Case No. INT-G-07-03, Order No. 30443

September 28, 2007

Contact: Gene Fadness (208) 334-0339, 890-2712




Intermountain Gas rates go down Monday


Rates for customers of Intermountain Gas Company will go down about 8 percent effective Monday.


Downward pressure on natural gas prices and the company’s effective hedging practices led to a second consecutive reduction in the company’s annual Purchased Gas Cost Adjustment (PGA), which was approved by the Idaho Public Utilities Commission this week.


Residential customers using natural gas for both space and water heating should notice about a $6 reduction in monthly bills and customers using natural gas for just space heating will have an average $4 monthly reduction. Commercial customers will experience an average $29 per month reduction. Industrial customers who use Intermountain’s delivery service, but do not buy natural gas from the company, will see about a 9.4 percent increase in delivery costs.


Each year, Intermountain Gas rates are adjusted through a Purchased Gas Cost Adjustment (PGA) mechanism. The adjustment does not change the base rates paid by customers, but does impact the size of a surcharge that is adjusted annually to adapt to the always changing costs of buying gas from suppliers and related transportation and storage expenses. The PGA adjustment takes place yearly, while a rate case, to adjust base rates, occurs less frequently. Intermountain Gas, which serves about 280,000 customers in its southern Idaho territory, has not had a change to its base rate since 1985.


The commission praised the company for taking advantage of its storage options and making favorable advance gas purchases to protect customers against the volatility of wholesale gas markets. Commission staff said the company’s ability to lock in prices with forward market purchases saved customers nearly $1.5 million in the coming year. Further, “Intermountain’s substantial storage capacity has allowed it to take advantage of lower prices when they have occurred, and makes it less dependent on spot market purchases during the volatile winter months,” commission staff said.


Customers also benefited from a settlement of a rate case between the Federal Energy Regulatory Commission and the Northwest Pipeline Corporation, which transports much of Intermountain’s gas supply to Idaho. The benefit received by customers in that settlement is about $970,000. Another case between FERC and the Gas Northwest Transmission Corporation is pending before FERC. If FERC approves an increase that is less than that proposed by the transmission corporation, the PUC reserves the right to reopen this case and re-evaluate the PGA for possible further reductions.


But on another transmission front, costs increased for Intermountain Gas. Capacity costs have increased on several Canadian pipelines and there is a tightening of the exchange rates between U.S. and Canadian currencies. In this PGA, Intermountain also included costs to secure additional liquid storage from Northwest Pipeline’s Plymouth, Wash. liquid natural gas facility.


Whether the yearly PGA is an increase or a decrease, it does not impact company earnings. Similar to the electric utilities’ annual Power Cost Adjustment (PCA) process, an increase or decrease in the yearly PGA goes directly to wholesale suppliers in the event of an increase or to customers in the event of a decrease. Money collected through the PGA cannot go to salaries, equipment or other needs, but must go directly to paying for gas supply, transportation and storage. When the cost of purchasing gas is higher than the amount customers pay in the current surcharge, the surcharge is increased. When gas supply purchases are less than that covered in the surcharge, the reduction goes directly to customers.


The company has said it will come before the commission again before the winter heating season if the company’s forecasted forward prices are significantly less than projected.


A full text of the commission’s order, along with the company’s application and other documents, 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-07-03.


Interested parties may petition the commission for reconsideration by no later than Oct. 17. 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.