Idaho Public Utilities Commission

Case No. INT-G-12-01, Order No. 32653

October 1, 2012

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

Customers will pay about 7.1 percent less in Intermountain Gas bills

Intermountain Gas Company customers received their sixth consecutive decrease in gas rates effective today due to a decline in the cost of gas the company buys for its customers and increased gas supply.

The decrease will come in two components: a reduction in monthly bills effective today as a result of the lower gas prices and a one-time bill credit in December. Combined, those adjustments result in a decrease of 7.1 percent for the average customer.

The yearly Purchased Gas Cost Adjustment (PGA) projects gas prices for the next 12 months and either surcharges or credits customers the difference between the projection and the actual cost. Sometimes the PGA is adjusted more than once a year if gas prices materially change.

The variable portion of customer rates is based on the Weighted Average Cost of Gas or WACOG, which makes up about half a customer bill. With this application, the WACOG drops from 41.8 cents per therm to about 33.5 cents per therm, as low as it has been since 2002. The WACOG represents about half the total customer bill, which is now about 66.8 cents per therm during the winter months and 70.2 cents from April through November for a customer who uses natural gas for both space and water heating. For that customer, the average bill will decrease by about $1.51 per month. A customer who uses natural gas for just space heating will see a decrease of about 17 cents per month. A commercial customer will see about a $6.46 per month decrease.

In addition to the $6 million price reduction as result of lower gas prices, a one-time credit totaling $11.9 million will be included on customers’ December bill. For residential customers who use natural gas for both space and water heating the one-time credit will be about $29.85. Residential customers who use natural gas for space heating only will receive a credit of about $19.40. The average December credit for commercial customers is about $129.80.

The commission said the credit will help customers during a time of year when natural gas bills are highest. “Instead of embedding the value of the credit in rates throughout the coming year, the single credit method will allow customers more immediate rate relief during a time period when natural gas usage is typically nearing its peak.”

The are several other significant factors in the overall reduction: 1) $3.7 million in benefits generated by release of some pipeline transportation capacity, 2) $4.8 million attributable to the collection of pipeline capacity costs, a true-up of expenses from the 2011 PGA and capacity release credits and 3) a $1.3 million deferred credit balance, which is the difference from the commodity costs Intermountain actually paid for natural gas and the WACOG that was included in rates.

The commission did give the company authority to surcharge customers for Lost and Unaccounted for Gas, which reduced the total credit allowed customers by $2 million.

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