Understanding the FERC Natural Gas Rate Case Process and Rate Filing

August 27, 2020 | Online ::

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 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 understanding of time standards, filing requirements, filing components, settlement process, testimony preparation, hearing, rate case participants, and analytical awareness that is sure to assist in their next rate case.

If you are a FERC employee who is interested in attending this course, our speaker will need to be aware of the project(s) you are currently working on so he can include case studies and current examples that are not a conflict of interest.

Learning Outcomes

Discuss and review the rate case timeline
Develop analytical tools useful in the development of rate case participant positions
Assess 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
Review 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

Credits

EUCI is accredited by the International Accreditors for Continuing Education and Training (IACET) and offers IACET CEUs for its learning events that comply with the ANSI/IACET Continuing Education and Training Standard. IACET is recognized internationally as a standard development organization and accrediting body that promotes quality of continuing education and training.

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

Requirements for Successful Completion of Program

Participants must log in each day 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.

Agenda

Thursday, August 27, 2020 :: Central Time

8:45 – 9:00 a.m. :: Log In

9:00 a.m. – 4:30 p.m. :: Course Timing

12:30 – 1:15 p.m. :: Lunch Break

Pre-filing

Gather and scrub data
- What data do you need?
  - General ledger
- Scrub
  - The point of the filing it is come up with 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

Instructor

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, conducted strategic analysis for a large energy company considering alternatives for its existing pipeline and storage portfolio, written a whitepaper on the impacts of the Tax Cuts and Jobs Act on FERC regulated assets as well as a whitepaper on the impacts of FERC Orders in SFPP, LP Docket No. IS08-390 related to Master Limited Partnerships and other pass-through entities income tax allowance. In addition, he has conducted confidential buy-side valuations and assessments of regulated electric and natural gas utilities in the U.S.

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’s insights were incorporated into the revision of the FERC Form 2 in Docket No. RM07‐9‐000, which lead to the FERC-initiated Section 5 natural gas pipeline proceedings from 2009 to today.

Mr. Sosnick currently teaches an executive FERC Natural Gas 101 course for EUCI and previously taught Practical and Regulatory Training for the Natural Gas Interstate Pipeline Industry at the New Mexico State University Center for Public Utilities, specifically addressing FERC requirements for determining “just and reasonable” rates. 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.

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

REGISTER NOW FOR THIS EVENT:

Understanding the FERC Natural Gas Rate Case Process and Rate Filing

August 27, 2020 | Online

Individual attendee(s) - $ 795.00 each

Buy 4 in-person seats and only pay for 3! For this event every fourth in-person attendee is free!

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 July 14, 2020 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