Idaho Public Utilities Commission

Case No. INT-G-11-01, Order No. 32372

September 30, 2011

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

Annual PGA is a decrease for Intermountain Gas customers

Natural gas rates for customers of Intermountain Gas Company are declining an average 5.3 percent effective Oct. 1, the Idaho Public Utilities Commission announced today.

Low demand growth due to lingering economic conditions and increases in natural gas supply are the primary reasons the company’s weighted average cost of gas continues to decline. Each year, the variable portion of Intermountain’s natural gas rates, the Purchases Gas Cost Adjustment (PGA) is adjusted up or down to account for the always changing costs of gas supply and transportation.

This year the PGA portion of rates decreases from 49.2 cents per therm to 45.3 cents, resulting in about an average $2.17 per month reduction for residential customers.

There are two major components to natural gas rates: a base rate and the PGA. Base rates cover fixed costs that rarely change. The PGA is designed to more closely align actual rates with the variable portion of gas rates. The variable rates included in the PGA include: 1) the cost of purchased gas from suppliers, which is largely dependent on wholesale market prices; 2) the cost to transport natural gas and 3) the cost to store it. The PGA portion of rates accounts for slightly more than half of the total customer rate. For example, the total rate for residential customers using natural gas for both space and water heating is 76.1 cents per therm from April through November and 72.8 cents in December through March. About 45 cents of that total is the variable portion of rates while the remainder covers fixed costs.

The annual PGA does not impact company earnings, whether the PGA is an increase or decrease. The amount collected in the PGA can be used only to meet gas supply, transportation, storage and other related expenses and cannot go to increase company earnings.

A full text of the commission’s order, along with other documents related to this case, is available on the commission’s Web site at www.puc.idaho.gov. Click on “File Room” and then on “Open Gas Cases” and scroll down to Case Number INT-G-11-01.