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Due to the sustained infiltration of brackish flood water as a result of Hurricane Katrina and the breach of the levee system, Entergy New Orleans, Inc.’s (ENO) natural gas infrastructure sustained a significant level of damage. ENO continues to receive numerous customer complaints of “no or poor gas” service from its New Orleans ratepayers. In this regard, members of the Firm have on an ongoing basis reviewed ENO’s monthly NOPG reports and reported the findings to ENO's Regulator, the Council of the City of New Orleans.
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:
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:
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.
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.
At the request of the Council of the City of New Orleans, ERG staff 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 for ERG 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. ERG staff 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.
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. ERG staff 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.
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:
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.
Entergy New Orleans, Inc. (ENO) filed for changes in its electric and gas rates on July 31, 2008. ENO’s Filing provided for a rate decrease of $12,300,000 million for its New Orleans electric customers and a rate increase of $9,100,000 for gas customers. On behalf of ENO’s Regulator (the Council of the City of New Orleans (Council)), members of the Firm issued over 250 data requests and participated in depositions of ENO witnesses. Additionally, members of the Firm sponsored expert testimony concerning accounting and revenue requirements, cost-of-service and rate design issues, fuel adjustment clause issues, rate of return and return on equity issues as well as issues surrounding the development of an Energy Smart program designed to provide rebates for home and business weatherization and heating/cooling system upgrades. The Firm played a lead role in negotiating settlement of the case as an Advisor to the Council. Under the final settlement between ENO and the Council, ENO electric bills will be reduced by $35.3 million and gas bills will increase by $4.95 million.
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.
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.
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.
Pursuant to the 2006 Agreement In Principal between ENO and the Council of the City of New Orleans (Council) concerning ENO’s 2006 electric and gas rate case, ENO filed its annual report on February 25, 2008 regarding its Storm Reserve Fund Escrow Account showing a total balance including earned interest of $5,271,875. The filing also showed that no disbursements were made due to the fact no triggering weather events occurred. On October 9, 2008, ENO provided notice of its intention to withdraw funds in the amount of $10 million by October 10, 2008 from the account due to damages incurred from Hurricane Gustav estimated at $40 million to $60 million. Members of the Firm reviewed, analyzed and reported upon ENO’s filings on behalf of ENO's Regulator.
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.
Established in 1999, 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 Council Resolution R-99-939, Entergy New Orleans, Inc. (ENO) was 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.
ERG has been providing 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 Executive Consultant Philip Movish on behalf of Tacoma which, amongst other things, alleged that Avista traders had knowledge of their participation in improper trading activities. ERG continues to provide consulting and expert testimony support to Tacoma in this and other ongoing regulatory proceedings before the FERC which are investigating Enron trading strategies and manipulation of the western electric market in 2000 - 2001.
In recent years, prices in U.S. natural gas markets have shown significant volatility which have resulted in great fluctuations in monthly natural gas bills of retail distribution system customers. ERG was recently retained by a Southeastern Retail Regulatory Commission to investigate the feasibility of alternative purchase gas adjustment mechanism designs for utilities in their jurisdiction. ERG investigated adjustment methodologies which are commonly in use around the country to determine if any one mechanism above others is preferred by regulators to dampen the affect of natural gas price volatility to retail end-use customers. As part of this engagement, ERG reviewed what factors directly or indirectly affected the price of natural gas. Such factors included but were not limited to: (i) weather and end-user consumption patterns; (ii) gas procurement procedures and resulting gas supply contract structures; (iii) use of financial hedging, futures, swaps, and options; (iv) gas storage availability/utilization; (v) pipeline capacity conditions; and (vi) natural gas costs and demand projections. In order to meet the regulator’s objective of minimizing the impact of volatile natural gas prices on monthly retail natural gas bills, ERG proposed that a twelve-month rolling average methodology, as an alternative to the utilities existing purchased gas adjustment clauses be taken into consideration. In addition, ERG also recommended utilities should investigate ways to minimize their exposure to extreme natural gas price fluctuations by segmenting portions of their gas supply portfolio with spot market purchases, short/long term contracts, hedging instruments and more efficient operation of available gas storage services. ERG continues to monitor the effect of its recommendations upon monthly natural gas bills on behalf of the regulator.
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