shown on Exhibit A are reasonable in amount. This was the first Intermountain
case in more than 30 years and required a significant effort from all the parties. NWIGU
arnlyzed the initial filing, reviewed and submitted discovery requests and responses, filed direct
and rebuttal testimony and participated in the technical hearing. The costs NWIGU is seeking
recovery of relate solely to a portion of the cost of NWIGU expert Mr. Gorman associated with
ROE, capital structure and revenue requirement issues that benefit all customers of
Intermountain. NWIGU is not seeking recovery of any witness or attorney travel time, is not
seeking recovery of any attorney time billed, and is not seeking recovery of any hours of
NWIGU's executive director, Ed Finklea. NWIGU is also not seeking any recovery for any
work done by Mr. Gorman on rate spread and rate design issues-including work performed on
NWIGU's rebuttal testimony. NWIGU is capping it request to $10,000.00 for Mr. Gorman's
work in this proceeding on ROE and revenue requirement issues.
4. Explanation of Cost Statement.
NWIGU is a 501(c)(4) organization. NWIGU's Idaho members who are customers of
Intermountain made voluntary contributions to support NWIGU's participation in this
proceeding. Because this was the first Intermountain case in more than 30 years, and there was
no settlement of any issue, the case was fully litigated with 3 days of technical hearings. This
PETITION FOR INTERVENOR FUNDING OF NORTHWEST INDUSTRIAL GAS USERS Page 4
required significant effort from NWIGU, including reviewing and conducting discovery and
filing technical direct and rebuttal testimony. The costs for NWIGU to meaningfully participate
in this proceeding exceeded NWIGU's assessments to its impacted members.
5. Statement of Difference.
There are material and substantial differences in the positions of NWIGU and the
Commission Staff. While both Staff and NWIGU submitted testimony on ROE that
recommended a similar range, the analysis and supporting testimony was materially different.
Mr. Gorman developed his recommended ROE by researching, developing and analyzing: (a) a
gas proxy group; (b) a discounted cash flow model; (c) a sustainable growth discounted cash
flow model; (d) a multistage growth discounted cash flow model; (e) a risk premium model; and
(f) a capital asset pricing model. NWIGU also recommended a change in the capital structure
(48 percent equity and 52 percent debt) of the Company that was more favorable to customers,
while still fair to the Company. This differed from Staff s position which was to adopt the 50/50
capital structure proposed by the Company. NWIGU also sponsored testimony on bonus
depreciation, other revenues, affiliate costs, incentive compensation-all of which was different
from the testimony sponsored by Staff. NWIGU also disagreed with Staff on how to address
rate spread and design. Staff argued that rates should be set based on a cost study performed
more than 30 years ago because Staff believed a load study was not performed. NWIGU
believes and argued that the Company's cost study was accurate and based on the best available
data and reflects the current costs to serve customers. Staff supported the implementation of a
demand charge for industrial customers that more accurately captures the cost to serve
customers, but at a lower level than proposed by the Company ($0.20 vs $0.30). NWIGU
PETITION FOR INTERVENOR FLNDING OF NORTHWEST INDUSTRIAL GAS USERS Page 5
disagreed with Staff and supported the $0.30 per therm demand charge proposed by the
Company as it is based on the cost study in the record.
6 Statement of Recommendation.
NWIGU's statement of recommendations impacts all customers of Intermountain as well
as the public interest. One of NWIGU's goals in this proceeding was to ensure that the revenue
requirement and resulting rates proposed by Intermountain was fair, just and reasonable. To that
end, NWIGU proposed more than a $4 million dollar reduction in the revenue requirement,
which benefits all customers. NWIGU also advocated for sending proper price signals to
customers, which is important since rates have not be adjusted for more than 30 yeilrs. In
particular, NWIGU is recommending that the Commission:
o Set the Company's ROE between 9.2 arrd 9.4 percent as it reflects the current market
cost of equity as provided in Mr. Gorman's direct testimony.
o Set the capital structure at 48 percent equity and 52 percent debt as provided in Mr.
Gorman's direct testimony.
o Reduce the revenue requirement with Mr. Gorman's proposed adjustments (a) other
Revenues (206); (b) Affiliate Costs (1,381); (c) Incentive Compensation (704); (d)
Bonus Depreciatio n (228).
. Spread any increase that the Commission determines to be fair, just and reasonable
based on the Intermountain's cost of service study consistent with the Company's
proposal.
o Adopt Intermountain's proposal to implement a demand charge for transportation
customers in the amount of $0.30 per therm based on a customer's maximum daily
firm quantity (MDFQ).
PETITION FOR INTERVENOR FUNDING OF NORTHWEST INDUSTRIAL GAS USERS Page 6
. Approve this request for intervenor funding.
7. Statement Showing Class of Customer.
NWIGU members are industrial firm sales and transportation customers of Intermountain.
Wherefore, NWIGU respectfully request the Commission grant this petition for $10,000 in
intervenor funding.
Dated in Portland, Oregon, this 17tr day of March2017.
Respectfully submitted,
Chad M. Stokes, OSB No. 004007
Tommy A. Brooks, OSB No. 076071
Cable Huston LLP
1001 SW Fifth Ave., Suite 2000
Portland, OR 97204-1 136
Telephone: [phone]
Facsimile: [phone]E-Mail: [e-mail]
[e-mail]
Of Attorneys for the
Northwest Industrial Gas Users
PETITION FOR INTERVENOR FTINDING OF NORTHWEST INDUSTRIAL GAS USERS Page 7
Exhibit A
Cost Statement of Northwest Industrial Gas Users
Work performed by Mr. Gorman on behalf of NWIGU that benelited all customer classes.
Task
Review Company filing
Review discovery and assist with the
development of discovery
Research and develop testimony on
Return on Equity and Capital Structure.
Research and develop testimony on rate spread and design
Research and develop testimony on other revenues,
affrliate costs, incentive compensation, and
bonus depreciation.
Review other parties testimony and develop rebuttal testimony
Prepare for hearing
Attend rate hearing (50 percent)
30
25
Hours
l0* *
l0* *
N/A**
N/A**
10
4**
Total Hours 89
Hourly rate $250.
Total 522,250.
NWIGU is capping its request to $10,000.
**NWIGU is not asking for any of Mr. Gorman's fees associated with rate spread or rate
design issues. NWIGU is also not asking for any legal fees, travel expenses or any fees
associated with the testimony and participation of NWIGU's executive director Ed Finklea.
PETITION FOR INTERVENOR FUNDING OF NORTHWEST TNDUSTRIAL GAS USERS Page 8
CERTIFICATE OF SERVICE
I CERTIFY that I have on this March 17,2017, I served the foregoing Petition for Intervenor
Funding of Northwest Industrial Gas Users upon all parties of record in this proceeding via
electronic mail pursuant to the Amended Notice of Parties.
Peter J. Richardson
Gregory M. Adams
Richardson Adams, PLLC
515 N 27th Street
Boise, ID 83702
peter@ richardsonadams. com
gre [e-mail]
Ronald L. Williams
Williams Bradbury, P.C.
1015 W. Hays Street
Boise, ID 83702
ron@williamsbradbury. com
Benjamin Otto
Idaho Conservation League
710 N 6th Street
Boise, ID 83702
botto @ idahoconservation. org
Michael C. Creamer
Givens Pursley
mcc@ givenspursley. com
Michael P. McGrath
Director, Regulatory Affairs
Intermountain Gas Company
P O Box 7608
Boise,ID 83707
Mike. mc grather@ intereas. com
Scott Dale Blickenstaff
Amalgamated Sugar Co LLC
l95l S Saturn Way Ste 100
Boise, ID 83702
sblickenstaff@ amal sugar. com
F. Diego Rivas
NW Energy Coalition
I l0l 8th Avenue
Helena, MT 59601
diego@nwenerg),.org
Andrew J. Unsicker
Lanny L. Zieman
Natalie A. Cepak
Thomas A. Jernigan
Ebony M. Payton
AFLOA/JA-ULFSC
139 Barnes Drive, Suite 1
Tyndall, AFB FL 32403
Andrew. unsicker@us. af. mi I
Lanny.zieman. I @us.af.mkil
Natalie. cepak.2 @us. af.mi I
Brad M. Purdy
2019 N 17th Street
Boise, ID 93702
com
Thomas j erni gan. 3 @us. af. mil
Ebony.pavton. ctr@ us. af. mi I
PETITION FOR INTERVENOR FLINDING OF NORTHWEST INDUSTRIAL GAS USERS CERTIFICATE OFSERVICE Page I
Ken Miller
Snake River Alliance
P.O. Box l73l
Boise,ID 83701
kmiller@ snakeriveralliance. or g
Karl Klein
Sean Costello
Idaho Public Utilities Commission
PO Box 83720
Boise, ID 83720-0074
[e-mail]. gov
Sean.costello@Fuc. idaho. gov
Dated in Portland, Oregon, this 17ft day 2017.
M. Stokes, OSB No. 004007
Tommy A. Brooks, OSB No. 076071
Cable Huston LLP
1001 SW Fifth Ave., Suite 2000
Portland, OR 97204-1 1 36
Telephone: [phone]
Facsimile: [phone]E-Mail: [e-mail]
tbrooks@cablehuston. com
Of Attorneys for the
Northwest Industrial Gas Users
PETITION FOR INTERVENOR FUNDING OF NORTHWEST INDUSTRIAL GAS USERS CERTIFICATE OFSERVICE Page2