Reflecting continued depressed retail demand and lower wholesale natural gas costs, the Idaho Public Utilities Commission (PUC) on Wednesday lowered further the retail rates of Boise-based Intermountain Power Co. The utility revenue requirement was dropped by $2.2 million and retail rates were cut slightly, effective last Friday.

The PUC's action was in response to a filing from Intermountain in September based on its purchased gas cost adjustment (PGA) mechanism that is adjusted up or down annually at this time of the year (see Daily GP, Sept. 8).

In its filing, Intermountain said it was reflecting an overall decrease in the commodity, transportation and storage charges, cumulatively adding up to the latest annual PGA decrease, which will be an average savings of 90 cents/month for residential customers and about 18 cents each month for business customers. Larger customers are looking at an increase, mainly because of increased costs for transportation (they buy their own supplies).

The PUC cited declining demand for gas, ample storage and lower-than-normal wholesale prices. "This is the fourth time in five years that Intermountain's annual PGA has resulted in a decrease for most customers," a PUC spokesperson said.

Idaho regulators differentiated the PGA covering the cost of the commodity and the base rates covering everything else. "Base rates cover fixed costs that rarely change," said the spokesperson, noting that the PGA includes variable costs and the mechanism is designed to more closely align retain rates with the variable portion of natural gas retail charges.

PGAs cover three basic components -- all variable -- cost of wholesale gas supplies, gas pipeline transportation costs, and gas storage costs.

As of last Friday, Intermountain's PGA portion of its gas rates dropped from 49.6 cents/therm to 49.2 cents/th. The 49.2 cents/therm represents slightly more than half of the total customer rate, the PUC spokesperson said. "For customers using natural gas for both space and water heating, the new total rate is 76.2 cents/therm in winter (December-March) and 79.6 cents/therm in the rest of the year (April-November)." Heating-only customers pay higher rates -- 83.2 cents/th erm and 94.5 cents/therm in the two respective periods.

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