Idaho Public Utilities Commission

Case No. INT-G-09-02, Order No. 30913

September 29, 2009

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



Intermountain Gas customers will start paying less Oct. 1


The Idaho Public Utilities Commission today approved a request by Intermountain Gas Company to reduce the variable portion of its gas rates by about 22.2 percent for residential customers and 21.6 percent for commercial customers.


Effective Thursday, residential rates for customers who use natural gas for both space and water heating, will decline from $1.05 to 80.9 cents per therm from April to November and from $1.02 to 77.5 cents from December through March. For a customer who uses natural gas for both space and water heating, the average monthly reduction is about $16.23 per month. For residential customers who use natural gas for space heating only, the reduction will be about $11.27 a month. For commercial customers, the average monthly reduction is $69.21.


This is the third reduction in four years of Intermountain’s annual Purchased Gas Cost Adjustment, or PGA. Every year on Oct. 1, the PGA portion of Intermountain Gas rates are adjusted either up or down depending largely on the price of natural gas on the wholesale gas market. Increases or decreases in the PGA do not affect the company’s earnings.


“A current imbalance exists between supply and demand for natural gas, which has driven down gas prices,” the commission said. “In addition, Intermountain Gas utilizes dynamic hedging and effectively manages its natural gas storage.”


In addition to customers benefitting from lower wholesale market prices, Intermountain stores significant amounts of natural gas procured during the summer season for use during the winter when market prices are normally higher. Also, in an effort to further stabilize prices paid by customers during the winter, Intermountain has entered into various hedging agreements to lock in the price for significant portions of its underground storage.


Currently, residential customers who use natural gas for both space and water heating pay $1.05 per therm ($1.02 during winter months). About 67.5 cents of that is based on the always variable weighted average cost of gas (WACOG). The rest of the rate is based on fixed costs such as capital investment and operations and maintenance. The fixed portion of the rate changes only after a rate case, while the variable WACOG is adjusted at least once annually through the PGA process. With the Oct. 1 decrease, the WACOG decreases from 67.5 cents per therm to 49.6 cents per therm.


Intermountain’s total PGA includes a combination of both increases and decreases to the cost of its gas supply and transportation including: 1)an increase in costs billed to Intermountain due to higher prices charged by Northwest Pipeline, which was offset by a small decline in the amount of gas transported on the pipeline; 2) an increase in costs from Intermountain’s Canadian pipeline suppliers, 3) a decrease in the company’s projected storage contract costs and 4) a reduction in firm transportation and storage costs due to Intermountain’s management of its storage and firm capacity rights on pipeline systems.


Intermountain Gas serves about 305,000 customers across southern Idaho.


A full text of the commission’s order, along with supporting documents from Intermountain Gas, is available on the commission’s Web site at Click on the gas icon and then on “Open Gas Cases” and scroll down to Case No. INT-G-09-02.