20081219Reply Comments.pdf

EXECUTIVE OFFICES
INTERMOUNTAIN GAS COMPANY RECE\VEO
555 SOUTH COLE ROAD · P.O. BOX 7608 · BOISE, IDAHO 83707 · [phone] · FAX: [phone] \ \. \ G
1\l6ß nEC \ 9 AM .
December 19, 2008
Ms. Jean Jewell
Idaho Public Utilities Commission
472 W. Washington Street
P.O. Box 83720
Boise, il 83720-0074
RE: Reply Comments
Case No. GNR-U-08-1
Dear Ms. Jewell:
Enclosed for fiing with this Commission are an original and seven (7) copies of Intermountain
Gas Company's Reply Comments in Case No. GNR-U-08-1.
Please acknowledge receipt of this filing by stamping and returing a copy of this Application
cover letter to us.
If you have any questions or require additional information regarding the attached, please contact
me at 377-6168
CC: K. F. Morehouse
E. NBook
S. W. Madison
MPM/sc
ltl!CE=
The Staff of the Idaho Public Utilities has provided a foru, througpl~..Energ)'.!VE:f)
Affordability Workshops, to discuss issues germane to "energy affordability rna~o. -,
Intermountain welcomed the opportnity to review and discuss many iss~ ~~ ,able tcAlf Ii: I
energy affordability during these workshops and, in that regard, does her~ýls..' 6
consideration by the Commission several key issues and Company Res
Intermountain believes are important to the subject of energy affordability.
Managing Intermountain's energy affordability is fundamental in helping to ensure a
quality low cost service to our customers and, in that regard, Intermountain wishes to
share with the Commission some of its basic philosophy regarding energy affordability.
The cornerstone of Intermountain's credit and collection philosophy, and ultimately the
building block of its credit management policies, is that every customer is and must be
accountable for paying their bill in a responsible and timely maner. Intermountain
believes the best utilization of its credit and collection resources is to focus on facilitating
and assisting those customers who intend to pay their bil but who require some
additional assistance and help to do so. Working within the guidelines of the
Commission's rules and regulations governing customer relations, Intermountain
continues to use its available credit and collection resources in a maner that includes
facilitating and accommodating those customers who wish to pay their bil but need
additional assistance to do so. Intermountain is finding, however, that its staff is
increasingly devoting a larger proportion of their time to customers who have no
intention of paying their bill, thereby distracting from our focus in working with
customers that request and require additional bill paying accommodations.
Intermountain contends that the strct application of strong credit and collection rules and
policies when applied in a customary and businesslike maner, are the key ingredients in
resolving unacceptably high levels of credit write-offs. Furher, Intermountain believes
that a key driver of a higher than acceptable level of write-offs are customers who simply
choose not to pay (vs. those that have diffculty paying) for the services they receive. It is
the vast majority of customers who faithfully pay for their services who ultimately lose
and have to pay for those customers who choose not to pay, or have been granted the
privilege of not paying.
Intermountain believes that if discussions and follow-on resolutions can be achieved with
the Staff pertaining to energy affordability matters those discussion should 1) help
Intermountain regain and realign its focus in working with those customers who choose
to pay their bil, but require additional accommodations to do so and, 2) appreciably
mitigate the level of uncollectible accounts thereby lessening the cross-subsidies born by
the remaining bill paying customers.
Staff believes that a LIRAP program would be beneficial for Idaho low-income
utilty customers. Staff recommends that the Commission support legislation to
allow it to consider adoption of such a program.
Company Response -
As stated on page v. of the NARUC Natural Gas Information Tool Kit "Subsidies. for
example, can harm the financial condition of a utilty or raise rates to most consumers,
lead to economic ineffciencies, and encourage subsidized consumers to overuse natural
gas. Experiences with subsidies across a wide array of sectors have shown that they tend
to continue even when conditions change and the need for the subsidies no longer
exists. " If LIRAP legislation were to occur, Intermountain believes that any such
legislation should recognize and acknowledge the need for cross-subsidization from the
remaining other customer classes, by way of higher utilty bils, in order to support, or
subsidize, the lower rates for the newly designed low-income customer class.
Staff encourages all utilties to increase awareness of and funding for nonprofit fuel
funds.
Company Response -
Intermountain Gas Company believes it is meeting its corporate responsibility in this
area. Intermountain currently distributes six (6) separate bil inserts each year which are
relevant to the above. In the past, the Intermountain Industries Foundation has provided
funding each year to both Project Share and Project Warmth. Intermountain has
promoted a bil program whereby customers can pledge dollars on their monthly
statements for the separate fuel funds Project Share, Project Warmth and Keep Kids
Warm, along with administrative support. Intermountain partners with SEICCA each
July to raise awareness and funds for the Project Warmth program. Intermountain
started a partnership with KlZN Radio in 2007 and continued in 2008 to promote the
Keep Kids Warm fund thru an auction held each December. Intermountain provides
media coverage for these funds several times a year, including our most recent Season of
Hope campaign with Channel 7 and Idaho Power, started in December 2007.
Staff recommends that a dialogue be initiated with Idaho's Congressional delegation
regarding increased awareness of LIHEAP's value and the critical need for
additional program funding. Staff also recommends that the utities, Commission
Staff, and other interested parties partner with CAP AI to identify ways in which to
further leverage existing federal LIHEAP funding.
Company Response -
Intermountain Gas Company supports this recommendation and would like to point out
that it has, and wil be, an active participant in supporting the need for increased
LIHEAP funding.
Staff recommends that additional funding for weatherization and energy
conservation education programs be addressed in future rate cases. Staff
recommends that utilties develop energy consetvation education programs targeted
to low-income customers. Staff further recommends that utilties examine their
incentive programs regarding higher effciency appliances, including consideration
of no interest/low interest loans for customers to purchase higher efficiency
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appliances and encourage the Northwest Energy Efficiency Allance to include
multi-family and manufactured homes in the Energy Star Home Program.
Company Response -
Intermountain is presently exploring ideas and programs for low income weatherization
for customers who may not have the means to manage such weatherization on their own.
Intermountain is slated to have a list of potential programs and/or activites by March
2009. Many weatherization measures are low in initial cost and can pay for themselves in
savings on the energy bils in just a few short months. Several ideas and suggestions are
listed on the Intermountain Gas website and most of Intermountain's media commercials
discuss ways to conserve energy and use it wisely. Intermountain has not included
no/low-interest financing in that listing since we had done that in the past, and had
terminated those financing programs for lack of use. But, Intermountain would consider
renewing such a loan program for high-effciency gas appliances.
As part of consumer outreach in the wake of the Fall 2008 price increases,
Intermountain's field personnel in Boise, Nampa, Twin Falls, Hailey, Pocatello, and
Idaho Falls have made over 75 presentations to various groups regarding natural gas
pricing and effciency/conservation measures and practices. The groups have included
HVAC dealer organizations, builder associations, Community Action Agencies, Civic
Groups, Chambers of Commerce, Municipal Offces, and ISU classes.
Staff encourages utilties to actively advocate for adoption and implementation of
energy efficient construction standards, including provisions for single family
rental, multifamily, and manufactured homes.
Company Response -
Intermountain Gas Company has been an Energy Star Partner since 2007. Intermountain
encourages, promotes, and supports high building and energy effcient standards in all
construction. In 2008, Intermountain received the ENERGY STAR for Homes Leadership
in Housing Award presented by the Us. Environmental Protection Agency for
sponsoring more than 250 ENERGY STAR qualifed homes. We support and encourage
minimum ENERGY STAR standards in all residential living units including multi-family.
Staff recommends that utilties and the Commission consider tiered rates for
residential customers within the context of future rate cases.
Company Response -
Intermountain Gas Company believes that tiered rates, as they pertain to higher prices
for each increment of usage, are applicable in helping to avoid, or otherwise delay, the
construction of incremental electric generation but have limited benefits in the natural
gas industry. Tiered rates would also serve to further exacerbate the abilty of low-
income customers to pay their natural gas utilty bil. .
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Staff recommends that utilties offer more flexibilty in negotiating payment
arrangements. Staff further recommends that Staff and utilties further investigate
payment arrangement alternatives.
Company Response -
Intermountain Gas Company believes payment plans should be set in order to repay
arrears in a timely manner and foster on-time payment of future bils. When negotiating
payment arrangements, the Company strives to enter into mutually beneficial plan that
meets the needs of the customer, while examining factors such as recent payment history,
time on service and the amount owed.
Staff recommends more investigation and discussion among all interested parties
regarding how convenience fees can be eliminated or reduced.
Company Response -
Responding to a growing demand for convenience, Intermountain Gas Company has
expanded several locales and methods whereby customers can make monthly natural gas
bil payments. Many of these payment methods are administered by third parties who
assess a convenience fee as part of that particular payment vehicle. These fees are
directly collected by the vendor and Intermountain receives no additional funds as a
result of these payments. Several low cost and no cost payment options remain for
customers that are concerned with the cost of the associated convenience fee.
Staff recommends more investigation and discussion among all interested parties
regarding the circumstances, if any, under which reconnection and interest charges
could be eliminated.
Company Response -
Intermountain Gas Company believes reconnection fees and late interest charges are a
fudamental aspect of the biling process in helping to promote responsible payment
habits. Reconnection fees help recover costs incurred by the utility in order to restore
service. If these fees were eliminated, these reconnection related costs would then need to
be passed on to, or subsidized, by the remaining bil paying customers. Eliminating late
interest charges would encourage late paying customers to forego or delay the timely
payment of their energy bil in lieu of paying other outstanding debts that have higher
fees and consequences. Additionally, biled interest charges help to offset the carng
charges borne by the company. Forgiving these offsets would create the need for fuher
subsidy by the remaining "on-time" bill paying customers.
Staff recommends further discussion of alternatives to existing deposit policies,
including an increase in installment payment plan timelines. Staff also recommends
that one or more of the utilities conduct a study of the effectiveness of collecting
residential deposits.
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Company Response -
Intermountain Gas Company believes that obtaining financial security from at risk
customers is an essential practice in mitigating bad debt losses and in controllng
potential rate increases to all customers. Realizing that an additional cash deposit can
be difcult for struggling customers, Intermountain continues to offer alternative security
solutions, such as a guarantor, where no cash transaction is needed to satisfY the deposit
request. The administrative costs associated with deposits are, by far, outweighed by the
potential bad debt losses that are prevented through the Company's deposit practices.
Deposit polices act in the interest of all ratepayers because these customers are the ones
that ultimately bear the burden of higher rates when bad debt losses are not controlled.
Intermountain's deposit practices were a focal point of a recent credit and collections
audit conducted by the Idaho Public Utilities Commission. The findings of that audit
concluded that Intermountain was not suffciently mitigating potential bad debt with its
current deposit structure and recommended strengthening financial security measures.
Staff recommends that utilties adopt new policies whereby lower risk applicants be
permitted to payoff old bils in installments while receiving new service.
Company Response -
Intermountain Gas Company does not support this recommendation. Risk is inherent
with the existence of a prior outstanding bil by the customer. To further delay payment
would jeopardize both the old debt as well as any new debt created from the
establishment of a new service. Intermountain carries out extensive measures to contact
customers following disconnection of service in attempts to make arrangements on any
outstanding balance. While there are some customers that are surprised by an old
outstanding bil when they apply for new service, the vast majority of potential applicants
with outstanding amounts owed are aware of the past amounts due and have disregarded
numerous communication attempts for requests for payment.
Staff recommends that all energy utilties develop arrearage forgiveness plans.
Company Response -
Intermountain Gas Company is supportive of any effort that can help a customer pay, or
become current, with their energy utilty bil in a responsible fashion. To 'forgive" a
customer's obligation to pay for the energy that they have consumed and benefited from
creates upward price pressure on the remaining customers of the utilty.
Staff recommends that all utilties implement case management programs if they
have not already done so.
Company Response -
Intermountain Gas Company is in full support of case management and empowers all
employees to make decisions that can provide solutions and service for customers having
difculty paying their bil in full. Intermountain continues to expand its case management
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processes and has implemented a program that provides specialized help for customers
with extenuating circumstances. The key to any good case management program is
contingent upon the customer taking the initiative to contact the utilty. Intermountain
relentlessly looks for ways to encourage customers to contact the utilty prior to service
disconnection. The earlier the utilty is contacted by the customer, the more likely it
becomes that a case manager can help the customer in making payment arrangements
and/or securing outside funding options, if necessary.
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