Rates and Regulatory Issues

Development of Net Metering Rules

ERG was engaged by the City of Burlington, CO to develop Net Metering rules for the City’s municipal electric utility. ERG staff analyzed Burlington’s needs as well as current laws and regulations to design a Net Metering policy covering the design, installation, interconnection, and operation of customer Distributed Generation (i.e. wind and PV solar) energy sources while maintaining a regulatory structure that ensured the City’s control over such energy sources in support of maintaining safe and reliable electric service system operation. In conjunction with the engagement, ERG staff developed a net metering tariff for the City’s use.

Distributed Generation presents challenges to utilities of all sizes that may disrupt the safety and reliability of electric service. ERG staff's experience and expertise in utility operations, regulatory policy, and finance enable them to efficiently address electric utilities’ needs in these areas, bringing the highest level of consulting services to engagements with focused scopes.

Entergy Louisiana, LLC Rate Case

On behalf of the Council of the City of New Orleans (Council), Members of the Firm served as technical advisors regarding Entergy Louisiana, LLC's (ELL) March 28, 2013 rate case application (Docket UD-13-01).
    • ELL's filing requested a $12.8 million annual increase in electric rates for customers of ELL in the Algiers ward of New Orleans.
    • Members of the Firm managed the docket, preformed analysis, and sponsored expert testimony before the Council in the areas of:
      • ELL's allowed Return on Equity (ROE)
      • The recoverability of specific costs requested by ELL
      • The allocation  of costs between Algiers and ELL's service territory regulated by the Louisiana Public Service Commission
      • Ratemaking issues related to ELL's cost to restore service following major hurricanes
      • Retail rate design to implement any increase in ELL's overall revenue requirement
      • Ongoing adjustments to rates in the form of annual Formula Rate Plans
    • On June 25, 2014, the Council approved a negotiated settlement that provided for:
      • An approximately 24% reduction in rates compared to ELL's initial filing request
      • A phase-in of new rates through four equal annual increases
      • Four annual evaluations of ELL's actual earnings and rate resets as required (FRPs)
Members of the Firm provided their valuable expertise to the Council in the areas of regulatory ratemaking, allowed Return on Equity (ROE) determination, financial analysis, expert testimony, cost allocation metrics, and settlement negotiation.

Alaska Wheeling Pilot Program

ERG served as the primary consultant to Aurora Power (a unit of Aurora Gas Corp., Houston, TX.) in its efforts to initiate retail electric competition in Alaska. Aurora Power is a provider of natural gas with operations in Alaska. ERG assisted Aurora Power in developing the first retail access program in Alaska using a power marketing approach to provide customers with alternative supplies of electric energy and gas service. ERG provided Aurora Power with:
    • Strategic Project Assessment;
    • Energy Market Analysis;
    • Load and Resource Analysis;
    • Transmission Access Options and Pricing;
    • Distribution Service Analysis and Quantification;
    • Analysis and Costs of Unbundled Electric Service;
    • Ancillary Service Identification and Analysis;
    • Customer Benefit Analysis;
    • One Stop Energy Shopping Analysis;
    • Drafting of Pilot Program Filing Documents;
    • Profitability Analysis;
    • Contract Issue Analysis;
    • Testimony Before the Alaska Public Utilities Commission;
    • Ongoing Project Status Evaluation;

Texas Transition to Competition Proceeding

Members of the Firm provided assistance to the North Star Steel Texas, Inc. (Beaumont) regarding rate and competition restructuring issues associated with Entergy Gulf State’s Transition to Competition proceeding filed before the Public Utility Commission of Texas. This competition proceeding was broken down into four phases: (i) Fuel Phase; (ii) Revenue Requirement Phase; (iii) Rate Design and Cost Allocation Phase; and, (iv) Competitive Issues Phase. In recognition of the significant changes which have and continue to take place within the electric utility industry and the need to establish sound regulatory and operational principles so that North Star Steel is treated in a fair and equitable manner, ERG staff addressed the following issues:
    • Cost allocation and rate design issues which attempt to shift additional cost to North Star Steel;
    • Support for the continuation of interruptible service rates based on deferred future capacity, market valuation, and spinning reserve credit derivation methodologies;
    • The analysis and development of potential stranded cost recovery derivations and their impact on ratepayers;
    • The effects that the functional unbundling of current rate schedules into generation, transmission, distribution/ customer service, and USC functional components has on individual ratepayers;
    • The proposed USC Rider and its proposed collection from interruptible customers;
    • The evaluation and development of specific plans for the restructuring of Entergy Gulf States in preparation for the future of a competitive environment.
The assistance provided to North Star included the preparation of direct and rebuttal testimony, appearances at scheduled regulatory hearings to present testimony subject to cross-examination, the cross-examination of other witnesses providing testimony and, general rate case support.

Automated Rate Case Management System

For the Georgia Power Company, a member of the Firm developed a comprehensive information management system which managed the majority of the regulatory accounting data required to compile a retail rate case filing with the Georgia Public Utility Commission. Each input source for rate filing exhibits was analyzed to develop specific data requirements in a common file structure. Updated rate case files were established for every area of plant accounting, general accounting, and regulatory information providing exhibits to the rate case. A regulatory data base consisting of complete per books rate filing data was structured to provide reports on revenue requirements, rate case exhibits, and detailed, functionalized inputs for the cost of service allocation model.

Review of Proposed Service Center Closings

At the request of the Council of the City of New Orleans, Members of the Firm performed an analysis of Entergy New Orleans, Inc.’s (ENO) proposal to close its service centers located throughout the City of New Orleans. The overall intent of this engagement was to identify potential impacts, if any, to electric and gas ratepayers and to provide suitable recommendations to the City Council concerning ENO’s proposal. Historically, ENO provided for its customer service functions through the utilization of both local customer service centers and a local telephone center to process customer service inquiries. Members of the Firm analyzed the costs and benefits associated with ENO’s proposal to retain one Business Office within the City. Additionally, a review of proposed transitional activities and comparison of ENO’s proposed program to the customer service approaches being undertaken by comparable utilities across the U.S. was accomplished.

Proposed Gas Transportation Service Review

In concert with the City of New Orleans Legal Counsel, members of the Firm investigated Koch’s proposal to implement at that time a new, summer only, firm transportation service on its pipeline system of which Entergy New Orleans, Inc. is a customer. Members of the Firm determined that as a result of this new service, there existed a potential cost-shifting to the detriment of firm transportation customers which could materialize in a future rate case, as well as a concern regarding the impact of the summer-only service on the reliability of natural gas transportation to New Orleans.

Retail Choice Pilot Program

Members of the Firm assisted the City of Manchester, New Hampshire in analyzing electric service options as a result of pending changes in federal/state electric utility regulation, most notably New Hampshire's Retail Choice Pilot Program (Program). ERG staff provided assistance to Manchester in managing its RFP process for alternate power providers under the Program which resulted in the City’s selection of Green Mountain Energy (Green Mountain Power, Hydro Quebec, Consolidated Natural Gas, Noverco) to replace its historic electric supplier, Public Service Company of New Hampshire. In conjunction with this engagement, the following consulting assistance was provided to Manchester by members of the Firm:
    • Participation in the New Hampshire Public Utility Commission mandated retail wheeling pilot program, including:
    • Identification of customers for participation in the program;
    • Determination candidate customer energy and power requirements;
    • Evaluation of Public Service Company of New Hampshire costs proposed to be imposed under retail wheeling;
    • Determination of the feasibility of the City participating in the pilot program;
    • Participation in the pilot program selection process;
    • Evaluation and negotiation of alternative power supply arrangements for pilot program participants;
    • Assistance to selected customers as necessary during the pilot program;
    • Evaluation of direct franchise competition;
    • Investigation of feasibility of providing load aggregation services;
    • Assistance in state legislative activities related to competition and deregulation

Retail Gas Cost of Service and Rate Design Study

Members of ERG were retained by the Greenville Utilities Commission (GUC) for the performance of a comprehensive cost-of-service study and rate design for the City of Greenville's natural gas utility. GUC utilized the information provided in the study to update its present natural gas rates and to establish natural gas rates for new services such as liquefied natural gas storage service.

Retail Electric Rate Design Study

For the City of Vineland, New Jersey, a member of the Firm developed a revenue requirements model for the City’s municipal electric system based on municipal charter requirements, the City’s financial structure, a short term energy forecast, working capital requirements, and projected expenditures for the electric system. The revenue requirements for each customer class was determined by an allocated cost of service analysis. In conjunction with this engagement, electric rate tariffs were redesigned and simplified. Updated revenue for each customer rate schedule was computed through the billing system and impacts on customer bills were assessed for each usage level.

Natural Gas Retail Rate Case

Members ERG provided consulting assistance to the Cities of Wilson, Monroe, and Rocky Mount, North Carolina and the Greenville Utilities Commission (GUC) relative to a retail gas rate case before the North Carolina Utilities Commission. ERG’s tasks in this proceeding was to analyze North Carolina Natural Gas (NCNG) rate filing to determine: (i) the level of impact of a proposed increase in the transportation rates that the Cities and the GUC pay; (ii) what revisions had been made to the terms and conditions within the rate tariffs applicable to the Cities and the GUC; and (iii) the economic benefit/detriment of a proposed rate that NCNG was proposing for the Cities and the GUC. In con junction with settlement discussions, members of the Firm analyzed NCNG’s offer on behalf of the Cities and the GUC, which, as an interim step, would recover certain fixed plant costs and provide for a rate re-balancing that would provide some temporary benefit to the Cities and the GUC. Members of the Firm also provided comments on a proposed Aggregate Demand Tariff that would provide a collective benefit to the group during periods of constrained gas supply.

Review of Entergy New Orleans, Inc.’s Sale of Market Street Property

This project concerned the proposed sale of a former generating station property owned by Entergy New Orleans, Inc. (ENO). On behalf of the Council of the City of New Orleans (Council) members of the Firm led the evaluation, examination, and review of ENO’s filing with the Council concerning its proposed sale and determined that ENO’s filing was incomplete and not in compliance with the Council's filing requirements. In addition, the Firm found that ENO's proposal did not assure that ENO's retail ratepayers were protected by being held harmless against any increases in ENO’s revenue requirements associated with the relocation, demolition and any resulting land purchases by ENO necessitated by the sale of its Market Street Property and any risks or loss associated with the costs of any environmental remediation efforts.

Retail Direct Access Processing

Members of ERG represented Barrick Gold Strike Mines, Newmont Mines and a consortium of casinos including the Mandalay Bay and Park Place groups before the Nevada Public Utilities Commission in a proceeding concerning the introduction of retail direct access in Nevada. Members of ERG provided strategy analysis, sponsorship of direct testimony concerning cost allocations methodologies used in the development of service revenue requirements, and allocation of specific service revenue requirements to customer classes. ERG staff provided assistance to counsel at scheduled regulatory for the cross-examination of witnesses and litigation support.

Reinstatement of Entergy New Orleans Inc.’s Reporting Requirements With Respect to Customer Data Relative to Entergy Thermal, L.L.C.

Entergy Thermal, L.L.C. is an unregulated company, wholly owned by the Entergy Corporation, which produces and distributes steam thermal energy to certain commercial buildings located within the Central Business District of the City of New Orleans. Pursuant to a Council Resolution, Entergy New Orleans, Inc. (ENO) was required to report on a semi-annual basis describing the detail for each customer (existing and/or new) served by the Entergy Thermal project and in aggregate, actual and normalized for weather conditions, the impact that the project has had on ENO gas and electric base rate revenues for customers served by Entergy Thermal and how such revenue changes impact ENO’s revenue requirements for its remaining customers. ENO’s reporting was to expire in 2005, but in light of the aftermath of Hurricane Katrina, ENO's Regulator (the Council of the City of New Orleans (Council)) desired to monitor and assess the project on an ongoing basis and particularly, to assess its impact on other electric and natural gas utility ratepayers in the City. Since the startup of Entergy Thermal, Members of the Firm have provided the Council with independent reviews of Entergy Thermal’s filings. The Firm continues to provide this assistance on an ongoing basis.

Avista Corporation, Avista Energy, Inc., Portland General Electric Company, Enron Power Marketing, Inc. FERC Docket No. E02-115-000

ERG provided consulting support to the City of Tacoma, Washington, as an intervener in this docket, which was initiated by the Federal Energy Regulatory Commission (FERC) to investigate whether the respondents engaged in any electricity trading practices designed to manipulate the western electric market in 2000 - 2001. Expert testimony was sponsored by ERG on behalf of Tacoma which, amongst other things, alleged that Avista traders had knowledge of their participation in improper trading activities.

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