Success Stories
Talk does not cook rice. - Confucius
Your company operates in an environment which can be highly competitive or highly regulated, or both. Operating and regulatory requirements vary among state and federal agencies. Consequently you must cope with current markets structures yet remain vigilant of changes over the horizon. The management and support of these issues should add value to your efforts, providing critical insights at crucial times. We have forty years of experience creating successful outcomes for regulated entities. Here are a few examples of our experience creating innovative solutions to your critical issues.
Return on Equity / Litigation Support at U.S. Court of Appeals for the DC Circuit
ISSUES
-
A FERC Order adopted the proxy group proposed by Commission Staff finding the pipeline’s proxy group to be inappropriate.
-
The selection of Staff proxy group produced a significant deficiency in return on equity and total cost of service.
-
In a case of importance to the entire natural gas pipeline industry, the pipeline appealed the Commission’s order.
SOLUTIONS
-
Participated in the original proceeding providing counsel with additional work papers and studies as necessary to develop the position.
-
Worked with counsel to prepare the appeal and arguments to be presented before the court.
RESOLUTION
-
The Court remanded the matter to the FERC and the pipeline negotiated a satisfactory settlement prior to the Commission action on the remand.
-
The Court’s remand of the FERC Order coincided with the issuance of a new FERC policy statement on the composition of pipeline proxy groups.
Shale Basin Infrastructure / NGPA §311 Project Development
ISSUES
•This midstream company was developing infrastructure to evacuate shale natural gas production, initially negotiating agreements with Anchor shippers to justify the project.
•The desire was to preserve the intrastate status of the entity, yet provide connectivity to the interstate markets and capitalize on higher value services.
SOLUTIONS
•Developed a pipeline economic model to simultaneously solve for the regulatory, financial and project solutions.
•Regularly modeled project economics with the project team to ensure that the fluctuating project costs and pricing continued to meet commercial targets.
•Supported the costs and rates before the FERC and intervenors.
RESOLUTION
•The parent company pipeline retained its intrastate status, constructing the additional facilities under Section 311 of the Natural Gas Policy Act and establishing new rates for service.
•The case was successfully settled and the commercial goals were achieved.
Pipeline Capacity Deficiency / Power Generation Services / Rates
ISSUES
•The growing regional power generation load required new gas pipeline infrastructure to deliver power fuel.
•Building a greenfield pipeline solely for power generation load was challenging from an operational, service and pricing perspective, requiring innovative regulatory approaches.
•This project required delivery at non-uniform rates of flow and pricing that recognized the impact of stranded intra-day capacity due to short notice startups.
SOLUTIONS
•Created an innovative rate design methodology for pricing power generation services that required non-uniform rates of flow and considered impact of stranded pipeline capacity.
•Designed an entirely new tariff with innovative services and terms and conditions to serve the commercial needs of the market and meet the financial goals of the project.
•Coordinated the preparation and filing of the FERC certificate application for the pipeline project.
RESOLUTION
•The pipeline was successfully approved, built and placed in service.
•The rate design concept has proved to be financially successful and popular with the shipper community.
Pipeline Earnings Stabilization / Earnings Enhancement
ISSUES
•A low annual load factor pipeline with increasing integrity and other maintenance expenses.
•Major natural disasters severely damaged the system, requiring significant expenditures to restore service.
•The Asset Retirement Obligation could not be funded under the current regulatory model.
SOLUTIONS
•As the project lead, developed the overall rate case strategy, directing and coordinating the company staff in the preparation of exhibits and testimony.
•Prepared analysis and supporting testimony for new tariff recovery mechanisms, depreciable lives and negative salvage.
•Developed studies and presentations for the client to illustrate and correct deficiencies in historic capital recovery mechanisms.
RESOLUTION
•The pipeline filed a significant increase in its rates and the case was successfully settled.
•The pipeline realized increased operating margins from increased revenues and the recovery of previously unrecoverable expenses.
•The stability in operating margins enabled the sale of this non-core asset to a third party.
