Parties who want to intervene in Intermountain Gas’s August 12 application (Case No. INT-G-16-02) to increase base rates by about $10.2 million (4.04 percent) have until September 23 to file petitions with the Idaho Public Utilities Commission (PUC), the regulators announced this week..
There are two primary components of the overall rate paid by Intermountain Gas customers. About half the rate is the base rate, which has not been adjusted since 1985.
The other half is the variable portion of rates, or Purchased Gas Cost Adjustment (PGA), which is fine-tuned up or down on October 1 of every year to account for continually changing market prices for natural gas and transportation. Intermountain Gas has a separate application (Case No. INT-G-16-03) before the commission to reduce the PGA by an average 7.1 percent.
If the full base rate request were granted, a residential customer who uses the company’s average of 747 therms per year and uses natural gas for space and water heating, would experience an increase of about $2.31 per month. A residential customer who uses natural gas only for space heating would see an increase of about $1.16 per month. Commercial customers’ monthly increase would be about $12.16. These numbers do not include the reduction in variable rates that would occur if the company’s PGA application were granted.
Intermountain Gas, which serves about 334,650 customers in 75 communities across southern Idaho, says the base rate increase is needed because of increased operating costs, the need to replace customer service information and technology platforms, and increased costs related to pipeline safety regulations and compliance.
Since its last rate case in 1985, the number of Intermountain Gas residential customers has increased from 85,400 to more than 300,000. In the same period, the number of commercial customers has increased from 13,300 to nearly 32,000. While more customers increase sales revenue, they also require more investment in non-revenue generating infrastructure such as pipeline expansion and replacement and customer care systems and information technology, Intermountain Gas claims.
The commission’s staff of auditors, engineers, and attorneys are in the midst of a six-month investigation of Intermountain’s application. The commission, by state law, cannot accept or deny the requested increase without first considering the evidence. State law requires that regulated utilities be allowed to recover their prudently incurred expenses and earn a reasonable rate of return, which is also established by the commission. I
Intermountain Gas is requesting a 9.9 percent return on equity and an overall rate of return of 7.42 percent. The burden of proof is on the utility to demonstrate that its additional capital investment is necessary to serve customers and if those expenses are prudently incurred. Commission decisions can be appealed to the Idaho Supreme Court by either the utility or customer groups.