Understanding the FERC Natural Gas Rate Case Process and Rate Filing

Understanding the FERC Natural Gas Rate Case Process and Rate Filing

June 23, 2021 | Online :: Central Time

“Ken is a good speaker and very knowledgeable and interesting.” – Regulatory Analyst, MB Hydro/Centra

“Very knowledgeable, hands-on experience.” – Principal Manager, DTE

This one-day course explores the FERC natural gas rate case process from pre-filing through a Commission Final Order. FERC rules and regulations govern the establishment of maximum and minimum rates that jurisdictional interstate pipelines and storage facilities can charge for their services.  This course will provide attendees with insight into the FERC natural gas rate making world by providing them with an understanding of time standards, filing requirements, filing components, settlement process, testimony preparation, hearing, rate case participants, and analytical awareness that is sure to assist them their next rate case.

If you are a FERC employee who is interested in attending this course, our speakers will need to be aware of the project(s) you are currently working on so they can include case studies and current examples that are not a conflict of interest. Please email Taylor Stephens at [email protected] with the necessary information upon your registration.

Learning Outcomes  

  • Discuss and review the rate case timeline
  • Develop analytical tools useful in the development of rate case participant positions
  • Review of FERC jurisdictional cost of service rate filing components to include rate base, operation and maintenance expenses, taxes other than income, depreciation and net negative salvage expenses, return, and income taxes
  • Exposure to various cost allocation methods and rate designs currently in use by pipelines and storage companies
  • Discuss recent FERC policies and rulemakings to include the impacts of the 2017 Tax Cuts and Jobs Act and Cost Recovery Mechanisms for Modernization of Natural Gas Facilities
  • Discuss and provide guidance on expert testimony and hearing preparation

Who Should Attend

  • Traders, marketers, natural gas utilities employees, and power generation employees that utilize natural gas supply
  • Managers, members of the financial community, compliance function employees, in-house and law firm attorneys, and anyone else interested in or who has a need to know about the laws governing FERC and its rules, policies, and procedures that affect the natural gas and LNG industry
  • The course will benefit those seeking a basic knowledge of FERC, those desiring a refresher course or a broader context of FERC knowledge, and those seeking insight on current agency proceedings involving natural gas and LNG

Agenda

Wednesday, June 23, 2021 : Central time

8:45 – 9:00 a.m.
Log In

12:30 – 1:15 p.m.
Lunch Break

9:00 a.m. – 4:30 p.m.
Course Timing

Pre-Filing

  • Gather and scrub data
    • What data do you need?
      • General ledger
    • Scrub
      • Brainstorming a representative year of business (i.e., costs and rates that recover those costs using a projected level of billing determinates)
      • Removal of non-recurring items
      • Removal of non-recoverable items
      • Inclusion of projected changes
        • Increased labor costs
        • Increase expense items (inflation)
  • Understand desired outcome
  • Meet with customers
  • Prepare rate case schedules and testimony

Filing

  • Make the filing
  • Protests
  • Answers to Protests
  • Commission Order for hearing and maximum suspension
  • Rehearing/Clarification Requests to FERC

Discovery

  • Review of testimony and rate filing
    • Test period concept
  • Four key areas of the rate case
    • Cost of service
      • Rate base
        • Plant
          • What is a plant?
          • What to look for
        • ADDA
          • Projecting
          • What to look for
        • Working capital
          • Prepayments
          • Materials and supplies
          • What to look for
        • ADIT
          • Timing difference
          • Credit to rate base
          • What to look for
        • Regulatory assets and liabilities
          • TCJA impacts
          • Other assets and liabilities
          • What to look for
        • Return
          • Cost of capital calculations
            • DCF
            • Cost of debt
            • Capital structure
            • What to look for
        • Income tax allowance
          • TCJA impacts
          • PL19-2 impacts
          • What to look for
        • Operation and Maintenance expenses
          • Labor
          • Material and other
          • Administrative and general
          • Gas costs
          • What to look for
        • Depreciation and net negative salvage expense
          • Economic end life
          • Survivor curves
          • What to look for
        • Taxes other than income
          • Property taxes
          • Payroll taxes
          • Miscellaneous taxes
          • What to look for
    • Cost allocation and rate design
      • Billing determinates
        • Firm
        • Interruptible
        • Reservation/commodity
        • What to look for
      • Cost functionalization
        • Common costs allocation
          • General and intangible plant
          • A&G – KN Method
        • Cost allocation to incrementals/zones
          • Allocation factors
        • Cost classification
        • Straight fixed variable
          • Fixed/reservation
          • Variable/commodity
        • Transmission distance sensitive rate designs
          • Mileage based
            • Cost allocation between mileage and non-mileage
            • Access charge
          • Zone gate
            • Cost allocation between zones mileage and non-mileage
            • Access charge
          • Transmission Postage Stamp rate design
          • Storage rate design
            • Equitable method

Settlement

  • Top sheets
    • What are top sheets?
    • What aren’t top sheets?

Negotiations

  • Customer vs. Pipeline
  • Customer vs. Customer
  • Stability vs. Unknown Outcome in Litigation

Testimony

  • Building your case
  • Supporting your case
  • Answering
    • Who files
    • What is filed
  • Cross-Answering
    • Who files
    • What is filed

Hearing

  • Hearing preparation
  • Testifying

Briefs

  • Initial
  • Reply

Initial Decision

  • Exceptions

FERC Order on Initial Decision

Instructors

Drew Cayton, Director, FTI Consulting

Drew Cayton is a Director in the Power and Utilities practice as a regulatory subject matter expert advising clients in power and gas industries in jurisdictions throughout North America. Mr. Cayton has industry expertise in regulatory policy and rate making with more than a decade of investigation, litigation, and negotiation experience in matters set before the Federal Energy Regulatory Commission (FERC) and various state commissions.

Prior to joining FTI, Mr. Cayton spent three years as a consultant advising commercial, industrial, municipal, and utility clients on regulatory impacts at both the state and federal level. His work included investigating and analyzing utility and pipeline cost-of-service, cost allocation and rate design, depreciation, rate of return, and billing determinants.

Mr. Cayton spent seven years as an Energy Industry Analyst (Litigation) in FERCs Office of Administrative Litigation. As a technical case team leader, Mr. Cayton managed diverse teams tasked with executing extensive investigations into the propriety of various rate and tariff proposals before the FERC. He developed sound positions incorporating relevant Commission precedents, policies, rules, and regulations and then defended those positions in settlement and litigation proceedings. Mr. Cayton was awarded the Commission’s Merit Award for his work leading the FERC Annual Form No. 2 Study. Since 2009, this study has been used at the basis for setting FERC jurisdictional natural gas pipeline rates for review under section 5 of the Natural Gas Act.

Kenneth A. Sosnick, Managing Director, FTI Consulting

Prior to joining FTI Consulting, Mr. Sosnick spent over five years as a consultant, extensively engaged in the natural gas, crude/product, and electricity markets. His work included analysis of natural gas pipeline and crude/product pipeline cost of service rates, levelized rates, market-based rates, discounted and negotiated rates, incremental vs. rolled-in project costs, initial certificate rates, allocation of corporate overhead costs, and master-limited partnership income taxes. He also specializes in throughput/system rate design quantities, fuel recover mechanisms, NGA Section 5 rate complaints, return on equity calculations under the discounted cash flow/risk premium/capital asset pricing model/expected earnings methods, depreciation rate and negative salvage rate calculations, asset retirement obligations, FERC Form 1 and 2 filing requirements, as well as being proficient in the application of FERC’s uniform system of accounts. Mr. Sosnick has prepared expert testimony for proceedings at FERC, prepared expert reports assessing and quantifying damages in civil litigation and conducted strategic analysis for a large energy company considering alternatives for its existing pipeline and storage portfolio.

Before working as a consultant, Mr. Sosnick spent 10 years at FERC and spent two years as an auditor in the Office of Enforcement and eight years as an expert witness and a lead technical staff negotiator on major electric utility, interstate natural gas pipeline, and crude/product pipeline proceedings in the Office of Administrative Litigation.

Mr. Sosnick holds a B.S. in Accounting from the Indiana University of Pennsylvania. He is a member of the Energy Bar Association, FERC Liquids Committee, FERC Natural Gas Pipeline Committee, and FERC Practice Committee.

Online Delivery

We will be using Microsoft Teams to facilitate your participation in the upcoming event. You do not need to have an existing Teams account in order to participate in the broadcast – the course will play in your browser and you will have the option of using a microphone to speak with the room and ask questions, or type any questions in via the chat window and our on-site representative will relay your question to the instructor.

  • IMPORTANT NOTE: After November 30 you will not be able to join a Teams meeting using Internet Explorer 11. Microsoft recommends downloading and installing the Teams app if possible. You may also use the Edge browser or Chrome.
  • You will receive a meeting invitation will include a link to join the meeting.
  • Separate meeting invitations will be sent for the morning and afternoon sessions of the course.
    • You will need to join the appropriate meeting at the appropriate time.
  • If you are using a microphone, please ensure that it is muted until such time as you need to ask a question.
  • The remote meeting connection will be open approximately 30 minutes before the start of the course. We encourage you to connect as early as possible in case you experience any unforeseen problems.

Register

Please Note: This event is being conducted entirely online. All attendees will connect and attend from their computer, one connection per purchase. For details please see our FAQ

If you are unable to attend at the scheduled date and time, we make recordings available to all registrants for three business days after the event

Event Standard RateAttendees
Single Connection - Understanding the FERC Natural Gas Rate Case Process and Rate FilingUS $ 895.00
Pack of 5 connectionsUS $ 3,580.00
Pack of 10 ConnectionsUS $ 6,265.00
Pack of 20 ConnectionsUS $ 10,740.00
Call us at 303.770.8800 if you have any specific questions on the volume discounts
* all other discounts do not apply to license packs

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Cancellation Policy

Your registration may be transferred to a member of your organization up to 24 hours in advance of the event. Cancellations must be received on or before May 21, 2021 in order to be refunded and will be subject to a US $195.00 processing fee per registrant. No refunds will be made after this date. Cancellations received after this date will create a credit of the tuition (less processing fee) good toward any other EUCI event. This credit will be good for six months from the cancellation date. In the event of non-attendance, all registration fees will be forfeited. In case of conference cancellation, EUCIs liability is limited to refund of the event registration fee only. For more information regarding administrative policies, such as complaints and refunds, please contact our offices at 303-770-8800

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EUCI has been accredited as an Authorized Provider by the International Association for Continuing Education and Training (IACET).  In obtaining this accreditation, EUCI has demonstrated that it  complies with the ANSI/IACET Standard which is recognized internationally as a standard of good practice. As a result of their Authorized Provider status, EUCI is authorized to offer IACET CEUs for its programs that qualify under the ANSI/IACET Standard.

EUCI is authorized by IACET to offer 0.7 CEUs for this event.

Requirements for Successful Completion of Program 

Participants must log in and be in attendance for the entirety of the course to be eligible for continuing education credit. 

Instructional Methods

PowerPoint presentations, interactive group exercise, and group discussion will be used during this course. 

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