Citing lower wholesale gas prices in 2007, Boise, ID-based Intermountain Gas told the Idaho Public Utilities Commission (PUC) it can lower its retail gas utility rates for the second consecutive year. Intermountain has proposed an 8.1% cut. The PUC has asked for comments from stakeholders and the general public by Sept. 18.
The utility’s annual purchased gas cost adjustment (PGA) turned up another year in which wholesale costs have been running lower than had been anticipated when the last gas cost rates were set a year earlier. Base rates will be unchanged but the gas cost surcharge, which is adjusted annually on Oct. 1, will be lowered.
“Factors typically beyond the company’s control impact the PGA,” the Idaho PUC said. “Natural disasters — such as the Gulf of Mexico hurricanes two years ago — severe winter weather or decreased production from drilling, can impact supply and, hence, wholesale gas prices. Since Intermountain Gas does not drill its own wells, it is wholly dependent on the wholesale gas market.”
This year’s decrease follows a 4% reduction in the PGA surcharge a year ago. In 2005 the surcharge was raised 27% in the wake of Hurricane Katrina. Intermountain has not had a change in the base rates for its 280,000 gas utility customers in southern Idaho since 1985.
If approved by the PUC, the decrease would lower bills by about $6/month.
To hedge against price volatility, Intermountain buys gas during the summer and stores it for winter use when wholesale prices are higher. “As a financial hedge, the utility buys on the forward market when it believes prices are reasonable and may trend upward if purchased later.”
Whether the PGA is an increase or a decrease, it does not impact company earnings, the PUC said.
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