20200611Comments.pdf

Beniamin I. Otto (lSB No. 8292)
710 N 6th Street
Boise,ID 83701
Ph: [phone]x12
Fax [phone]
botto@idahoconservation. org
Attorney for the Idaho Conservation League
IN THE MATTER OF THE
APPLICATION OF INTERMOI'NTAIN
GAS COMPANY FOR AUTHORITY TO
REVISE ITS GENERAL SERVICE
PROVISIONS RELATED TO THE
INSTALLATION AND EXTENSION OF
NATURAL GAS MAINS AND
SERVICES
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ISSIGN
BEFORE THE IDAHO PI.'BLIC UTILITIES COMMISSION
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CASE NO. INT.G-2o-OI
IDAHO CONSERVATION LEAGUE
COMMENT
The Idaho Conservation League (lCL) submits the following comments regarding
Intermountain Gas Company's request to adjust the Line Extension policy. lntermountain
proposes to increase the "allowable investment" applied to requests for new service, thereby
reducing the costs incurred by the new customer. To the extent this new customer does not cover
the cost of extending service, existing and future customers are forced to subsidize growth
without receiving any commensurate benefit. To avoid subsidization, ICL recommends the
Commission carefully scrutinize the assumptions underlying IMG's request to ensure that new
customers cover the cost of service they incur.
When a new customer requests service from Intermountain, the utility must extend lines
between the existing system and the new location. Because these costs are directly attributable to
a specific customer, cost recovery policy should prioritize direct cost recovery and minimize any
subsidization by others. Intermountain's line extension policy subsidizes new customers by
extending service, without charge, up to the "allowable investment".App, Exhibil 2 at 10.
By not charging the new customer Intermountain causes existing and future customers to cover
this expense. Existing customers must cover the costs of Intermountain extending the service
initially. Because the line extension calculation to assure Intermountain recoups this investment
covers methane consumption over the life of the service lines, future customers will be obligated
ICL'S COMMENT June 11,2020
to the costs incurred by the requesting new customers. To minimize this subsidization by a
specifically identified new cost-causer, ICL recommends the Commission direct Intermountain
to develop a line extension policy that directly assigns all of the costs to the entity requesting
new servlce.
One of our primary concern with the Company's proposal is the method used to calculate
the "allowable investment" likely overstates the methane consumption. By overstating the
methane consumption Intermountain assumes more revenues from the customer to recoup the
investment than are likely to occur. This under-recovery will increase costs for other customers
and should be avoided to the maximum extent possible.
Our review of Intermountain's Residential Energy Consumption Study, included as
Exhibit 3 to the Application, leads us to conclude it overstates likely methane consumption in
two ways. First, the study generally assumes customers will build homes to meet minimum code
levels, install minimally efficient appliances, and does not factor in any improvements or
appliance replacements over time. Meanwhile Intermountain has just completed a Conservation
Potential Assessment that includes assumptions about the turnover rate of appliances and future
efficiency standard development. ICL recommends the Commission direct Intermountain to
incorporate the most recent Conservation Potential Assessment assumptions into the calculation
of methane consumption.
Second, the study creates several model homes all of which assume high levels of
methane consumption. For example, for single story homes the study assumes a full suite of gas
appliances - heater, water heating, dryer, range, fireplace, and a gas grille. For two-story homes,
the study assumes the same full suite but excludes, without explanation, the gas grille. ICL
recommends the Commission direct Intermountain to assess the actual distribution of appliances
in thE service territory rather than assume each gas customer will use a full suite of appliances.
We are also concerned the Company's proposal applies an average "allowable
investment" across the system instead of a known and measurable costs to new customer
applicants. To develop the "allowable investment" Intermountain calculated methane
consumption factors for seven specific locations with six residential building types per location.
See Applicotion, Exhibit.3. Each building type in each location has a unique assumed methane
consumption factor that can be input into the allowable investment calculation. But
Intermountain does not do this, rather they calculate an average consumption factor to apply
ICL'S COMMENT June 11,20202
generally across this system thereby causing unnecessary customer cross-subsidization. ICL
recommends the Commission order Intermountain to develop a line extension policy that is
unique to each location and building type by using the data in Exhibit 3, pages 7 and9.
Finally, ICL is concemed the line extension policy does not include incentives for
customers to design projects to maximizes energy conservation. For example, the policy does not
make clear than by limiting consumption levels the customer could avoid the need for larger,
more expensive service lines. ICL recommends the Commission direct Intermountain to develop
a line extension policy that encourage efficiency use of the system through tiered costs based on
required service sizing.
ln sum, ICL recommends the Commission deny Intermountain's request to update the
line extension policy as proposed because it causes unnecessary subsidization of new customers
by current customers. Instead ICL recommends the Commission direct lntermountain to develop
a line extension policy that directly allocates all costs to the requesting customer. If this requires
making assumption about methane consumption, ICL recommends the Commission direct
Intermountain to use the most recent Conservation Potential Assessment, develop location and
building type specific consumption factors, and include direct encouragement for the customer to
design for conservation initially.
Respectfully submitted this 1lth day of |une 2020,
/s/Beniamin I Otto
Benjamin J. Otto
Idaho Conservation League
JICL'S COMMENT June 11,2020
CERTIFICATE OF SERVICE
I hereby certifr that on this 1lth day of fune 2020I delivered true and correct copies of
the foregoing COMMENTS to the following persons via the method of service noted:
/s/Beniamin I Otto
Electronic Mail Only (See Order No. 34602)
Idaho Public Utilities Commission
Diane Hanian
Commission Secretary
secretary@puc. idaho. gov
Int efin o untain G as C o mp any
Preston N. Carter
Givens Pursley LLP
[e-mail]
kendrah@givenspursley. com
Lori A. Blattner
Director - Regulatory Affairs
Intermountain Gas Company
Lori. [e-mail]
City of Boise
Abigail R. Germaine
Deputy City Attorney, Boise City Attorney's Office
[e-mail]
4ICL'S COMMENT June 11,2020