HomeMy WebLinkAboutColumbia Gas Co.GlumLL Gas -
of Massachusetts
Susan B. Kuliberg
A NiSource Company
`t�. �i`�i �a'LD
Lead Regulatory Analyst Ic� (1 �- I C E 4 Technology Drive, Suite 250
Westborough, MA 01581
Z )13 r' Y - 2 ,a 2: 1 Fax: 0x: (608) 836-7072
RECEIVEDskuilberg a),nisource.com
MAY 01 2013
Board of Selectman April 24, 2013
Dear Sir/Madam:
On April 16, 2013, Bay State Gas Company d/b/a Columbia Gas of
Massachusetts ("CMA" or "Company") filed a request for approval of a general
increase in its gas distribution rates with the Massachusetts Department of Public
Utilities ("MDPU"). The MDPU docketed the request as D.P.U. 13-75, and on April
22, 2013, issued a Notice of Filing, Public Hearing and Procedural Conference
("Notice"). The MDPU ordered CMA to provide to the cities and towns in its service
territories, a copy of the Notice, as well as a copy of the Attorney General's Notice of
Retention of Experts and Consultants.
The MDPU requests that the Notices be made available for viewing at your
offices during normal business hours, through May 22, 2013. The Notices are
attached hereto.
I appreciate your assistance with the Department's Orders. If you need
additional information, please feel free to contact me at (508) 836-7274.
Sincerely,
�an rJ • ��-�QQ b v� p
Susan B. Kullberg
Enclosures
TO Commonweal* of 0notbuatto
DEPARTMENT OF PUBLIC UTILITIES
NOTICE OF FILING PUBLIC HEARING AND PROCEDURAL CONFERENCE
D.P.U.13-75
April 22, 2013
Investigation by the Department of Public Utilities on its own motion as to the propriety of the
rates and charges by Bay State Gas Company d/b/a Columbia Gas of Massachusetts set forth in
Tariffs M.D.P.U. Nos. 140 through 173, and approval of an increase in base distribution rates for
gas service pursuant to G.L, c. 164, § 94 and 220 C.M.R. § 5.00 et seg filed with the
Department on April 16, 2013, to be effective May 1, 2013.
On April 16, 2013, Bay State Gas Company, d/b/a Columbia Gas of Massachusetts ("Columbia
Gas" or "Company") filed a petition with the Department of Public Utilities ("Department") for
approval of a general increase in its gas distribution rates. The Department has docketed this
matter as D.P.U. 13-75, and it has suspended the effective date of the proposed rate increase until
March 1, 2014, in order to investigate the propriety of the Company's request. The Company
was last granted an increase in gas distribution rates in 2012 in Bay State Gas Company,
D.P.U. 12-25 (2012).
In the instant filing, the Company seeks to increase its annual revenues by $30.1 million. The
Company claims that its proposed increase represents a 16.7 percent increase in base distribution
revenues, or an increase of 7.5 percent in current annual operating revenues.
If the petition filed by Columbia Gas is approved as requested, the Company states that its
proposed rates will have the following effects:
• a typical residential heating customer using 126 therms of gas per month during the
winter season will experience a monthly bill increase of $9.30 (a 6.2 percent increase
in current rates);
D.P.U.13-75
Page 2
• a typical residential heating customer using 29 therms of gas per month during the
summer season will experience a monthly bill increase of $3.36 (a 9.2 percent
increase in current rates);
• a typical residential non -heating customer using 19 therms of gas per month during
the winter season will experience a monthly bill increase of $4.24 (a 13.2 percent
increase in current rates);
• a typical residential non -heating customer using 12 therms of gas per month during
the summer season will experience a monthly bill increase of $3.16 (a 14.8 percent
increase in current rates); and
• commercial and industrial customers will experience an annual bill increase in the
range of 3.4 percent to 6.2 percent depending upon the amount of their usage.
For specific bill impacts, please contact the Company as indicated below.
As part of the filing, the Company seeks ratemaking treatment associated with the sale of its
Energy Products & Services business and certain upgrades of its information system in the areas
of finance, human resources, and supply chain. Further, the Company seeks several
modifications associated with its current targeted infrastructure reinvestment program. Finally,
Columbia Gas sets forth a proposal related to the updating of certain post-test year expenses and
rate base additions. Additional information regarding these proposals can be found in the
Company's filing.
The Attorney General of the Commonwealth of Massachusetts ("Attorney General") has filed a
notice to intervene in this matter pursuant to G.L. c. 12; § 11E(a). Further, pursuant to
G.L. c. 12, § 11E(b), the Attorney General has filed a notice of retention of experts and
consultants to assist in her investigation of the Company's filing, and has requested Department
approval to spend up to $250,000 in this regard. Pursuant to G.L. c. 12, § 11E(b), the costs
incurred by the Attorney General relative to her retention of experts and consultants may be
recovered in rates.
The Department has scheduled public hearings to receive comments on the Company's proposal
as follows:
May 20, 2013, at 7:00 p.m. at the Lawrence City Council Chambers, Lawrence City Hall,
200 Common Street, Lawrence, MA 01840
May 21, 2013, at 7:00 p.m. at the South Junior High School Auditorium, 105 Keith Avenue
Ext., Brockton, MA 02301.
May 22, 2013, at 7:00 p.m.. at the Springfield City Hall, Room 220, 36 Court Street,
Springfield, MA 01103.
D.P.U.13-75 Page 3
A procedural conference in this matter will be held at the Department's office on May 16, 2013,
at 2:00 p.m.
Persons interested in commenting on the Company's filing may appear at any of the public
hearings or may file written comments by the close of business (5:00 p.m.) on May 22, 2013.
Any person who desires to participate in the evidentiary phase of this proceeding must file a
written petition for leave to intervene or to participate in the proceeding no later than the close of
business (5:00 p.m.) on May 13, 2013. A petition filed late may be disallowed as untimely,
unless good cause is shown for waiver under 220 C.M.R. § 1.01(4). To be allowed, a petition
under 220 C.M.R. § 1.03(1) must satisfy the standing requirements of G.L. c. 30A, § 10.
Any person who seeks to intervene in this matter and also desires to comment on the Attorney
General's notice of retention of experts and consultants must file the comments no later than the
close of business (5:00 p.m.) on May 13, 2013.
Written comments, petitions for leave to intervene or to participate, and comments on the
Attorney General's notice of retention of experts and consultants should be addressed to:
Mark D. Marini, Secretary, Department of Public Utilities, One South Station, Boston, MA
02110. Receipt by the Department, not mailing, constitutes filing.
In addition to the above filing requirement, one (1) copy of all materials filed with the
Department should be sent to Marc J. Tassone, Hearing Officer, Department of Public Utilities,
One South Station, 5`h Floor, Boston, MA 02110; one (1) copy of these documents should be sent
to the Company's counsel, Robert J. Keegan, Esq., Keegan Werlin LLP, 265 Franklin Street,
Boston, MA 02110; and one (1) copy of these documents should be sent to Joseph W. Rogers,
Assistant Attorney General, Office of Ratepayer Advocacy, One Ashburton Place, Boston, MA
02108.
Further, in addition to paper filings with the Department, all documents should be submitted to
the Department in electronic format using one of the following methods: (1) by e-mail
attachment to dou.efiling@state.ma.us and the Hearing Officer, Marc.Tassonegstate.ma.us; or
(2) on CD-ROM. The text of the e-mail or CD-ROM must specify: (1) the docket number of the
proceeding (D.P.U. U-75); (2) the name of the person or company submitting the filing; and
(3) a brief descriptive title of the document. The electronic filing should also include the name,
title, and telephone number of a person to contact in the event of questions about the filing. All
documents submitted in electronic format will be posted on the Department's website:
http://www.mass.jzov/dpu.
A copy of the Company's filing is available for inspection during regular business hours at the
following locations: Springfield Public Library, Central Library, 220 State Street, Springfield,
MA 01103; Brockton Public Library, Main Library, 304 Main Street, Brockton, MA 02301;
Lawrence Public Library, Main Library, 51 Lawrence, MA 01841; Northhampton Public
Library, Forbes Library, 20 West Street, Northampton, MA 01060; the Company's offices, 4
D.P.U.13-75
Page 4
Technology Drive, Suite 250, Westborough, MA 01581; and the Department's offices, One
South Station, 5ch Floor, Boston, MA 02110. The filing also is available on the Department's
website,littp://www.mass.goy/d-pu. Any person desiring further information regarding the
Company's filing should contact the Company's counsel, Robert J. Keegan, Esq. at
(617) 951-1400.
A copy of the Attorney General's notice of retention of experts and consultants is available for
inspection at the locations above and during regular business hours at the Attorney General's
offices, One Ashburton Place, Boston, MA 02110, and at the Department's offices, One South
Station, 5ih Floor, Boston, MA 02110. The Attorney General's notice of retention of experts and
consultants also is available on the Department's website, http://www.mass. ovg /dpu. Any person
desiring further information regarding the Attorney General's notice of retention of experts and
consultants should contact Joseph W. Rogers, Assistant Attorney General, at (617) 727-2200.
Any person desiring further information regarding this notice should contact Marc J. Tassone,
Hearing Officer, Department of Public Utilities, at (617) 305-3500.
THE COMMONWEALTH OF MASSACHUSETTS
OFFICE OF THE ATTORNEY GENERAL
ONE ASHBURTON PLACE
BOSTON, MASSACHUSETTS 02108
MARTHA COAKLEY
ATTORNEY GENERAL
Mark D. Marini, Secretary
Department of Public Utilities
South Station
Boston, MA 02110
(617)727-2200
(617)727-4765 TTY
www.mass.gov/ago
April 18, 2013
Re: Bay State Gas Company d/b/a Columbia Gas of Massachusetts, D.P.U.13-75
Dear Secretary Marini:
Enclosed for filing is the Attorney General's Notice of Retention of Experts and
Consultants in the above referenced matter.
If you have any questions, please do not hesitate to contact me.
Sincerely,
Joseph W. Rogers
Assistant Attorney General
Enclosure
cc: Marc Tassone, Hearing Officer
Robert Keegan, Esq.
Kevin Penders, Esq.
Danielle Winter, Esq.
Service List
COMMONWEALTH OF MASSACHUSETTS
DEPARTMENT OF PUBLIC UTILITIES
Bay State Gas Company )
d/b/a Columbia Gas of Massachusetts ) D.P.U. 13-75
CERTIFICATE OF SERVICE
I hereby certify that I have this day served the foregoing document upon all
parties of record in this proceeding in accordance with the requirements of 220 C.M.R.
1.05(1) (Department's Rules of Practice and Procedure). Dated at Boston this 18"' day of
April, 2013.
Joseph W. Rogers
Assistant Attorney General
Office of the Attorney General
Office of Ratepayer Advocacy
One Ashburton Place
Boston, MA 02108
(617)963-2408
COMMONWEALTH OF MASSACHUSETTS
DEPARTMENT OF PUBLIC UTILITIES
BAY STATE GAS COMPANY d/b/a ) D.P.U.13-75
COLUMBIA GAS OF MASSACHUSETTS )
THE ATTORNEY GENERAL'S NOTICE OF RETENTION OF
EXPERTS AND CONSULTANTS
I. INTRODUCTION
On April 13, 2010, Bay State Gas Company, ("Bay State" or "Company") d/b/a
Columbia Gas of Massachusetts, pursuant to G.L. c. 164, § 94, filed a request seeking
approval from the Department of Public Utilities ("Department") for a general increase in
base rates designed to collect an additional $30.1 million per year. This represents a
16.7% percent increase in the Company's distribution rates. Residential customers will
receive increase of 16.56% , while commercial customers will see increases ranging from
15.04% to 22.26%. Sch. JAF-2-6.
This Section 94 rate proceeding is the third base rate case for Bay State in the last
five years. The Company's filing includes the testimony of 8 witnesses and is
sufficiently complex in nature to qualify for the expenditures of expert charge -back funds
in excess of $150,000. G.L. c. 12, § 11E (b). Therefore, pursuant to G.L. c. 12, § 11E
(b), the Attorney General of the Commonwealth ("Attorney General") has determined
that it is necessary to retain experts and consultants to assist in this proceeding before the
Department. With this filing, the Attorney General gives notice to the Department of her
intent to retain experts and consultants and to allow full parties to this proceeding the
opportunity to comment on her decision to do so.
General Laws Chapter 12, § 11E(b) allows the Attorney General to charge back to
the utilities the cost of experts and consultants up to $150,000 per proceeding, unless the
Department, based upon exigent circumstances, finds that additional costs should be
approved. The Attorney General has determined that due to the complexity of this
proceeding, exigent circumstances exist requiring the expenditure of funds for experts
and consultants in excess of $150,000. Therefore, the Attorney General gives notice that
exigent circumstances exist, as described in detail below, and respectfully requests
authorization to expend up to $250,000 to assist her in the litigation of this proceeding.
G.L. c. 12, § I IE (b). This is the same amount the Department approved in Bay State's
last rate case. See Order on Attorney General's Notice of Retention of Experts And
Consultants, D.P.U. 12-25 (May 7, 2012).
IL BACKGROUND
Currently, Bay State operates as a subsidiary ofNiSource Inc. ("NiSource").
NiSource provides natural gas service to approximately 3 million residential, commercial
and industrial customers in Ohio, Pennsylvania, Indiana, Virginia, Kentucky and
Maryland. On December 1, 2008, Bay State sold Northern Utilities to Unitil Corporation
pursuant to a stock purchase agreement approved by the Department in D.P.U. 08-43-A
(2008). Bay State currently provides retail natural gas distribution service to
approximately 304,000 residential, commercial and industrial customers in three
divisions geographically centered in Springfield, Brockton and Lawrence.
III STANDARD OF REVIEW
General Laws Chapter 12, § 11 E(a) grants the Attorney General broad authority
to "intervene, appear and participate in administrative, regulatory, or judicial proceedings
on behalf of any group of consumers in connection with any matter involving rates,
charges, prices and tariffs of an electric company, gas company, generator, transmission
company, telephone company and telegraph company doing business in the
Commonwealth and subject to the jurisdiction of the Department of Public Utilities or the
Department of Telecommunications and Cable." The Attorney General intervenes as a
matter of right in Department proceedings. G.L. c. 12, § 11E.
The Green Communities Act expanded the Attorney General's authority to
participate in state and federal administrative and judicial proceedings on behalf of utility
customers. As part of the Green Communities Act, the General Court also provided
resources to enhance the Attorney General's authority to participate in Department
proceedings by enacting a provision for the Attorney General to retain experts and
consultants. General Laws Chapter 12, § I I (b) provides, in pertinent part, that "the
Attorney General may retain an expert or a consultant to assist in proceedings before the
Department of Public Utilities or the Department of Telecommunications and Cable" and
"[a]ll reasonable and proper expenses, as defined in this section, shall be borne by the
affected party in the proceeding and shall be paid by such party at such times and in such
manner as the Attorney General directs."
The Attorney General's determination "that the services of an expert or a
consultant are necessary in a proceeding" is an administrative decision by the Office of
the Attorney General.' G.L. c. 12, § I lE (b). If the Attorney General believes that
experts or consultants are necessary to adequately represent the interests of customers in
a proceeding, the Green Communities Act provides that the Attorney General may retain
' The expert chargeback provision is governed by Chapter 12 of the General Laws, which enumerates some
of the Attorney General's statutory powers, as opposed to Chapter 25, which governs the powers of the
Department.
such experts or consultants at the affected utility's expense. Upon the Attorney General's
determination that experts or consultants are necessary, Section I IE (b) provides that the
Attorney General "shall file notice in the proceeding that includes the type of expert or
consultant sought and the anticipated cost." Upon the filing of such notice, the
Department:
shall allow full parties to the proceeding the opportunity to
comment regarding the necessity or desirability of such
services. Absent a showing that the costs proposed are
unnecessary for the Attorney General to represent ratepayer
interests in the proceeding or that such costs are not
reasonable or proper, the use of the expert or consultant
shall be approved.
G.L. c. 12, § I IE (b).
The notice requirements do not create any affirmative obligation other than to
inform the Department of the Attorney General's determination that an expert or
consultant is necessary, set forth the anticipated costs, the type of consultant, and allow
for comment by full parties. Id. Absent a showing by a full party that the use of an
expert or consultant is unnecessary for the Attorney General to represent ratepayer
interests, 2 "the use of an expert or consultant shall be approved." Id. In addition, as
noted above, the Attorney General has determined that due to the complexity of this
proceeding, exigent circumstances exist requiring the expenditure of funds for experts
and consultants in excess of $150,000. G.L. c. 12, § I IE (b).
2 The Attorney General's interpretation of her own authority should be given the same significant deference
of any administrative agency in carrying out a power granted by the legislature. Dowling v. Registrar of
Motor Vehicles, 425 Mass. 523, 525 (1997), quoting Massachusetts Medical Society v. Cononissioner of
Insurance, 402 Mass. 44, 62 (1988).
0
IV. USE OF EXPERTS AND CONSULTANTS IN D.P.U. 13-75
The Department has recognized the Attorney General's prerogative in obtaining
experts and consultants in complex rate proceedings that present exigent circumstances
set forth in G.L. c. 12, § 11 E(b).3 Massachusetts Electric Company and Nantucket
Electric Company, D.P.U. 09-39, Order On Notice Of Attorney General's Notice To
Retain Experts And Consultants (June 26, 2009).4 Unless the costs proposed are found to
be unnecessary for the Attorney General to represent ratepayer interests in the proceeding
or that such costs are not reasonable or proper, the use of the expert or consultant shall be
approved. G.L. c. 12, § I I (b).
The Company's petition for a general increase in rates filed pursuant to G.L.
c. 164, § 94 involves the rates, charges, prices, and tariffs of the Company and, therefore,
triggers both the Attorney General's intervention as of right before the Department (G.L.
c. 12, § I I (a)) and her ability to retain experts and consultants for this proceeding.
G.L. c. 12, § I I (b).
While some gas utilities have not filed rate cases for over a decade or more,5 Bay
State has filed its third rate case in four years. In this phase, of what the Company calls
its "multi -year, transformative effort," it demands for even more revenues than in years
3 See Investigation by the Department of Public Utilities on its Own Motion into the Preparation and
Response of the Massachusetts Electric Distribution Companies to the December 12, 2008 Winter Storm,
Hearing Officer Ruling at 1 (March 3, 2009). See also Western Massachusetts Electric Company, Order on
Attorney General Notice to Retain Experts and Consultants, D.P.U. 09-05 (2008).
"The Department finds that the Attorney General's examination of the issues identified in the Notice is
reasonably necessary to carry out her statutory authority to represent consumer interests in this proceeding.
In addition, based on the information provided in the notice, the costs to retain experts and consultants
appear to be reasonable and proper for the exercise of the Attorney General's authority. The Department
also acknowledges that the rate case filing is complex matter with numerous issues ...... Massachusetts
Electric Company and Nantucket Electric Company, D.P.U. 09-39, Order On Notice Of Attorney General's
Notice To Retain Experts And Consultants at 4-5 (June 26, 2009).
5 Berkshire Gas Company, D.T.E. 01-56 (2002) (11 years), and NSTAR Gas Company formerly
Commonwealth Gas Company, D.P.U. 91-60 (1991) (22 years).
past. As part of its filing, the Company has sponsored the testimony of 8 witnesses.
Among other issues, the Company's witnesses offer testimony on the following:
1. Modification of the Company's Targeted Infrastructure Reinvestment Factor
("TIRF");
2. Deferral ofTIRF Costs;
3. Post-test Year changes to the Cost of Service;
4. A Revenue Adjustment to reflect the fact that the test year does not reflect the
increase in revenues from D.P.U. 12-25;
5. Cost of Capital;
6. The sale of the Company's Energy Products and Services (`BP&S") business to
AGL Resources Inc ("AGL"); and
7. A comprehensive upgrade of information systems in the areas of finance, human
resources and supply chain ("NIFIT") and CMA's work -management system
("WMS").
To carry out her responsibilities, the Attorney General requires experts and
consultants to review these and other issues. The Attorney General intends to supplement
or complement her existing staff s expertise in this docket by hiring experts and
consultants to assist on developing positions concerning the Company's proposed base
rate increase. The Attorney General requires supplemental expertise in order to
effectively advocate before the Department for an outcome that is in the best interest of
the Company's customers. Areas of expert and consultant expertise include, but are not
limited to, the Company's:
1. Capital Additions and Pipe Replacement Programs;
2. Cost of Capital;
3. Cost of Service Issues;
4. Service Company Costs;
5. Rate Design Proposal, Rate Design Impacts, and Cost Allocation;
6. Energy Products and Services and;
7. Such other matters determined to be within the scope of the Company's
filing and subject of this proceeding.
V. EXINGENT CIRCUMSTANCES EXIST REQUIRING THE
EXPENDITURE OF FUNDS IN EXCESS OF $150,000
The Company has presented a rate petition that seeks to re -litigate and make
modifications to the rate mechanisms adopted in its last rate case, D.P.U. 12-25.
Additionally, the Company has presented 8 witnesses in support of its petition. As the
Department well understands, the Company's filing is more complex than a typical clean
rate case filing. The Department has always considered "not only the instant proceeding,
but also other matters under review in order [to] manage its docket in an efficient
manner." Fitchburg Gas & Electric Light Company, D.T.E. 02-24/25 at 14 (2002). The
exigent circumstances presented through the Company's rate case, together with the other
proceedings pending before the Department, require the Attorney General to hire experts
and consultants in order to manage its cases and statutory responsibilities in an efficient
manner as well. Noting the number of witnesses and issues, the Company's rate case is,
if nothing else, complex.
General Laws Chapter 12, § 11 E(b) allows the Attorney General to expend up to
$150,000 per rate case, unless the Department, based upon exigent circumstances, finds
that additional costs should be approved. Therefore, the Attorney General submits that
exigent circumstances exist and the reasonable and proper expenses for experts and
consultants will surpass the $150,000 initial limitation imposed by G.L. c. 12, § 11E (b).
As noted above, the Attorney General anticipates that the costs of experts and
consultants will exceed $150,000. Nevertheless, the expenses for these services will
comply with the statutory requirements set forth in G.L. c. 12, § 11E (b). Therefore, the
Attorney General hereby informs the Department of the exigent circumstances that
necessitate spending above the statutory limit and presents justification for Department
approval of expenditures not to exceed $250,000. The amount requested is the same
amount authorized in the Company's last rate case, D.P.U. 12-25. Should the Attorney
General's Office require expenditures that would exceed this estimate, the Office would
seek further approval from the Department.
It is important to note that in implementing the provisions of Section I IE(b), the
Attorney General has taken several steps to ensure that expert services are procured and
managed in the most cost effective and efficient manner. Although not required by
Massachusetts procurement statutes or G.L. c. 12, § 11E(b), the Attorney General will
issue a request for proposals ("RFP") to provide expert assistance in connection with the
Company's rate case to identify the most qualified individuals and firms. Once use of
experts is approved by the Department in this matter, the Attorney General will execute
contracts with a not -to -exceed, maximum obligation contract to ensure that costs for
these services are controlled. In addition, all contractors performing work for the
Attorney General in this proceeding will be subject to all the Commonwealth's standard
contracts terms and conditions (albeit payable pursuant under the terms of Section
11 E(b)). All invoices will be reviewed by the Attorney General's Office prior to being
submitted to the Company for payment to ensure accuracy and compliance with the terms
of the contract. Through these processes, the Attorney General has made every effort to
ensure its proposed use of funds under G.L. c. 12, § 11E will be prudent.
Finally, the Attorney General notes that its ability to hire experts and consultants
in this case rests on Department approval. The Attorney General's experts and
consultants cannot begin their work until a source of funding through G.L. c. 12,
§ 11E (b) has been approved. The Attorney General, therefore, respectfully requests that
the comment period on the Attorney General's petition be meaningful but brief and that
the Department issue an order on the Attorney General's Notice as soon as practicable
considering the truncated nature of a rate case proceeding.
VI. CONCLUSION
In order to fully and adequately represent the interests of customers, experts and
consultants are necessary in this docket. The participation of the Attorney General and
the presentation of evidence through the use of experts and consultants will enhance the
record in this proceeding and assist the Department in determining whether the
Company's filing comports with the provisions of Chapter 164 and results in just and
reasonable rates for customers.
WHEREFORE, for the foregoing reasons, the Attorney General requests the
Department's prompt approvals pursuant to G.L. c. 12, § I I (b).
Respectfully submitted,
MARTHA COAKLEY
By
Joseph W. Rogers
Assistant Attorney General
Massachusetts Attorney General
Office of Ratepayer Advocacy
One Ashburton Place
Boston, Massachusetts 02108
Dated: April 18, 2013