Case No. INT-G-10-03, Order No. 32051

September 3, 2010

Contact: Gene Fadness (208) 334-0339 office; 890-2712 cell


Intermountain Gas PGA is a decrease for most customers


Rates for most Intermountain Gas Company customers will decline for the fourth time in five years if the Idaho Public Utilities Commission accepts an application by Intermountain Gas Company to reduce the variable portion of its gas rate.


While base rates that cover fixed costs rarely change, there is a yearly adjustment called the Purchased Gas Cost Adjustment (PGA) that most closely aligns rates with the variable portion of gas rates. The portion of rates that varies from year to year includes primarily three components: 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. For this year’s PGA, Intermountain Gas is asking to decrease its annual revenue by $2.2 million.


If the commission adopts the proposal, rates will decline about 1.6 percent for the 77 percent of Intermountain Gas customers under Schedule RS-2, who use natural gas for both water and space hearing. For an average RS-2 customer, that is a reduction of about 90 cents per month.


Customers who use natural gas under Schedule RS-1 for space heating only would see about a 0.2 percent increase or 9 cents a month for an average customer.


The new rate is proposed to be effective Oct. 1.


RS-2 customers would get a reduction under the company’s application because the growth in that customer class more than paid the cost of serving that class. Since RS-2 customers overpaid the amount it requires to serve them, the company proposes a slight decrease in rates. On the other hand, lack of growth in the RS-1 class resulted in the cost of serving that class not being met. Natural gas and electric utilities typically determine the rate each customer class pays based on the cost required to serve that class. Basing rates as closely as possible to cost of service eliminates one class of customers subsidizing another class of customers. Commission staff or the commission may recommend a different allocation of how the $2.2 million decrease in revenue should be applied to customers.


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


The commission is taking comments on the company’s proposal through Sept. 22. Comments are accepted via e-mail by accessing the commission’s homepage at and clicking on "Comments & Questions About a Case." Fill in the case number (INT-G-10-03) 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 other documents related to this case, is available on the commission’s Web site at Click on “File Room” and then on “Gas Cases” and scroll down to the above case number.