Case No. INT-G-05-2, Order No. 29875

September 30, 2005

Contact: Gene Fadness (208) 334-0339 office; (208) 841-1107 cell




Intermountain Gas allowed to recover expenses


The Idaho Public Utilities Commission today approved an average 27.6 percent increase for Intermountain Gas, allowing the company to recover costs it incurred from buying gas on the wholesale market to serve its customers. The new rate is effective Saturday.


Intermountain Gas stated the $67.6 million revenue increase was needed due to the higher prices it must pay to acquire natural gas for customers. The commission uses a yearly mechanism, called the Purchased Gas Cost Adjustment (PGA) that allows the company to adjust rates to reflect changes in the costs for purchases of gas from the Williams Northwest Pipeline and other suppliers. State statutes require that regulated utilities be allowed to recover costs that are prudently incurred. Part of the commission’s responsibility is to determine if the company used a reasonable approach in purchasing gas for its customers.


The PGA, unlike a general rate case, does not affect company profits. “The company’s earnings are not to be increased from changes in prices and revenues resulting from the annual PGA,” the commission said.  “The PGA mechanism is designed to pass through prudently incurred commodity costs in a timely fashion.”


The commission noted that wholesale natural gas prices have continued to fluctuate dramatically. “The volatile natural gas market has seen forecasts of future costs at record levels, and resulted in increased uncertainty about when and where prices will stabilize.”


The portion of a customer’s bill that reflects costs of gas increases from 55.5 cents per therm to 73.2 cents with today’s order. The total average price per therm for a residential customer, including the base rate and cost of gas is about $1.14 per therm. The company has not filed for a base rate increase since 1985. The commission ordered the company to “promptly seek” a decrease in the PGA portion of rates if commodity prices decrease by 5 percent or more.


The commission’s staff of auditors assured the commission that Intermountain Gas is not over-earning or price-gouging customers. “Staff looks closely at all of the company’s records and assures that the company is making efforts to keep costs down and making prudent decisions,” the commission said. Staff’s next complete audit of the company is planned for spring of 2006.


A portion of Intermountain Gas’ overall increase includes nearly $700,000 the commission ordered held in reserve until the company adopted a more formal risk management policy. “However, this is not the end of the work that must be accomplished regarding risk management,” commissioners said. “The continuing volatility, uncertainty and upward trend of the natural gas market necessitates continued work, development and improvement upon risk management and documentation of company decision making.”


The commission declined a staff recommendation to open a separate case to examine the company’s customer deposit policies, its voluntary charitable contributions to low-income assistance programs and whether the company should implement a weatherization program for low-income customers.


Customer deposits were recently examined in a separate case, the commission said, and there is no indication that the company is violating the commission’s customer relations rules.


Regarding the company’s charitable contributions, the commission said matters relating to low-income assistance and weatherization are beyond the scope of the PGA process. “The commission’s primary duties are to ensure that all charges made, demanded or received by a public utility are just and reasonable, ensure that the public utilities maintain adequate, efficient, just and reasonable service to the public and to ensure that all rules and policies adopted by a public utility affecting or pertaining to its charges or services to the public are just and reasonable.”


Commissioners said there are federal and local low-income and weatherization assistance programs available. Customers interested in those programs can contact the commission’s consumer assistance staff at 1-800-432-0369 for more information on programs in their vicinity.


AARP Idaho and the Community Action Partnership Association of Idaho (CAPAI) filed comments in the case. AARP urged the commission to protect the interests of customers on low and fixed incomes and closely examine the company’s gas procurement process.  CAPAI asked the commission to open a separate case to assess the company’s attempts to address the needs of low-income customers through programs such as home weatherization.


A full text of the commission’s order, along with other documents related to this case, are available on the commission’s Web site at Click on “File Room” and then on “Gas Cases” and scroll down to Case No. INT-G-05-02.


Interested parties may petition the commission for reconsideration by no later than Oct. 21. Petitions for reconsideration must set forth specifically why the petitioner contends that the order is unreasonable, unlawful or erroneous. Petitions should include a statement of the nature and quantity of evidence the petitioner will offer if reconsideration is granted.


Petitions can be delivered to the commission at 472 W. Washington St. in Boise, mailed to P.O. Box 83720, Boise, ID, 83720-0074, or faxed to 208-334-3762.