Idaho Public Utilities Commission

Case No. INT-G-09-02, Order No. 30886

August 28, 2009

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

Commission taking comments on proposed 22 percent gas rate reduction

The Idaho Public Utilities Commission will take comments through Sept. 9 on a proposal by Intermountain Gas Co. to reduce the variable portion of its gas rates by about 22.2 percent for residential customers and 21.6 percent for commercial customers.

If approved by the commission, this will be Intermountain’s third reduction in four years of its annual Purchased Gas Cost Adjustment (PGA). Every year on Oct. 1, Intermountain Gas rates are adjusted either up or down depending largely on the price of natural gas on the wholesale gas market. An abundance of natural gas supply has resulted in the company being able to buy gas at favorable prices.

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. In its current application, Intermountain proposes to reduce its WACOG from 67.5 cents per therm to 49.6 cents per therm.

Under the proposed adjustment, the residential rate for customers who use natural gas for both space and water heating, will decline from $1.05 to 80.9 cents from April to November and from $1.02 to 77.5 cents from December through March.

The PGA portion of rates also includes costs of transportation and storage. Intermountain’s proposed PGA includes the following adjustments in addition to the reduction in the WACOG: 1) an increase in costs billed to Intermountain due to higher prices charged by Northwest Pipeline, which is 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.

If the commission accepts Intermountain’s application, the reduced rates will become effective Oct. 1.

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

Comments are accepted via e-mail by accessing the commission’s homepage at www.puc.idaho.gov and clicking on "Comments & Questions." Fill in the case number (INT-G-09-02) 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 commission’s order, along with supporting documents from Intermountain Gas, is available on the commission’s Web site at www.puc.idaho.gov. Click on the gas icon and then on “Open Gas Cases” and scroll down to the above case number.