Case No. INT-G-06-04, Order No. 30121

August 29, 2006

Contact: Gene Fadness (208) 334-0339




Intermountain application reflects stability in natural gas prices


Intermountain Gas Co. bills won’t be going up in the near future, reflecting the stability in wholesale market prices for natural gas.


The Idaho Public Utilities Commission is taking comments through Sept. 20 on the company’s proposal to adjust its Weighted Average Cost of Gas, or WACOG, from 73.2 cents per therm to 72.4 cents, which will result in a $1.6 million decrease – 0.5 percent – in Intermountain’s total net revenue. The stability in wholesale market prices for natural gas is a departure from the volatility of the last two years. Last year, the company received a 27.6 percent increase in its WACOG, due to increased wholesale gas prices. In 2004, the increase was 10 percent.


Changes in the WACOG, while impacting total net revenue, do not increase or decrease company earnings. Money collected from the WACOG goes directly to pay Intermountain’s wholesale gas suppliers. The WACOG, which represents over half the total customer bill, is intended to reflect the costs Intermountain Gas incurs acquiring natural gas to serve its approximate 275,000 southern Idaho customers. A customer who uses natural gas for both space and water heating pays about $1.11 a therm from April through November and $1.07 a therm from December to March. Of that, 73.2 cents is for gas supply. The remainder is for Intermountain Gas’ fixed costs. When fixed costs are adjusted, company earnings either decrease or increase. There has not been an adjustment in Intermountain Gas’ fixed costs for more than 20 years.


Intermountain Gas attributes the stability in rates to a number of factors, including the company’s practice of procuring gas during the traditionally lower-priced summer season and storing it for use in the winter when prices are higher. Intermountain Gas also reports that wholesale natural gas prices have been moderated by increased levels of storage in the national gas supply, the restoration of natural gas production in the Gulf states after being temporarily lost due to Hurricane Katrina, a moderate outlook for the upcoming hurricane season and increases in domestic exploration and production.


Intermountain says it will come before the commission before the winter heating season if wholesale prices materially deviate from the proposed 72.4-cent WACOG.


Those wishing to submit comments must do so by no later than Sept. 20. Comments are accepted via e-mail by accessing the commission’s homepage at and clicking on "Comments & Questions." Fill in the case number (INT-G-06-04) and enter your comments. Comments can also be mailed to P.O. Box 83720, Boise, ID 83720-0074 or faxed to (208) 334-3762.


A full text of the company’s application, along with other documents related to this case, are available on the commission’s Web site. Click on “File Room” and then on “Gas Cases” and scroll down to the above case number.