PUBLIC (REDACTED) TESTIMONY OF OUCC WITNESS BRIEN R ... · 2 corrosion control of pipes. ... PHMSA...

STATE OF INDIANA

INDIANA UTILITY REGULATORY COMMISSION

VERIFIED PETITION OF INDIANA GAS COMPANY, ) INC D/B/A VECTREN ENERGY DELIVERY OF ) INDIANA, INC. FOR (1) APPROVAL OF AN ) ADJUSTMENT TO ITS GAS SERVICE RATES ) THROUGH ITS CSIA RATE SCHEDULE, (2) ) AUTHORITY TO DEFER 20% OF THE APPROVED ) EXPENDITURESFORRECOVERYINPETITIONER'S ) CAUSE NO. 44430 TDSIC-10 NEXT GENERAL RATE CASE, AND (3) APPROVAL OF ) PETITIONER'S UPDATED 7-YEAR PLAN, INCLUDING ) ACTUAL AND PROPOSED ESTIMATED CAPITAL ) EXPENDITURES AND CSIA COSTS, ALL PURSUANT ) TO IND. CODE CHPT. 8-1-8.4 AND 8-1-39 AND THE ) COMMISSION'S ORDER IN CAUSE NO. 44429 )

IINDIANA OFFICE OF UTILITY CONSUMER COUNSELOR

PUBLIC'S EXHIBIT NO. 2: PUBLIC REDACTED TESTIMONY OF

BRIEN R. KRIEGER

May 31, 2019

Respectfully submitted,

J e-i-rri--~ ,11 • Reed A or eyNo.11651-49 De ty Consumer Counselor

.. ,

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Filing Stamp

Public’s Exhibit No. 2 Cause No. 44430 TDSIC-10

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PUBLIC (REDACTED) TESTIMONY OF OUCC WITNESS BRIEN R. KRIEGER

CAUSE NO. 44430 TDSIC-10 INDIANA GAS COMPANY

D/B/A VECTREN ENERGY DELIVERY OF INDIANA, INC. (“VECTREN NORTH”)

NOTE: INDICATES CONFIDENTIAL INFORMATION

I. INTRODUCTION

Q: Please state your name and business address. 1 A: My name is Brien R. Krieger, and my business address is 115 West Washington 2

Street, Suite 1500 South, Indianapolis, Indiana 46204. 3

Q: By whom are you employed and in what capacity? 4 A: I am employed by the Indiana Office of Utility Consumer Counselor (“OUCC”) as 5

a Utility Analyst for the Natural Gas Division. My educational background, 6

experience, and my preparations for this case are detailed in Appendix BRK-1 7

attached to this testimony. 8

Q: What is the purpose of your testimony? 9 A: My testimony discusses reasons for cost variances in estimated budgets and actual 10

dollars spent for Vectren North’s (“Petitioner”) Compliance Projects and TDSIC 11

Projects contained within Petitioner’s 7-Year Plan (“7 Year Plan”). Petitioner’s 7-12

Year Plan contains both Compliance Projects (“Compliance Plan”) and TDSIC 13

Projects (“TDSIC Plan”). Compliance Projects are commenced to meet Federal 14

regulations as mandated through the Department of Transportation – Pipeline and 15

Hazardous Materials Safety Administration (“PHMSA”). TDSIC projects are 16

chosen by the natural gas utility, Petitioner, to improve safety and reliability to its 17


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system, which may include operational issues or redesign due to conflicts 1

encountered with roadways or roadway improvements impacting natural gas pipes. 2

I reviewed updates to the 7-Year Plan, including the level of project detail and 3

project cost support when variances exceed a predetermined threshold. The OUCC 4

continues to define the threshold as “substantial” if the present estimate is either 5

$100,000 or 20% above the most recently approved estimate. 6

In summary, Vectren North supported the vast majority of the increased 7

costs to Compliance and TDSIC Projects with detail provided in its testimony or 8

through informal data requests. My testimony recommends the Indiana Utility 9

Regulatory Commission (“Commission”) disallow $3,446 for overages in one 10

project – Compliance Distribution Project No. 330. Vectren North adequately 11

explained the remainder of its updated 7-Year Plan in this filing for its Compliance 12

Projects and TDSIC Projects. 13

Q: Please describe your understanding of the differences between Compliance 14 Projects and TDSIC Projects. 15

A: The Pipeline and Hazardous Materials Safety Administration (“PHMSA”) 16

establishes standards and policies to improve the safety integrity of the natural gas 17

system to prevent incidents. Natural gas utilities are required by PHMSA to 18

improve the integrity of natural gas systems in part as prescribed in 49 CFR 192 19

Subparts O and P: transmission integrity management and distribution integrity 20

management plans with storage integrity included. The following are a few 21

examples of integrity management practices: 22

1. Retrofit the pipeline mains for in-line-inspection (“ILI”) causing the utility 23 to replace service stubs, fittings, elbows, and other components to make 24 ready for continuous passage of the un-manned ILI inspection device. 25


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2. Bare steel and cast iron (“BSCI”) pipeline replacement necessary for 1

corrosion control of pipes. 2

3. Improvement/Replacement of inadequate odorization stations. 3

4. PHMSA Underground Storage Rule of 2017 and draft of final rule for safety 4 and risk management. 5

5. PHMSA Plastic Pipe Rule. 6

6. Vectren North’s Priority Pipe recognition for pipe replacement. 7

Vectren North’s 7-Year Plan contains two parts: 1) the Compliance Plan is 8

established according to Indiana Code § 8-1-8.4 to comply with the PHMSA 9

requirements, and 2) the TDSIC Plan is established according to Indiana Code § 8-10

1-39-9. All projects are subject to extended OUCC scrutiny when estimates or 11

actual spent dollars increase 20% or $100,000 from previous estimates. 12

Petitioner’s TDSIC Plan has four major categories: Public Improvement, 13

System Improvement, Rural Extensions, and Targeted Economic Development 14

(“TED”). 15

The TDSIC Plan requires Petitioner to provide a “best estimate”1 for each 16

Plan project and receive Commission approval of the original or updated Plan. 17

Indiana Code § 8-1-39-9(g) provides that, 18

[A]ctual capital expenditures and TDSIC costs that exceed the 19 approved capital expenditures and TDSIC costs require specific 20 justification by the public utility and specific approval by the 21 commission before being authorized for recovery in customer rates. 22

1 Per Ind. Code § 8-1-39-10(b)(1): A finding of the best estimate of the cost of eligible improvements included in the plan.


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For the Compliance Plan, Indiana Code § 8-1-8.4-6(b) provides that, 1

…In determining whether to grant a certificate under this section, 2 the commission shall examine the following factors: 3

(1) The following, which must be set forth in the energy utility’s 4 application for the certificate sought, in accordance with section 7(a) 5 of this chapter… 6 (B) A description of the projected federally mandated costs 7 associated with the proposed compliance project, including costs 8 that are allocated to the energy utility: (i) in connection with regional 9 transmission expansion planning and construction; or (ii) under a 10 Federal Energy Regulatory Commission approved tariff, rate 11 schedule, or agreement. 12

Q: Within the context of your understanding of the term “best estimate,” please 13

describe your approach in analyzing Vectren North’s project cost estimate 14 support and its justification for project cost increases. 15

A: For my analysis of project cost increases, I relied on the Indiana Code sections cited 16

above and Commission Orders for what can be considered a “best estimate” of 17

original costs for the original project definition. 18

The Commission’s Order in Cause No. 44403 TDSIC-4, page 27, states 19

“…in a Section 9 proceeding, a utility must update its approved plan and explain 20

any changes in the best estimate of costs, necessity, or incremental benefits.” The 21

Order goes on to state: “[a] TDSIC best estimate should reflect, at a minimum, costs 22

a utility reasonably could or should have foreseen at the time the estimate was 23

created.” Id. at page 28. 24

With regard to showing satisfactory reason for increased cost estimates, the 25

Commission has stated: 26

[B]ecause our approval of the plan as reasonable was based on our 27 determination of the best estimate of the cost of the eligible 28 improvements, whether public convenience and necessity require 29 the eligible improvements, and whether the estimated costs of the 30


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eligible improvements are justified by the incremental benefits, it 1 seems reasonable that any update to the plan include changes to 2 those factors we considered in approving the plan, i.e., changes in 3 an eligible improvement’s cost estimate, necessity, and associated 4 benefits.2 5

The Commission also stated in Cause No. 44403 TDSIC-1: “[t]his does not mean 6

that the utility may simply detail the reasons why the increase occurred. Rather, the 7

utility must explain why the increase in best estimated costs (i.e., costs that were 8

considered to be highly reliable) is reasonable or warranted under the circumstances 9

presented.”3 Furthermore, the Commission stated in Cause No. 44403 TDSIC-4: 10

Whether the utility seeks to provide specific justification for 11 approval of an increase in the best estimate at the time it seeks cost 12 recovery or prior to incurring actual costs, the standard is the same. 13 As we explained in the TDSIC-1 Order at 20, a utility may not 14 simply detail the reasons for the increase in costs. Instead, it must 15 explain why the increase in the best estimated cost, which was 16 considered to be better than all others in quality or value, is 17 reasonable or warranted under the circumstances presented.4 18

In addition to Vectren North’s TDSIC Projects, I also analyzed its 19

Compliance Projects to determine if adequate explanations had been provided to 20

justify cost increases for these projects. Within this context, I reviewed each 21

project, paying particular attention to projects with increased estimates, or if a 22

project’s actual costs exceeded Vectren North’s previously approved best estimate. 23

Q: Please describe your analysis process of the support provided by Vectren 24 North for project estimate and cost updates in this Cause. 25

A: I reviewed the testimonial and evidentiary support provided by Vectren North. I 26

reviewed all projects discussed in Petitioner’s testimony and the data contained in 27

2 Cause No. 44430 TDSIC-3, Order at page 5. 3 Cause No. 44403 TDSIC-1, Order at page 20. 4 Cause No. 44403 TDSIC-4, Order at page 28.


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Petitioner’s confidential attachments looking for new projects and variances 1

exceeding the OUCC’s threshold for project cost estimates and actual cost 2

variances. Increases above these thresholds ($100,000 or 20%) triggered my deeper 3

review of “best estimate” or actual costs. Petitioner included commentary 4

describing variances in its attachments (Petitioner’s Exhibit No. 1, Attachments 5

SAH-4, -5, -6, -8, and -11), Petitioner’s testimony including Petitioner’s Exhibit 6

No. 1: Tables SAH-1 through SAH-4, and in informal discussions with the OUCC. 7

I analyzed Petitioner’s testimony and exhibits and asked Petitioner specific 8

questions through the OUCC informal discovery process. I found a few projects 9

that still lacked any Petitioner discussion. I believe this to be a function of Vectren 10

using a threshold of 20%, and the OUCC using a threshold for thorough review of 11

20% or $100,0005. I recommend for future Compliance System Improvement 12

Adjustment (“CSIA”) recovery, Petitioner explain the reasons for both overages: 13

20% or $100,000. 14

My testimony discusses projects that experienced substantial (20% or 15

$100,000) increases over estimates approved in TDSIC-9, and my analysis focuses 16

on whether Petitioner should have reasonably foreseen substantial actual cost 17

increases at the time the estimates were last approved. 18

Q: Have you reviewed Vectren North’s Compliance Plan and TDSIC Plan on a 19 project basis? 20

A: Yes, I reviewed Vectren North’s entire Petition, testimony, workpapers, and the 21

confidential portions of the filing, including confidential Attachments SAH-4 22

5 Petitioner’s Exhibit No. 1, page 9 of 23, lines 30 -31.


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through SAH-11 that include all project numbers, project categories, the planning 1

year, the cost estimate variances, and the actual spend variances of the current 2

period (7/1/18-12/31/18) and since project inception. 3

Additionally, on April 25, 2019, Mr. Ed Rutter and I met with Vectren 4

North’s engineers to understand its project preparation, the variables that may 5

increase costs, and to specifically discuss project variances that have increased in 6

this current period by $100,000 or 20%. Petitioner was responsive to our questions 7

and provided additional detail for projects of concern presented in its case-in-chief. 8

Q: What are some of the variables that cause best estimates or costs to increase, 9 thus engaging the OUCC threshold limit requiring further analysis? 10

A: Petitioner provided a “best estimate” for TDSIC Projects and Compliance Projects 11

during its initial TDSIC filing. These 7-Year Plan project costs are estimated for 12

projects to be completed in a 7-Year Plan cycle; some to be constructed the first 13

year, others a few years out, and some projects scheduled for the seventh year. 14

Petitioner may find it necessary to update the original “best estimate” on an 15

ongoing basis as the individual project approaches the construction phase. Changes 16

to the best estimates and actual costs incurred can be within Petitioner’s control or 17

not within Petitioner’s control. My analysis considers some of the following 18

situations. 19

• New, pending, and changing PHMSA requirements. 20 • Underground pipe corrosion conditions extending beyond the original 21

estimated pipe segment. 22 • Pressure tests discovering inadequate services. 23 • Undocumented pipe materials. 24 • Incorrect drawings not capturing “as-built’ construction. 25 • Poor locates of all underground utilities: utility and private. 26 • Changed municipality requirements for drainage, easements, accessibility, 27


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and restoration. 1 • Farm Taps. 2 • Historical records of service and main material types. 3

My analysis investigates variances to identify trends, and I focus on 4

Petitioner’s cost support when there is a large variance between the original “best 5

estimate” and any updated estimate. 6

Q: Do you have any major observations discovered through your analysis that 7 explains the variances from the original “best estimate”? 8

A: Yes. One major observation is that the original 7-Year Plan costs are not typically 9

derived from an engineering estimate which includes a detailed site visit, but are 10

based on costs of similar projects, review of existing maps and service records, 11

other prior project experiences and Petitioner’s initial estimating process. Many 12

times the second cost estimate, also called an engineering based cost estimate, is 13

performed at a time closer to the construction phase resulting in an updated best 14

estimate. 15

Petitioner does not perform the refined engineering estimate on most 16

projects until 6 months to 1½ years before the construction phase. For Vectren 17

North, the engineering cost estimate is carried out when projects are engineered 18

with detailed site visits and subsequently placed in the work order que. This allows 19

Petitioner to have a detailed work order of materials, labor and equipment including 20

a schedule for the complete work order packet used for its internal crews and 21

material acquisition or to be bid by outside contractors. Vectren North’s refined 22

estimates or engineering estimates are a typical process within the construction 23

industry in order to finalize the work order/bid package. There have been occasions 24

when a best estimate is further refined by an actual bid and sometimes the bid is 25


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more expensive then the estimate. The best estimate would now reflect some 1

known costs. 2

Q: What are some of the variables or situations Petitioner experiences that cause 3 its best estimate to increase or the actual cost to exceed the best estimate? 4

A: Based on Vectren North’s testimony and discussions with its engineers, the 5

company says it has experienced the following: 6

• Contract labor shortages. 7 • Unforeseen rock formations. 8 • Inconsistent railroad crossing requirements. 9 • Extended corrosion beyond original estimate of pipe length. 10 • Changed municipal plans (Public Improvement) causing expanded scope or 11

higher cost time, time and material contracts, and additional traffic control. 12 • Poor locates of sewer mains and sewer laterals. 13 • Older commercial and residential areas with confluence of all utilities. 14 • Greenspace and tree root issues causing relocates and additional restoration 15

costs. 16 • Inaccurate service records. 17

Q: Please describe the categories of Petitioner’s Compliance Plan. 18 A: The Compliance Plan has four project groupings: Transmission Modernization 19

(“Transmission Projects”), Distribution Modernization (“Distribution Projects”), 20

Bare Steel and Cast Iron (“BSCI”), and Storage Modernization (“Storage 21

Projects”). Distribution Projects and BSCI make up the vast majority of the 22

projects. The Compliance Project groupings are further characterized with the 23

following major categories. 24

• In-Line-Inspection (“ILI”) retrofits 25 • Odorizers 26 • Exposures 27 • Bridge Crossings 28 • Casings 29 • Obsolete Equipment 30 • Priority Pipe 31


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Q: Which project categories of the Compliance Plan are potentially affected by 1 situations not in Petitioner’s control? 2

A: The requirement of ILI and replacement of BSCI mains has exposed multiple 3

issues. Making mains ready for the ILI equipment has meant replacing or removing 4

farm tap services, replacing fittings, reworking regulating stations, and adding 5

filters. Replacing BSCI mains causes relocation of mains as the natural gas pipe 6

locations have succumbed to large amounts of growth involving a confluence of 7

roadways, other utilities, sewer laterals, and greenspace. Many times Vectren 8

North is able to improve operation of its system and discover inadequacies of 9

existing services. 10

Separately, the original best estimates for crossing underneath railroads did 11

not contain a pipe casing requirement (Casings) for the natural gas carrier pipe. 12

Additionally, many railroad crossings need an exact depth location that is not 13

known until the permitting process is finalized, including site engineering review 14

with railroad personnel. The required “jack and bore” installation that varies per 15

railroad company and per railroad location adds cost to Petitioner’s least cost 16

scenario of a horizontal boring installation. These “jack and bore” requirements of 17

railroad crossings are typically found in Distribution Projects in the Compliance 18

Plan. 19

Q: Which project categories of the TDSIC Plan are potentially affected by 20 situations out of Petitioner’s control? 21

A: The Public Improvement project category makes up approximately 40% of Vectren 22

North’s TDSIC Projects and almost 30% are TED and Rural Extensions. These 23

Public Improvement projects are at the direction of government agencies and 24


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restoration scope can expand to include additional traffic security, drainage, 1

flowable fill, and strip paving. In this period, Petitioner replaced many mains where 2

the relocation costs were negatively affected by minimizing greenspace and tree 3

root impacts. 4

Q: Are there project categories in the Compliance Plan or the TDSIC Plan 5 potentially more within Petitioner’s control? 6

A: Yes. All 7-Year Plan projects, depending on location, have the potential to 7

encounter cost variances subject to municipality changes, unknown underground 8

rock, railroad crossing requirement variances, and confluence of utilities including 9

sewer laterals from homes and business. However, the second estimate, the 10

engineering site specific estimate, should reduce actual cost overruns of the most 11

recent “best estimate.” 12

Q: Do you have any general recommendations concerning Petitioner’s estimating 13 or planning process for the 7-Year Plan? 14

A: Yes. I reiterate to Petitioner to continue to improve engineering planning and 15

design considering the likelihood of conflicting sewers, sewer laterals, the impacts 16

of driveways, and greenspaces on construction to avoid higher cost bids due to less 17

than full design or re-design during the construction phase. 18

Additionally, it is important for Vectren North to continually improve 19

communication with town and city planners and designers to reiterate that changing 20

plans, or having incomplete plans typically has negative impacts for the utility and 21

the costs are paid by ratepayers. Unplanned or deviation from plans for wider 22

roads/roundabouts, different ADA accessibility, or new sidewalks or bike paths can 23


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cause more expensive time and material contracts or changing restoration 1

requirements for the utility. 2

The 7-Year Plan projects of concern follow, and are separated into 3

Compliance Projects and TDSIC Projects with projects tabulated that exceed the 4

OUCC’s 20% or $100,000 threshold for actual costs since the 7-Year Plan 5

inception. My testimony also discusses projects that incurred estimated costs 6

during this period (July 1 to December 31, 2018) that experienced substantial 7

increases over estimates approved in TDSIC-9 as analyzed from Petitioner’s 8

testimony and discussions. I focus on whether Petitioner should have reasonably 9

foreseen substantial increases at the time the estimates were last approved and if 10

projects meeting the OUCC threshold were discussed by Petitioner. 11

All 7-Year Plan project estimates and actual costs were included in my 12

review. In summary, my analysis indicates Petitioner’s testimonial support along 13

with its response to the OUCC’s informal questions established the estimate 14

increases as reasonable. There is a portion of one actual project cost (Database 15

Project No. 330) in the Compliance Plan under Distribution Projects that I have 16

excluded because of lack of engineering planning and existing contingency in the 17

original plan. There are a few cases where there is no testimonial support for cost 18

overruns because Petitioner did not address actual costs that exceed $100,000 if the 19

project did not also exceed a 20% increase. I recommend the “not discussed” 20

project costs be discussed in Petitioner’s future CSIA filings anytime estimated or 21

actual costs exceed 20% or $100,000 from the previous estimate. 22


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II. COMPLIANCE PLAN UPDATES (7/1/18 – 12/31/18)

Q: What cost support information did Vectren North provide in regard to its 1 Compliance Plan projects in this filing? 2

A: Petitioner’s witness Steven Hoover’s testimony included CONFIDENTIAL 3

Attachments SAH-4, SAH-5, SAH-6, and SAH-11, which contain information for 4

the Transmission, Distribution, Bare Steel and Cast Iron, and Storage Projects, 5

respectively. These attachments contain project description, project type, prior 6

planned year, current planned year, prior estimated cost, and current estimated cost. 7

Some additional information was provided in confidential workpapers and in 8

Petitioner’s testimony. 9

NEW PROJECTS 10 Q: Have there been any additional estimated projects moved into the current 11

2018/2019/2020 Compliance year as compared to Petitioner’s most recently 12 approved Compliance Plan (1/29/2019)? 13

A: The following Tables 1 – 3 contain Petitioner’s new Compliance Projects added 14

this period. These projects are either completely new to the Compliance Plan or 15

have been reprioritized into this 2018/2019/2020 Plan year from future years. 16

These projects are extracted from Petitioner’s filing and were designated with 17

“N/A” in the Previous Capital Expenditure and Variance columns. Petitioner has 18

supported these new projects as needed for PHMSA requirements. I have reviewed 19

Petitioner’s support, and I do not dispute Petitioner’s addition of these new projects 20

to its Compliance Plan. 21

1

2

3 4 5 6 7 8 9

10

11

12

13

14

15

16

Public 's Exhibit No. 2 Cause No. 44430 TDSIC-10

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Petitioner provided the following description in infonnal answers to OUCC

infonnal questions concerning Priority Pipe:

The operational definition for PRIORITY pipe is the following: Replacement of a segment of pipe needing to be replaced because of a condition or issue that cannot be remediated. An example is the replacement of a pipeline as a result of issues found during an inline inspection or a pipeline that needs to be replaced because pressure testing was not feasible. PRIORITY pipe issues are generally addressed as quickly as possible which may result in a new project or project being pulled fo1ward in the Plan.

Additional relevant info1mation concerning PHMSA mies for plastic pipe and

underground storage are contained in Petitioner's testimony of Sarah J. Vyvoda

plastic pipe discussion (Petitioner's Exhibit No. 2, pages 24-27). These new

projects comply with requirements as federally mandated projects.

Table 1: New 201912020 Transmission Projects

Database P1·evious Cu1Tent

Prnject Category Current Plan Capital Capital Val"iance

Number Year· Estimate Estimate (%)

(Confidential) (Confidential)

4088 Miscellaneous 2019 NIA - NIA

4321 ILi Retrofits 2019 NIA - NIA



There are no new Transinission Projects for Plan year 2018.


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1 Table 2: New 20181201912020 Distribution Projects

Database P1·evious Cu1Tent

Prnject Category Current Plan Capital Capital Val"iance

Year· Estimate Estimate (%) Number


4239 Priority Pipe 2018 NIA - NIA

4243 Bridge Crossings 2018 NIA - NIA

3696 Casings 2019 NIA - NIA

3792 Regulator Station 2019 NIA - NIA

3834 Exposures 2019 NIA - NIA

4107 Obsolete

2019 NIA - NIA Equipment



4603 Obsolete

2019 NIA - NIA Equipment



4818 Encroachments 2019 NIA - NIA



2 There are no new BSCI Projects for Plan years 2018119120.

1

2

3

4

5

6

7

8

Database Prnject

Number

4306

4308

4310

4342

4343

4347

4799

4800

4801


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Table 3: New 201912020 Storage Projects

P1·evious Cu1Tent

Category Current Plan Capital Capital Val"iance

Year· Estimate Estimate (%) (Confidential) (Confidential)

Well Construction 2019 NIA - NIA I Remediation

Pressure Monitoring I 2019 NIA - NIA

SCADA I RTU


SCADA I RTU





SCADA I RTU Pressure

Monitoring I 2020 NIA - NIA SCADA I RTU


SCADA I RTU

There are no new Storage Projects for Plan year 201 8. I recommend Petitioner

discuss and provide a comparison of the new Storage Projects with the planned

Storage Projects along with PHMSA requirements to the OUCC because of the

wholesale Plan changes and the unfolding PHMSA requirements. Additionally, if

Petitioner adds any new Projects to any Compliance or TDSIC Projects, a table

should be provided separately from n01mal Attachment SAH-4 through SAH-8,

and SAH-11 .


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BEST ESTIMATES 1 Q: Are there estimate increases for the Compliance project types between 2

Vectren North’s most recently approved Compliance Plan estimates 3 (1/29/2019) and the current 2019 and 2020 Compliance Plan years that exceed 4 the OUCC threshold? 5

A: Yes. There are increases for all four Compliance types: Transmission Projects, 6

Distribution Projects, Storage Projects, and BSCI Projects. Vectren North supplied 7

commentary for those projects that exceed the OUCC threshold, as noted in Tables 8

4-7 below. Upon informal request, Vectren North described the following 9

Transmission Projects: 10

Transmission Project ID 3215 11

• Vectren North Testimony – Scope revised to optimize system operation 12 including retirement of two regulator stations, as found in Petitioner’s 13 Exhibit No. 1, Page 7 of 24, Table SAH-1. 14

• Additional OUCC/Vectren North Informal Communication – Building and 15

pond were started after plan and estimates were developed. 16


• OUCC/Vectren North Informal Communication – Due to proximity to a 18 creek determined during detailed field survey, some of the fittings to be 19 replaced due to unknown material could not be accessed. It was necessary 20 to design and install a new 800’ HDD creek crossing instead. 21


• Vectren North Testimony - Revised estimate is based on contractor bids and 23 material estimates as found in Petitioner’s Exhibit No. 1, Attachment SAH-24 4, page 2. 25


• Vectren North Testimony - Project scope refined with specific quantity and 27 location of pipeline cutouts and installation of filters at regulator stations. 28 Preliminary unit cost estimates were revised based on recent similar design 29 estimates as found in Petitioner’s Exhibit No 1, Attachment SAH-4, page 3. 30

1

2 3 4

5

6 7 8

9 10

11

12

13


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Transmission Project ID 4294

• Vecti·en No1i h Testimony - Project scope expanded as project was scoped. In addition, the conti·act bid was more than originally estimated as found in Petitioner 's Exhibit No 1, Attachment SAH-4, page 3.

Transmission Project ID 3941

• Vecti·en No1th Testimony - Preliminary unit cost estimates revised based on recent similar design estimates as found in Petitioner's Exhibit No 1, Attachment SAH-4, page 3.

Table 4: Transmission Projects with Estimate Variances Over the OUCC's Threshold for Plan Years 2019/2020

Database Previous CuITent Va1·iance

Project Catego1-y Capital Capital

Increase Commenta1-y Estimate Estimate Number·

(Confidential) (Confidential) (%)

Operations

- - - scope revised: 3215 ILi Retrofits retire 2 reg

stations & rmprove one

3419 Pressm e Test - - - Bid price

3508 ILi Retrofits - - - Engineering estimate

- - - Scope 4294 ILi Retrofits expansion &

bid price

- - - Replace 3217 ILi Retrofits unknown

materials

3941 Gas Quality / - - - Unit price .. Conditioning rev1s10ns

Three projects (Nos. 3215, 3419, and 3508) from the prior update, TDSIC-

9, have new estimates that exceed the OUCC threshold again this period. In

TDSIC-9, Project No. 3419 increased - more to an estimate of -


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which is reflective of the engineering site visit estimate, and in TDSIC-10 it went 1

up another as shown in Table 4 because of the contractor bid price. 2

Petitioner provided a thorough explanation during our discussion on April 3

25, 2019 of those issues encountered when a Distribution Project is estimated based 4

on an engineering site visit. I mapped that discussion to those specific project 5

explanations Petitioner provided within Petitioner’s Exhibit No. 1, Attachment 6

SAH-5 Commentary section. This combined analysis indicates Petitioner 7

satisfactorily substantiated those project estimates that exceeded the OUCC 8

threshold. 9

In Table 5, I have summarized Petitioner’s testimonial explanation as can 10

be found in Petitioner’s Exhibit No. 1, Attachment SAH-5. 11

Distribution Project ID 27 12

• Vectren North Testimony: Attachment SAH-5, page 1 - During the 13 preliminary design review it was discovered that an easement would need 14 to be acquired and traffic control would have to be utilized to complete the 15 project. 16


• Vectren North Testimony: Attachment SAH-5, page 2 – During the design 18 review it was discovered that easements would need to be acquired for this 19 project. 20


• Vectren North Testimony: Attachment SAH-5, page 2 - An additional 500 22 feet of main and a service line was added to service a customer. Also, 23 Regulator Station 7 needed to be upgraded with new equipment. 24

-


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1 Distribution Project ID 4106

2 • Vecti·en North Testimony: Attachment SAH-5, page 2 - After field 3 investigation, Vecti·en No1t h needed to install additional 25 feet of 8 inch 4 main and required additional traffic conu-ol labor hours.

5 Distribution Proiect ID 4213

6 • Vecti·en Noith Testimony: Attachment SAH-5, page 2 - During the 7 preliminaiy design review it was discovered that the new main would have 8 to be auger bored to cross both a state road highway and an existing raihoad 9 crossing, as there was not enough room located between the state road and

10 raihoad ti·ack which resulted in an additional bore to cross the state road. 11 Also changed from 4" to 8" main to ensure future capacity.


13 • Vecti·en No1th Testimony: Attachment SAH-5, page 3 - During the design 14 review it was discovered that ti·affic conti·ol and hai·d surface restoration 15 would be needed for the tie-in locations and additional creek crossing bore 16 contingency was also included in the estimate.


18 • Vecti·en No1th Testimony: Attachment SAH-5, page 3 - Length of main to 19 replace was revised from 500' to 1,000' due to the length of exposure.

20 Distribution Project ID 3864

21 • Vecti·en Noith Testimony: Attachment SAH-5, page 3 - During the 22 preliminaiy design review it was discovered an additional 145 feet of main 23 needed to be installed. Additional ti·affic conti·ol would be needed due to 24 the amount of ti·affic on US Highway 136 and additional spot holing was 25 required due to close proximity with existing main. Also, pipe x-ray testing 26 was added for the high pressure disti·ibution main.

27 Table 5: Distribution Projects with Estimate Variances over the OUCC's Threshold 28 for Plan Years 2019/2020

Database Previous CuITent

Va1·iance Project Catego1-y

Capital Capital Increase Commenta1-y Estimate Estimate

Number· (Confidential) (Confidential)

(%)

- - - Acquire 27 Exposures easement &

ti·affic conu-ol


Page 21 of 55

1582 Ineffectively Coated Steel

Acquire easements

3670 Casings

Additional 500 ft. of mains to

serve a customer upgrade regulator

4106 Casings Additional main & traffic control

4213 Casings Larger main &

additional auger bore

1627 Ineffectively Coated Steel

Creek crossing contingency &

restoration

3836 Exposures

Additional 500 ft. of mains and

estimate improved with

site visit.

3864 Exposures Pot holing,

traffic control, & x-ray at high pressure main

No Distribution Projects from the prior update, TDSIC-9, have new 1

estimates that could have caused the same project to exceed the OUCC threshold 2

again this period in TDSIC-10. TDSIC-9 estimate increases for railroad crossings 3

did not increase this period. Vectren North has justified the increased estimates in 4

Estimate Variance Commentary for Distribution Projects contained in Confidential 5

Attachment SAH-5. 6

The Compliance Plan – Bare Steel and Cast Iron Projects have three projects 7

with increased “best estimates.” All of these increased estimates are based upon 8

- - -- - -- - -- - -- - -- - -- - -


Page 22 of 55

1 actual contractor bids. Petitioner provided a thorough explanation during our

2 discussion on April 25, 2019 of those issues encountered when a BSCI Project

3 estimate, based on engineering site visit, is compared to those impediments that

4 may actually occur during construction. A conti·actor bid aids in setting the final

5 estimate, but depending on type of bid, the actual cost can still be greater or lesser

6 than the final "best estimate." These are all 2019 projects and have been justified

7 by Petitioner as estimates adjusted from actual contractor bids. I do not dispute

8 Petitioner's justification.

9 Bare Steel Cast Iron Project ID 1713

10 • Vecti·en North Testimony: Attachment SAH-6, page 2 - Adjustment made 11 to estimate based on contractor bid cost.


13 • Vecti·en No1th Testimony: Attachment SAH-6, page 2 - Adjustment made 14 to estimate based on contractor bid cost.


16 • Vecti·en No1th Testimony: Attachment SAH-6, page 2 - Adjustment made 17 to estimate based on contractor bid cost.

18 Table 6: Bare Steel and Cast Iron Projects with Estimate Variances Over the 19 OUCC's Threshold in Plan Year 2019

Database Previous

Current Capital Project Capital Estimate Increase

Number Estimate (Confidential) Va.-iance (o/o) Description (Confidential)

- - - Increases from contractor N-1713 bid

1

2

N-2301 - -N-2400 - -

--


Page 23 of 55

Increases from contractor bid

Increases from contractor bid

Upon info1mal request, Vectren No1i h described the following Storage

Projects. Petitioner has satisfactorily explained the new estimates based on

3 info1m al discussions on April 25, 2019 and Petitioner 's testimony.

4 Storage Estimates Project ID 4282

5 • Vectren No1i h Testimony - New estimate inco1porates site visit and 6 additional surveys for final design of routes. Condemnation of land 7 required to gain access of new well. Petitioner 's Exhibit No. 1, Page 8 of 8 24, Table SAH-1.

9 • OUCCNectren No1ih Info1mal Communication - Eminent domain/ 10 condemnation will likely be needed to obtain access to the well site.

11 Table 7: Storage Projects with Estimate Variances Over the OUCC's Threshold in 12 Plan Years 2019/2020

Database Previous CuITent Va1·iance

Project. Catego1-y Capital Capital

Increase Commenta1-y Estimate Estimate Number·

(Confidential) (Confidential) (%)

Condemnation

Well Construction / for Easements

4282 - - - & similarity to Remediation actual costs of

others

13 Q: Do you have any concerns with Petitioner's support for increased "best estimate" budgets for Compliance Projects? 14

15 A:

16

17

No. Petitioner has a process for refining project costs originally estimated to an

engineered "best estimate" for an upcoming construction season and to meet

changing PHMSA requirements, especially in Storage Projects. From a review of


Page 24 of 55

Petitioner’s cost support and my informal discussions with Petitioner, Petitioner 1

adequately supported estimate increases based on actual field investigations 2

including current material, labor prices, restoration requirements and present 3

knowledge of PHMSA requirements. I do recommend Petitioner file and present a 4

separate discussion and explanation of the planning process and planned Storage 5

Projects. 6

ACTUAL SPEND 7

Q: In your analysis of Vectren North’s Compliance Plan – Transmission Projects, 8 are there actual costs that have exceeded the budget by $100,000 or 20% in 9 this current period (7/1/18-12/31/18) and have not been addressed previously? 10

A: Yes. There are eleven Transmission Modernization projects that have exceeded the 11

spend variance threshold in this update period, and five from previous periods. 12

Petitioner did not address four of these projects in Attachment SAH-4 because those 13

projects did not exceed Vectren’s threshold of 20%. The following were discussed 14

in informal data requests where the OUCC asked Vectren North engineers to 15

explain variances. Petitioner supplied the following information for those projects 16

that exceed the OUCC $100,000 threshold. Petitioner has satisfactorily explained 17

the new actual costs of all Transmission Projects based on discussions on April 25, 18

2019 and Petitioner’s testimony, including Petitioner’s confidential attachment 19

SAH-4. 20


• OUCC/Vectren North Informal Communication – The utilities identified 22 when construction started, were private electric and fiber facilities, which 23 are not located via one call/911. These utilities were also not identified on 24 available historical records. Vectren North became aware of and located 25 the private facilities while on-site for the start of construction and spot 26 holing for other activities. 27


Page 25 of 55

Transmission Project ID 3285-4019 1

• Vectren North Testimony: Attachment SAH-4, page 1 – A casing was 2 found shorted under a RR crossing and required insertion of a new segment 3 of pipe and spacers. Additionally, undocumented fittings on the 4 transmission line required replacement resulting in additional labor and 5 material costs. A mechanical coupling at the Dolan station was found on 6 pressure test that trapped several pigs. Also had additional legal fees for 7 right-of-way acquisition and restoration due to flooding. 8

• OUCC/Vectren North Informal Communication – The additional 9 this period are primarily from final restoration and final easement costs. 10


• OUCC/Vectren North Informal Communication – Crawfordsville to 12 Lafayette 12” main: This project’s actual cost exceeded the previous 13 estimate primarily due to encountering rock that was not expected. Soil 14 borings were performed along the route, but the rock was encountered at 15 isolated locations where soil borings were not performed. Field 16 investigation determined the need to replace some of the regulator station 17 inlet piping at multiple locations due to unknown material specification and 18 rebuild two stations where the new line supplies the de-rated existing main. 19 Some costs were incurred due to delays caused by vendor supply issues (e.g. 20 stopple). 21

Transmission Project ID 3078-4022 22

Vectren North Testimony: Attachment SAH-4, page 2 - A new pipeline 23 heater and additional electrical work was required at Needmore Station. 24 The 10" line leaked during hydrotest and a section was required to be 25 replaced. The 10" line and 16" were very dirty and required additional 26 cleaning beyond normal. It was necessary to split the pressure test into 2 27 segments on the 10" pipeline due to weather concerns which increased 28 construction and inspection labor. 29


• OUCC/Vectren North Informal Communication – Increased actual costs 31 were primarily due to additional work required at Fulmer Station where 32 historical drawings did not correctly indicate the existing piping 33 configuration. Vectren North installed a 6” filter at Grassy Creek Station in 34 lieu of 4” that was designed and several additional cleaning/pig runs were 35 required to remove liquids found in the pipeline. 36

-


Page 26 of 55


• OUCC/Vectren North Informal Communication – The existing heater failed 2 over the winter prior to construction start that was not included in the 3 original scope of work. During construction it was determined the filter 4 would need to be replaced due to non-compliance with current codes. Two 5 existing valves failed during startup and were required to be replaced. 6


• Vectren North Testimony: Attachment SAH-4, page 2 - Project was 8 completed on an accelerated schedule. Also, project was completed on 9 Time and Materials (“T & M”) contract due to work being performed in a 10 heavy industrial area with significant heavy traffic. 11

The following Transmission Projects had zero or minimal spending and all are in 12

service and should remain with minimal spending since they are closed out: 13

Transmission Project Nos. 3285, 3350, 3911, 3475 and 3064. The following four 14

Transmission Projects were discussed in TDSIC-9 and the explanations were 15

reasonable and the costs were not disputed: Transmission Project Nos. 4205, 4174, 16

3078 – 4027, and 4173; however, only Project No. 4205 had minimal spending this 17

period while the remaining three Projects had increases that doubled from TDSIC-18

9. 19

Petitioner provided a thorough explanation during our discussion on April 25, 20

2019 of those issues encountered when a Transmission Project is constructed. 21

There may be substantial costs differences between an engineering site visit 22

compared to those impediments that may actually occur during construction. This 23

can be a function of actual pipe conditions found during a pressure test, ILI, or case 24

grounding test. These Transmission Projects have all been justified by Petitioner 25

during my on-site review and testimony review of Petitioner’s Exhibit No. 1, 26

1

2

3 4


Page 27 of 55

Attachment SAH-4. I do not dispute Petitioner 's justification for actual cost

vanances.

Table 8: Transmission Projects - Actual Cost Variances Over the OUCC's Threshold

Database Current Inception to

Previous Capital Increase Date Actual

Project Planned Catego1·y Spend

Estimate Va1·iance Number Yea1·

(Confidential) (Confidential) (% ) Description

Valves / Underground Operators / - - - utilities not

4291 2018 Remote located - work Control around

3285-4019 2017 Pressure Test - - - Electrically shorted casing

Pressure Test - - - Additional 506 3285-4012 2017 ft. main

Minimal

3350 2017 Priority Pipe - - - spending this period.

Actual labor bid higher due

3911 2017 Priority Pipe - - - to resource sho1iages

because of all Midwest

pipeline work

Minimal

3475 2017 Pressure Test - - ■ Spending this period.


Page 28 of 55

4205 2018 Priority Pipe Pipe anomalies

– pipe seam defects

3890 2018 Priority Pipe

No Testimonial

explanation – exceeds $100k,

explained above.


New easements,

rocky, traffic control,

additional shoring


No Testimonial


Priority Pipe projects

explained by Petitioner

informally.

3078-4022 2018 ILI Retrofits

New pipeline heater required and cutouts due to leaks found

3078-4027 2018 ILI Retrofits Additional

main to eliminate farm

taps

3167 2018 Pressure Test

No Testimonial

explanation – exceeds$100k,

Informal response above

- - -- - ■

- - -

- - -

- - -- - -- - -


Page 29 of 55

3286 2018 ILI Retrofits

No Testimonial


informal response above

4173 2018 ILI Retrofits

Accelerated schedule required,

completed industrial area.

3064 2016 Pressure Test

No explanation – exceeds

$100k - 2016 year project & minimal spent

this period I believe the actual spends in Transmission Projects to be justified by 1

Petitioner through its commentary provided in its case-in-chief and the additional 2

informal responses. 3

Q: In your analysis of Vectren North’s Compliance Plan – Distribution Projects, 4 are there actual costs that have exceeded the budget by $100,000 or 20% in 5 this current period (1/1/18-6/30/18) and have not been addressed previously? 6

A: Yes. Vectren North supplied commentary for those projects that exceed the OUCC 7

threshold. Petitioner provided informal explanations for four of the twenty-one 8

Distribution Projects with actual costs over the previous estimate. The majority of 9

the others were explained in Petitioner’s Attachment SAH-5. There are two 10

Distribution Projects where the same Category of work is performed in multiple 11

locations of Petitioner’s territory; however, there is only one Database Project 12

Number associated with these: Distribution Projects: No. 1392 – Inside Meters and 13

No. 1411 – Ineffectively Coated Steel. Through formal Date Request Petitioner 14

- - ■

- - -- - ■

1

2

3 4 5 6 7

8 9

10 11 12 13 14 15 16 17 18 19 20

21

22 23 24 25 26

27 28 29 30 31 32 33 34

35

36 37

explained these two Distribution Projects.

Inside Meters - Distribution Proiect No. 1392


Page 30 of 55

OUCC Request No. 1-3: For database project #1392 please explain why the actual spend variance is - when ~ on to date actual spend was $4,891,172 and the cmTent estimate is - Shouldn't this produce an actual spend variance of If the answer is anything other than an unqualified yes, please explain the reasoning.

Response: No. Project #1392 is an ongoing Compliance Project being completed pursuant to Ind. Code § 8-1-8.4 under which Petitioner relocates inside meters to the exterior of the stiu cture. Similar Compliance Projects in the modernization program include obsolete service riser replacements and isolated service line replacements. Since inception, approximately - year is budgeted for identification and relocation of inside meters. Budgeted spend for 2018 was-and actuals were-resulting in a var~ The total expenditme over the 7-year Plan through 2018 is~revious years, spending for inside meter relocation, and like proJects, will fluctuate depending on inspection findings, operational focus, and available resources. This practice has not changed since inception of the Compliance Plan and the method of variance repo1i ing is consistent with that used in all previous filings.

Ineffectively Coated Steel - Distribution Proiect No. 1411

OUCC Request No. 1-4: For database project #1411, please explain why the

-

1 end variance is-when-he ince tion to date actual spend was and the cunent estimate is Shouldn't this produce an

pend variance of- I e answer is anything other than an unqualified yes, please explain the reasoning.

Response: No. Project #1411 is an ongoing Compliance Project being completed pmsuant to Ind. Code § 8-1-8.4 under which Petitioner replaces isolated services. As explained in Question 1.3 above, Petitioner compares the annual spend budget to actual a~enditures. In 2018, the variance between the annual estimate of - and the annual expenditmes of -is-The total spend since inception of the Plan is-. This practice has not changed since inception of the Compliance Plan and the method of variance reporting is consistent with that used in all previous filings.

Distribution Proiect ID 1880

• Vecti·en N 01i h Testimony: Attachment SAH-5, page 1 - Due to the difficulty of this project with tie in locations 7 feet deep adjacent to a signaled


Page 31 of 55

intersection of a city street and a state highway, construction labor was 1 much higher than estimated. Increase in traffic control at the intersections 2 due to heavy traffic. 3


• Vectren North Testimony: Attachment SAH-5, page 1 - Project required 5 additional CSX railroad inspection which increased permit cost. Also, 6 restoration was higher due to the cementing/filling of the abandoned casing. 7


• Vectren North Testimony: Attachment SAH-5, page 1 - The project 9 encountered rock during installation which changed the install method from 10 bore to open-cut trench. This change also increased the cost of restoration 11 as the roadway being crossed had to be restored once installation was 12 complete. 13


• OUCC/Vectren North Informal Communication – for traffic 15 control - Estimate did not include significant amount for traffic control due 16 to the project being in a residential neighborhood. However, the City of 17 Richmond would not let contractor work without traffic control due to 18 drivers using SE Parkway as a way to get around traffic on US-40. This 19 was not a known factor during design. Sewer locates were also 20 over estimated cost. It was necessary to use a camera to locate sewer mains 21 for length of this project, while estimate assumed standard locating lateral 22 and main, which was less than camera per foot cost. 23


• OUCC/Vectren North Informal Communication – During construction, 25 issues were identified with the existing conduit at Seymour and Needmore 26 Purchase Points. It was necessary to replace/rework the wiring and conduit 27 to be compliant with electrical codes. Additional time was necessary to 28 setup the new valve controllers. 29


• OUCC/Vectren North Informal Communication – The original project’s 31 scope was to retire main and the casing under the river. During the field 32 investigation, an existing active service was determined to be connected to 33 the main. This was not reflected on historical information. Installation of a 34 new main and casing were necessary to maintain the customer’s service. 35

--


Page 32 of 55

1 Additional cost was incmTed to replace some obsolete equipment at the 2 Regulator Station 7 upgrade.


4 • OUCCNectren No1th Inf01mal Communication - The constmction start 5 date had to be expedited and field activities staited eai·lier than originally 6 planned due to the Rail Road pe1mit issue date and requirements which 7 provided a limited work timeframe from the date the pe1mit was issued. 8 Additional excavation and restoration work was required due to unstable 9 soil conditions which resulted in lai·ger bore and catch pits. Jack and bore

10 installation (as specified by the RR) requires excavations to the specified 11 depth of main installation. The boring equipment is then placed in the 12 excavation. The soil conditions at the time of constmction required these 13 pits to be lai·ger than estimated to ensme safety.

14 Included in the table below are all projects that have exceeded the OUCC threshold.

15 The following projects exceeded the OUCC threshold in prior periods, but had no

16 dollai·s spent or minimal dollars spent this period (TDSIC-10): Distribution Project

17 Nos. 162, 198, 210, 1578, 1720, 1863, 2906, 2941, 3759, 3678, and 4166,

18 Table 9: Distribution Projects - Actual Cost Variances Over the OUCC's 19 Threshold

Database Current Inception to Previous Capital Increase Date Actual Project Planned Category

Spend Estimate ariance

Number Year (Confidential)

(Confidential) (%) Description

Trim plates not in Obsolete - - - estimate, some dollai·

330 2018 Equipment amount disallowed, see explanation

Focused resomces -

1392 2018 Inside Meters - - many locations, see explanation above

6 The inception to date spend for this project is - but as explained above, Vectren No1th keeps a running total of all expenditures since inception, but only includes the current year estimate in the estimate column. The actual costs for this annual period are_ , as reflected in this table.


Page 33 of 55

1411 2018 Ineffectively Coated Steel

Focused resources – many locations, see explanation above

1880 2018 Casings Deep tie in and

highway proximity labor costs

3679 2018 Casings

Railroad inspection and cement fill

retirement, not known railroad requirements


No explanation in testimony – exceeds

$100k, informal explanation above

4070 2018 Exposures Rock, open trench, restoration

4166 2018 Bridge

Crossings Flow fill required and

additional traffic control costs

4214 2018 Obsolete

Equipment Additional labor hours

3670 2019 Casings In progress – new estimate & plan year

4231 2019 Casings In progress to meet

unchanged estimate – explained informally,

see above

162 2017 Exposures Rock cutting bore machine required

7 The inception to date spend for this project is but as explained above, Vectren North keeps a running total of all expenditures since inception, but only includes the current year estimate in the estimate column. The actual costs for this annual period are as reflected in this table.

- -- - -- - -- - -- - -- - -- - -- - -- - -- - ---


Page 34 of 55

198 2017 Exposures Additional main –

remove bridge crossing

210 2017 Exposures Rock cutting bore machine required

1720 2017 Casings Problems tapping pipe and concrete

restoration required

1863 2017 Casings Deep tie in and

highway proximity labor costs

2906 2017 Casings Sewer issues

2941 2017 Casings Jack & bore and another utility in Vectren easement

3759 2017 Exposures

No engineered estimate due to

customer service demand

3678 2018 Casings

No explanation – exceeds $100k but minimal cost this

period.

1578 2017 Ineffectively Coated Steel

No explanation – exceeds $100k but minimal cost this

period.

The Compliance Plan – Distribution Projects information provided in 1

Vectren North’s case-in-chief and in informal discussion supports the cost overruns 2

experienced in this period except for Distribution Project No. 330. Petitioner’s 3

- - -- - -- - -- - -- - -- - -- - -- - -- - -


Page 35 of 55

explanation for Project No. 330 suggests that a portion of the compressor system 1

was not included in final engineering estimate. Petitioner provided the following 2

explanation in Attachment SAH-5, page 1: 3

The trim plate cost for two Mooney regulators was not in the original 4 estimate and the trim plate size was changed after the project was 5 approved. 6

I recommend disallowing $3,346 because Petitioner’s explanation suggests the 7

final engineering estimates did not include an integral part of the compressor 8

system. 9

Q: In your analysis of Vectren North’s Compliance Plan – BSCI Projects, are 10 there actual costs that have exceeded the budget by $100,000 or 20% in this 11 current period (1/1/18-6/30/18) and have not been addressed previously? 12

A: Yes. There were 6 BSCI Projects reported in TDSIC-9 that exceeded 20% or 13

$100,000 of the previous estimate, and these 6 BSCI Projects continue to increase 14

with no new estimate, while continuing to exceed the OUCC threshold. Three of 15

the 6 projects had substantial increases over best estimate. The percent increase for 16

BSCI Project No. N-1083 has gone up by a factor of four, N-130 has gone up 5 17

times the TDSIC-9 percentage increase, and N-2182 has gone up 3 times the 18

TDSIC-9 percentage increase. Eleven BSCI projects (Nos. N-912, N-1164, N-19

2051, N-1958, N-584, N-1148, N-643, N-663, N-1093, N-2050, and N-557) 20

exceeded the OUCC threshold in prior periods, but had minimal spending this 21

period. 22

The BSCI Projects have all been justified by Petitioner during my on-site 23

review and testimony review of Petitioner’s Exhibit No. 1, Attachment SAH-6. 24


Page 36 of 55

Bare Steel Cast Iron Project ID N-1081 1

• Vectren North Testimony: Attachment SAH-6, page 1 – Restoration cost 2 was higher than expected due to relocating main from green space to street 3 because of utility conflict. The City of Tipton permit was also higher than 4 anticipated. 5


• Vectren North Testimony: Attachment SAH-6, page 1 - Due to difficulty of 7 locating sewer lines, open trench installation was required for the entire 8 project which increased the restoration and additional permit costs. 9


• Vectren North Testimony: Attachment SAH-6, page 1 – Due to the trees 11 located in the planned grassy areas, the installation of main was relocated 12 to the sidewalk area causing an increase in restoration costs. 13


• Vectren North Testimony: Attachment SAH-6, page 1 – Due to difficulty 15 of locating sewer lines, open trench installation was required for a portion 16 of the project which increased the restoration cost and inspector over-time. 17


• Vectren North Testimony: Attachment SAH-6, page 1 - S. 7th St. was 19 scheduled for 2022 as a part of N-719. Due to the City of Terre Haute's 20 repaving schedule this street had to be added to this project. This added an 21 additional 5,155 feet of main and 69 services, poor subgrade was 22 encountered changing the excavation depth form 16 inch to 30 inch which 23 placed the services in the project area in conflict. Also, during the 24 downtown area of the project, sewer lines could not be located causing open 25 cut trenching; this increased hard surface restoration costs. 26


• Vectren North Testimony: Attachment SAH-6, page 1 - A portion of the 28 project designed to be uprated was found to be vintage plastic causing an 29 additional 2,000' of main and 43 services to be replaced. 30


• Vectren North Testimony: Attachment SAH-6, page 1 - Due to difficulty of 32


Page 37 of 55

locating sewer lines and other utility conflict, a large portion of the project 1 had to be open cut trenched which increased restoration costs. 2


• Vectren North Testimony: Attachment SAH-6, page 1 – During 4 construction, full-time traffic control was necessary at an industrial area of 5 US 231. Two large open excavation areas were needed to relocate tie-ins 6 at major intersections, which resulted in additional hard surface restoration 7 of entire intersections. 8


• Vectren North Testimony: Attachment SAH-6, page 1 – Due to difficulty 10 of locating sewer lines, a considerable portion of this project was open cut 11 trenched and the City of Danville required concrete to be poured over 12 excavated areas, which increased restoration costs. Additional traffic 13 control was also necessary due to working in a downtown area. 14


• Vectren North Testimony: Attachment SAH-6, page 1 – Several services 16 were designed to be relocated from the back of the buildings to the front-17 side, which caused additional cost when several customers’ inside fuel lines 18 were found not to be up to code during construction. Also, additional cost 19 of inspector overtime was incurred. 20


• Vectren North Testimony: Attachment SAH-6, page 1 – Due to difficulty 22 of locating sewer lines, a considerable portion of this project was open cut 23 trenched, which increased restoration costs. Additional traffic control was 24 also necessary due to job location. Time and material were applied due to 25 project difficulty. 26


• Vectren North Testimony: Attachment SAH-6, page 1 – An additional 500' 28 of main and 6 services were installed to maintain feed to accommodate the 29 planned retirement of the existing regulator station. Also, additional traffic 30 control and restoration costs were incurred with the added main and 31 services. 32


Page 38 of 55

• OUCC/Vectren North Informal Communication - 400’ of additional 4” 1 main was installed to replace existing identified Aldyl-A (vintage plastic) 2 piping identified during construction. Installation of a new section of 6" 3 plastic main (approx. 100') along 4th St. was added to maintain gas supply 4 for the system while the existing low pressure regulator station was retired. 5 It was determined during construction that the existing 6” MP steel main 6 and the 10” MP steel main were not tied together (which would have 7 maintained the supply) and this added tie-in was necessary to retire the 8 existing LP regulator station. The six services were on these additional 9 segments of main. 10


• Vectren North Testimony: Attachment SAH-6, page 2 – Due to difficulty 12 of locating sewer lines, the entire project required open cut trench versus 13 boring, which added to the cost of hard surface restoration. 14


• Vectren North Testimony: No explanation in Attachment SAH-6 if greater 16 than $100k. 17

• OUCC/Vectren North Informal Communication - The added costs for this 18 project were the result of having to install sections of the proposed new 19 main by means of open cut/trench in lieu of horizontal directional drilling 20 (“HDD”) due to proximity to existing utilities. There were instances during 21 construction where conflicts with other existing subsurface utilities were 22 discovered which required a change in construction method. The added 23 open cut installation method sections added construction schedule duration 24 and also increased the quantity of required restoration work items such as 25 street asphalt repairs and sidewalk replacements. 26


• Vectren North Testimony: Attachment SAH-6, page 1 – Due to 28

encountering rock, time and material was used for installation. Conflict 29 with steam line required a change in construction and additional cost. 30 Additional restoration was required due to sidewalk replacements. 31


• Vectren North Testimony: Attachment SAH-6, page 1 – Due to recently 33

paved streets, dual main was installed under the sidewalk to avoid any street 34 cuts. This resulted in sidewalk restorations. 35


Page 39 of 55

1 Table 10: BSCI Projects - Actual Cost Variances Over the OUCC's Threshold

Database Current Inception to Previous Inc1·ease Project. Planned Date Actual Capital Variance

Description Numbe1· Year Spend Estimate (%) (Confidential) (Confidential)

Relocate out of

N-1081 2018 - - - greenspace -pennit &

restoration costs

- - - Locates - open

N-1083 2018 trench & restoration

N-1085 2018 - - - Relocate - trees

- - - Town required

N-1164 2018 hard restoration surfaces

- - - Locates - open

N-1173 2018 ti·ench required, restoration

Additional 1 mile

- - - of main and 69 N-130 2018 services due to

City moving up paving schedule

Found vintage

N-1600 2018 - - - plastic - replaced 2000 ft. of main & 43 services


Page 40 of 55

N-201 2018 Utility conflicts –

open trench & restoration

N-2051 2018 City code

requirement - resurfacing

N-2097 2018 Encountered rock

N-2119 2018 Traffic control & restoration

N-2182 2018

Dual main was installed due to recently paved

streets

N-387 2018

Sewer lines – open trench &

concrete restoration

N-435 2018

Relocate services from the back of buildings to the

front – inspection

N-551 2018 Sewer lines – open trench &

restoration

- - -- - -- - -- - -- - -- - -- - -- - -


Page 41 of 55

N-585 2018 Additional 500 ft. of main & 6

services installed

N-661 2018 Sewer line

locates – open trench

N-912 2018 Inspectors & traffic control

N-1958 2016 RR – depth & space constraints

N-584 2016 Storm drainage – open trench

N-1148 2017 Sewer laterals – open trench &

restoration

N-643 2017 Utility conflicts –

open trench & restoration

N-663 2017 Open hard surface cut

required

- - -- - -- - -- - -- - -- - -- - -- - -


Page 42 of 55

N-586 2018

No Testimonial explanation – greater than

$100k – Petitioner

supplied detail upon OUCC

request

N-1093 2017

No Testimonial explanation – greater than

$100k – 2017 Project – No

dollars spent this period

N-2050 2017

No explanation – greater than $100k 2017 Project – No


N-557 2017

No explanation – greater than $100k 2017 Project – No


The Compliance Plan – BSCI Project information provided in Vectren 1

North’s case-in-chief and in informal discussion adequately supports the actual cost 2

overruns experienced in this period. 3

Q: In your analysis of Vectren North’s Compliance Plan – Storage Projects, are 4 there actual costs that exceeded the budget by $100,000 or 20%? 5

A: Yes. During my review of the Compliance Plan – Storage Projects information 6

provided in Vectren North’s case-in-chief there are only nine of thirty projects that 7

- - -

- - -- - -- - -


Page 43 of 55

have charges from project inception to date. Four Storage Projects met my 1

threshold for a more in-depth review. 2

Storage Project ID 4192 3

• OUCC/Vectren North Informal Communication - The primary reason the 4 well was going to be plugged was due to the restrictive casing size, integrity 5 issues, and no representative field response patterns. During the preparation 6 of an audit, Reservoir Engineering developed some models to aid in the 7 reservoir and geologic characterization of the field. After creating these 8 models to help explain gas containment monitoring methods to regulators, 9 it was apparent that the Oglesby well could help Reservoir Engineering 10 better understand the field operation and extents. Prior to placing the well 11 into service as an observation well, it was necessary for a casing integrity 12 issue to be remediated. This variance in the budget is largely due to the 13 integrity defect being remediated in the well. Conversion of this well was a 14 more cost-effective solution to obtain additional monitoring capabilities as 15 opposed to constructing a new observation well. 16


• Vectren North Testimony: Attachment SAH-11, page 1 - Additional costs 18 included modification to the existing flow line which was required because 19 the wellhead was required to be extended 2' higher. Wireline was required 20 to kill the well instead of water because the well would not hold the water. 21 A pulldown rig was required because there was a solid plug discovered 22 inside the wellhead during construction which had to be drilled out. 23


• Vectren North Testimony: Attachment SAH-11, page 1 - Actual costs 25 included modification to the existing flow line which was required because 26 the wellhead was required to be extended 2' higher. Also, wireline was 27 required to kill the well instead of water because it would not hold the water. 28 In addition, a pulldown rig was required because there was a solid plug set 29 inside the wellhead which had to be drilled out. 30


• Vectren North Testimony: Attachment SAH-11, page 1 – Actual costs 32 included modification to the existing flow line which was required because 33 the wellhead was required to be extended 2’ higher. Also, wireline was 34 required to kill the well instead of water because it would not hold the water. 35

1 2


Page 44 of 55

ill addition, a pulldown rig was required because there was a solid plug set inside the wellhead which had to be drilled out. -

3 T bl 11 S a e . tora2e ro1ects - ctua ost anances ver t e s res . p . A I C V. 0 h OUCC' Th hold Database Current Inception to Previous Inc1·ease

4 Q:

5 A:

6

7

Project. Planned Date Actual Capital Variance Description Numbe1· Year Spend Estimate (%)


Supplied infonnal

4192 2018 - - - info1mation upon request - see

above

Modified flow - - - line & "kill' well 4195 2018 with wireline

instead of water

Modified flow - - - line & "kill' well 4197 2018 with wireline

instead of water

Modified flow - - - line & "kill" well 4198 2018 with wireline

instead of water

III. TDSIC PLAN UPDATES

Please give an overview of Vectren North's TDSIC projects.

ill Attachment SAH-8, Vectren N01th provides the following infonnation for the

projects: the Maximo Work Order Number, Proj ect Catego1y , Project Sho1t

Description, Planned Year, other data, the estimated budget, actual costs to date,


Page 45 of 55

and variances. I reviewed each individual project by category while looking for 1

variances that exceed the OUCC’s predetermined threshold. I focus on those 2

projects that have exceeded the OUCC’s threshold in this period and have not been 3

discussed in prior TDSIC filings. 4

The four major Project Categories are: Targeted Economic Development 5

(“TED”), System Improvement, Public Improvement, and Rural Extension. The 6

TED projects and the rural extensions are designed for the addition of customers 7

for economic development purposes, and serving previously unserved rural areas. 8

Combined, TED and Rural Extension Projects account for approximately 30% of 9

the TDSIC Projects. Approximately 40% are Public Improvement Projects and 10

30% System Improvement Projects. 11

There are no TDSIC Projects with estimated or actual cost variances that 12

exceed the OUCC threshold (exceed 20% or $100,000) that lacked valid 13

explanations and therefore there are no Vectren North TDSIC projects of concern 14

in this filing – TDSIC-10. 15

BEST ESTIMATES 16 Q: Are there estimate increases for the TDSIC Projects between Vectren North’s 17

most recently approved TDSIC Project estimates (1/29/2019) and the 2018 18 through 2020 Plan years that exceed the OUCC threshold? 19

A: Yes. There are three estimate increases that exceed the OUCC threshold for 20

TDSIC Projects within the TDSIC Plan. All three of these project estimates were 21

increased based on engineering site review. The Gas Production and Storage 22

project was discussed on April 25, 2019, and explained as permanent concrete pads 23

required for the natural gas underground storage grounds. I accept this as a 24

1

2

3

4

5

6

7

8 9

10

11 12 13 14 15

16

17 18 19 20


Page 46 of 55

reasonable requirement for the site. The Public Improvement proj ect is in West

Lafayette at Lindberg Road, and upon site review, Petitioner now has re-estimated

because proj ect engineering found substantial complexities required main relocates

due to a road improvement project by the City of West Lafayette. The System

Improvement Project (Project No. 12265416) is a pressm e uprate of mains in the

n01th and east sides of Franklin, Indiana.

TDSIC Proiect ID 12265416

• Vecti·en No1th Testimony: Attachment SAH-8, page 4 - Adjustment made to estimate based on contractor bid cost

TDSIC Project ID 221

• Vecti·en No1i h Testimony: Attachment SAH-8, page 4 - The cmTent estimate is based on a detailed design which incmporates additional field site visits, smveys, drawings, etc. Also, the estimate was revised to include reinforced concrete pads and retaining walls for dumpster storage required dming tower media replacement.

TDSIC Proiect ID 13494166

• Vecti·en No1ih Testimony: Attachment SAH-8, page 4 - The original estimate was based on prelimina1y plans. CmTent estimate is based on final plans and detailed design which is significantly more complex than the original.

21 T bl 12 TDSIC P . a e . ro1ects - stimate ost anances E . d C V . ver t e s res o 0 h OUCC' Th h Id

Database Current Previous Current

Project Category Planned Capital Capital Variance

Number Year Estimate Estimate (%) Description


New estimate

System - - - based on 12265416

Improvement 201 8 conti·actor actual

bid


Page 47 of 55

221

Gas Production &

Storage 2020

Detailed design including reinforced

concrete pads & walls for dumpster

area

13494166 Public Improvement 2020 Detailed design –

more complex

The TDSIC Plan information provided in Vectren North’s case-in-chief and in 1

informal discussions adequately supports the revised estimates experienced in this 2

period. 3

ACTUAL SPEND 4

Q: In your analysis of Vectren North’s TDSIC Plan, are there actual costs that 5 exceeded the budget by $100,000 or 20%? 6

A: Yes. There are twelve Public Improvement Projects, of which 3 exceed the OUCC 7

threshold this period. There are four System Improvement Projects, and none of 8

these had any expenditures this period. There is one Gas Production & Storage 9

Project with substantial actual cost increases in this period. Additionally, there are 10

six TED/Rural Extension projects that exceed the OUCC variance threshold. The 11

majority of the actual cost overages are a function of other utility conflicts, typically 12

sewer, resulting in unplanned open trench and restoration instead of directional 13

drilling. 14

Q: Did Vectren North explain the reasons that some of the Public Improvement 15 Project actual costs exceeded the OUCC threshold variances? 16

A: Yes. Petitioner provided reasons in the commentary portion of Attachment SAH-17

8. My analysis consisted of reading commentary, and discussing projects with 18

Petitioner. Additionally, Petitioner responded to my questions at our meeting and 19

- - -- - -


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in informal email responses. The following is a summary of my analysis for the 1

Public Improvement Projects. 2

Petitioner has continued to experience, as discussed in TDSIC-9, conflicts 3

with other utilities where utility relocation coordination is the responsibility of the 4

project owner, but locating was not adequately detailed, nor was the locating in the 5

near proximity of all utilities enforced prior to construction causing underground 6

conflicts addressed during actual construction. 7

Petitioner stated storm drainage systems, private utilities, and water mains 8

have caused cost variances. For TDSIC-10, sewer mains and sewer laterals were 9

more of an issue for this period’s projects. Additional costs include increased labor 10

time for exposing laterals to avoid cross boring into sewer laterals and increased 11

restoration due to open trenching. Vectren North discussed on April 25, 2019 the 12

following specific projects through informal discussions relating to Public 13

Improvement Projects. 14

There are six Public Improvement Projects that have zero or minimal actual 15

spend this time, but prior period actual costs caused these projects to exceed the 16

OUCC threshold: Nos. 12627014, 12307318, 12626850, 13390314, 15206962, 17

and 12624612. There are three other Public Improvement TDSIC-9 projects that 18

exceeded the OUCC threshold in TDSIC-9 and have substantial increases this time: 19

Project Nos. 12624179, 15206965, and 13831950. The percentage increases for 20

these have gone up in Project order above: 2-times, 5-times, and 2-times. 21


Page 49 of 55

PUBLIC IMPROVEMENT PROJECTS 1

TDSIC Public Improvement Project ID 12624179 2

OUCC/Vectren North Informal Communication - The work that wasn’t 3 mentioned in the original variance explanation was for additional hard 4 surface restoration. Relocation work was completed prior to the City 5 completing its work and Vectren North was required to perform final hard 6 surface restoration prior to winter rather than minimal temporary restoration 7 as originally planned/estimated (with the final being performed as part of 8 the City’s work). 9


• Vectren North Testimony: Attachment SAH-8, page 2 – Two additional 11 conflicts were found with the 4" steel pipe during the construction phase 12 which required relocation, including a service. These sections were 13 originally thought to be un-conflicted. Secondly, the 6" steel creek bore had 14 to be lengthened by 120' and deepened due to a late change by the project 15 owner to the creek culvert headwall structure. This deepening required 16 additional time/labor, excavating, and special shoring. 17


• OUCC/Vectren North Informal Communication – Additional traffic control 19 was needed due to heavier than expected traffic in the work area which was 20 attributable to a combination of the following factors: other 21 utility/construction work in the area, which concentrated traffic more than 22 expected, other road closures that impacted traffic flows and heavy rains 23 that saturated roadside areas and forced construction vehicles to be staged 24 on the pavement rather than off of the roadway. 25


• Vectren North Testimony: Attachment SAH-8, page 5 – Original estimate 27 was for standard depth excavation. However, main was found to be deeper 28 than expected which caused the contractor to expend additional labor, 29 required a second excavator to accomplish the creek crossing, and 30 additional special extra depth shoring to safely perform the work. 31


• OUCC/Vectren North Informal Communication – This project was a 2015 33 public improvement project that was never closed out and Vectren did not 34


Page 50 of 55

1 intend to include the costs reflected in the second half of 2018 in TDSIC-2 10 and will remove the amounts from the CSIA calculation.

3 TDSIC Public Improvement Project ID 13831950

4 • Vecti·en No1th Testimony: Attachment SAH-8, page 4 - Project costs 5 exceeded the estimate due to a field scope change that changed the extent 6 of the road work which resulted in one additional conflict lowering and the 7 extension of another planned lowering from 14 feet in length to 60 feet in 8 length. These field changes added significant labor and ti·affic control costs. 9 The work site was also more complex than originally planned due to heavy

10 vehicular ti·affic and utility congestion which slowed the work progress.

11 Table 13: TDSIC Public Improvement Projects -Actual Cost Variances Over the 12 OUCC's Threshold

Maximo CuITent

Inception to Pr·evious Increase Work

Planned Date Actual

Estimate Variance Or·der

Year· Spend

(Confidential) (%) Description Number (Confidential)

- - - Special backfill, additional

12627014 2018 sewer locations, extended ti·affic conti·ol

12307318 2017 - - - City scope changes -additional 739 ft. of main

Subsurface rock and eliminate

12624179 2018 - - - steel with polyethylene, discussed above.

- - - Conflict with sto1m sewer 12626850 2018 drainage, minimal this period.

- - - RR casing, flowable backfill,

13390314 2017 extended ti·affic conti·ol, minimal this period.

Unlocated conflicts found and - - - discussed in TDSIC-9 -15206965 2018 service and culvert, discussed

above.

15206962 2018 - -12624612 2018 - -13831950 2018 - -13494120 2018 - -12623899 2018 - -6525235 2015 - -


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- Unknown private utility locations, minimal this period.

- Conflicted tie-in, minimal this period.

- Field scope change and utility congestion, discussed above.

- Depth & trnffic control, discussed above.

- Main deeper thus additional shoring & excavation,

discussed above.

- Additional excavations & restoration, discussed above.

1 Q: 2

Did Vectren North explain the reasons that some of the System Improvement Project actual costs exceeded the OUCC threshold variances?

3 A: Yes. Petitioner provided written explanations, in its Attachment SAH-8 for the four

4 projects in Table 14 and the situations were also discussed on April 25, 2019. All

5 four of these System Improvement projects have no additional costs this period.

6 Table 14: TDSIC System Improvement Projects -Actual Cost Variances Over the 7 OUCC's Threshold

Current Inception to Previous Increase

Database Planned

Date Actual Estimate Variance

Project Number Year

Spend (Confidential) (%) Description

(Confidential)

- - - 8" Leaking valve

4703437 2017 found, no spend in cunent period.

Increased labor

12439551 2016 - - - due to late delivery of

heater, no spend

15202802053014 2016 -11198275 2017 -


Page 52 of 55

in cunent period.

Bad winter weather - time & - - material contract,

no spend in cmTent period.

RR - unplanned

- - cainer p1pe replacement, no spend in cmTent

period.

1 Q: 2

Did Vectren North explain the reasons the TDSIC Gas Production and Storage Project actual costs exceeded the OUCC threshold variances?

A: Yes. Petitioner provided written explanations, which I have paraphrased, in its

Attachment SAH-8. I am satisfied with Petitioner's explanation in SAH-8.

Project EN267 is the Wolcott water removal system enhancements for improved

gas deliverability, which originally had planned on a 12 inch valve to remain in

place, but Petitioner replaced the valve upon further inspection.

3 GAS PRODUCTION AND STORAGE PROJECTS

4 TDSIC Gas Production and Storage Project ID EN267

5 • Vectren No1ih Testimony: Attachment SAH-8, page 6 - Actual costs 6 include replacement of an existing 12" valve which was planned to stay.

7 Table 15: TDSIC Gas Production and Storage Projects -Actual Cost Variances 8 Over the OUCC's Threshold

Maximo Current

Inception to Previous Increase Work Planned Date Actual Estimate Variance

Order Year

Spend (Confidential) (%) Description

Number (Confidential)

- - - Change to EN267 2016 replace 12 inch

main, see above


Page 53 of 55

Q: Have any of Vectren North’s TDSIC-10 Rural Extension or TED projects 1

exceeded the OUCC Threshold for further inquiry? 2 A: Yes. There are six Rural Extension Projects and zero TED Projects that exceed the 3

OUCC threshold. Petitioner provided written explanations, which I have 4

paraphrased in the following table, in its Attachment SAH-8. I am satisfied with 5

Petitioner’s explanation in SAH-8 as valid reasons for the additional costs. 6

TDSIC Rural Extension Project ID 16126427 7

• Vectren North Testimony: Attachment SAH-8, page 1 - Actual costs 8 increased due to a change to the original plan which added approximately 9 300 additional feet of main to serve additional customers who were 10 identified after the original estimate was created. 11


• Vectren North Testimony: Attachment SAH-8, page 7 - The original 13 estimate did not include costs for removal or restoration of the existing 14 roadway. 15

16 TDSIC Rural Extension Project ID 15853693 17

• Vectren North Testimony: Attachment SAH-8, page 7 - Construction crews 18 encountered shallow rock formations during trench excavations which 19 increased construction and spoils removal costs. 20


• Vectren North Testimony: Attachment SAH-8 page 7 - When project was 22 released for construction it was found that the property had been subdivided 23 which required the main to be extended beyond the original plan. This 24 extension drove increased labor and materials costs for the project. 25


• Vectren North Testimony: Attachment SAH-8, page 7 - Due to congestion 27 of the work areas with other utilities additional labor was required to 28 complete the installation, including additional time for locating of sewers. 29

1 TDSIC Rural Extension Project ID 15524010


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2 • Vecti·en No1ih Testimony: Attachment SAH-8, page 7 - Actual costs 3 exceeded the estimated costs for this project primarily due to three factors. 4 1. The estimated costs for all sewer locating were inadveliently excluded 5 from the final estimate. 2. Due to the project owner's timing requirements 6 and the planned resmfacing of the streets all crossings had to be completed 7 in advance of the rest of the adjacent work which caused multiple inefficient 8 mobilizations and demobilizations. 3. New tapping equipment was required 9 due to the size and type of main pipe used which led to additional labor

10 costs for an additional tapping crew to assist/train.

11 Table 16: TDSIC Rural Extensions - Actual Cost Variance Over the OUCC's 12 Threshold

Database Cu1Tent Inception to Date Previous Capital Increase

Prnject Planned Actual Spend Estimate Variance (%) Number Year (Confidential) (Confidential) Desc1iption

Additional main

16126427 2018 - - - required to se1ve additional loads, see

above

- - - Additional restoration 15518532 2018 required, see above

- - - Encountered shallow 15853693 2018 rock fonnations, see

above Additional main for

16161776 2018 - - - subdivision not originally platted, see

above

- - - Additional sewer 15864440 2018 locates required, see

above Additional sewer

- - - locates & new 15524010 2018 tapping equipment

required for main size installed, see above


Page 55 of 55

When asked, Petitioner provided the following information concerning the 20-year 1

revenue test for new rural extension projects included in the TDSIC Plan: 2

From the table, projects 16126427, 16161776 and 15524010 still meet the 3 total potential revenue test. For example, project 15524010 total potential 4 revenue is . While projects 15518532, 15853693 and 15864440, 5 currently fall below the revenue test, there is a substantial amount of time 6 for additional services to be added to increase revenue. 7 IV. CONCLUSIONS AND RECOMMENDATIONS

Q: Please summarize your recommendations. 8 A: For the reasons stated above, I recommend the Commission: 9

• Approve Vectren North’s Updated 7-Year Plan, but not include $3,346 for 10 recovery of Distribution Project No. 330, as discussed above. 11

• Require Petitioner to close out and remove from TDSIC Public 12 Improvement Project ID 6525235 (Plan Year 2016) the not 13 intended to be included in TDSIC-10 CSIA calculation. 14

• Require Petitioner in further TDSIC filings to explain all project estimates 15 or actual cost increases that meet or exceed the OUCC’s threshold of 20% 16 or $100,000 of the previous estimate. 17

• Require Petitioner to provide an explanation and presentation to the OUCC 18 of engineering, costs, and PHMSA requirements for its finalized projects 19 for natural gas storage contained in either Compliance Projects or TDSIC 20 Projects. 21

• Require Petitioner to provide a separate table in testimony for all new 22 Compliance or TDSIC Projects. 23

I also recommend Petitioner continue to proactively engage the OUCC when a 24

TDSIC Project and Compliance Project cost “best estimate” is trending to exceed 25

the OUCC threshold variances. 26

Q: Does this conclude your testimony? 27 A: Yes, it does. 28

-

-

AFFIRMATION

I affam, under the penalties for pe1jury, that the foregoing representations are true.

Brien:S::; ~ ~ Utility Analyst II Indiana Office of Utility Consumer Counselor 44430 TDSIC-10 Vectren North

Date

Appendix BRK-1 Cause No. 44430 TDSIC-10

Page 1 of 3

APPENDIX BRK-1 TO THE TESTIMONY OF OUCC WITNESS BRIEN R. KRIEGER

Q: Please describe your educational background and experience. 1 A: I graduated from Purdue University in West Lafayette, Indiana with a Bachelor of Science 2

Degree in Mechanical Engineering in May 1986, and a Master of Science Degree in 3

Mechanical Engineering in August 2001 from Purdue University at the IUPUI campus. 4

From 1986 through mid-1997, I worked for PSI Energy and Cinergy progressing to 5

a Senior Engineer. After the initial four years as a field engineer and industrial 6

representative in Terre Haute, Indiana, I accepted a transfer to corporate offices in 7

Plainfield, Indiana where my focus changed to industrial energy efficiency implementation 8

and power quality. Early Demand Side Management (“DSM”) projects included ice 9

storage for Indiana State University, Time of Use rates for industrials, and DSM 10

Verification and Validation reporting to the IURC. I was an Electric Power Research 11

Institute committee member on forums concerning electric vehicle batteries/charging, 12

municipal water/wastewater, and adjustable speed drives. I left Cinergy and worked 13

approximately two years for the energy consultant, ESG, and then worked for the OUCC 14

from mid-1999 to mid-2001. 15

I completed my Masters in Engineering in 2001, with a focus on power generation 16

including aerospace turbines and left the OUCC to gain experience and practice in turbines. 17

I was employed by Rolls-Royce (2001-2008) in Indianapolis working in an engineering 18

capacity for military engines. This work included: fuel-flight regime performance, 19

component failure mode analysis, and military program control account management. 20


Page 2 of 3

From 2008 to 2016 my employment included substitute teaching in the Plainfield, 1

Indiana school district, grades 3 through 12. I passed the math Praxis exam requirement 2

for teaching secondary school. During this period, I also performed contract engineering 3

work for Duke Energy and Air Analysis. 4

Over my career I have attended various continuing education workshops at the 5

University of Wisconsin and written technical papers. While previously employed at the 6

OUCC, I completed Week 1 of NARUC’s Utility Rate School hosted by the Institute of 7

Public Utilities at Michigan State University. In 2016, I attended two cost of service/rate-8

making courses: Ratemaking Workshop (ISBA Utility Law Section) and Financial 9

Management: Cost of Service Ratemaking (AWWA). In 2017, I attended the AGA Rate 10

School sponsored by the Center for Business and Regulation in the College of Business & 11

Management at the University of Illinois Springfield and attended Camp NARUC Week 2, 12

Intermediate Course held at Michigan State University. In 2018, I completed 13

Fundamentals of Gas Distribution developed by Gas Technology Institute. 14

My current responsibilities include reviewing and analyzing Cost of Service 15

Studies (“COSS”) relating to cases filed with the Commission by natural gas, electric and 16

water utilities. Additionally, I have taken on engineering responsibilities within the 17

OUCC’s Natural Gas Division. 18

Q: Have you previously filed testimony with the Commission? 19 A: Yes. I have provided written testimony concerning cost of service studies in Cause Nos. 20

44731, 44768, 44880, 44988, 45027, 45072, 45116, and 45117. Additionally, I have 21

provided written testimony for Targeted Economic Development “TED” projects in 22

2017/2018 and various Compliance/TDSIC Petitions. While previously employed by the 23

http://www.uis.edu/cbam/cbr/

http://www.uis.edu/cbam

http://www.uis.edu/cbam

http://www.uis.edu/


Page 3 of 3

OUCC, I wrote testimony concerning the Commission’s investigation into merchant power 1

plants, power quality, Midwest Independent System Operator and other procedures. 2

Additionally, I prepared testimony and position papers supporting the OUCC’s position on 3

various electric and water rate cases during those same years. 4

Q: Please describe the general review you conducted to prepare this testimony. 5 A: I reviewed previous Vectren South and Vectren North TDSIC Petitions in Cause Nos. 6

44429 and 44430, and the Commission Orders. Additionally, I reviewed PHMSA 7

requirements. I reviewed and analyzed Petitioner's prefiled direct testimony, exhibits, 8

workpapers, and data request responses for this Cause. I focused on the testimony, 9

exhibits, and work papers of Petitioner’s witness Steven A. Hoover. On April 25, 2019, I 10

performed an on-site review and discussion with Petitioner of its Compliance and TDSIC 11

Projects. 12

CERTIFICATE OF SERVICE

This is to certify that a copy of the foregoing OUCC'S REDACTED TESTIMONY OF

BRIEN R. KRIEGER has been served upon the following counsel of record in the captioned

proceeding by electronic service on May 31, 2019.

Robe1t E. Heidorn P. Jason Stephenson CENTERPOINT ENERGY, INC. E-mail: [email protected] [email protected]

Steven W. Krohne ICE MILLER LLP E-mail: [email protected]

Jeffr Atto Dep

INDIANA OFFICE OF UTILITY CONSUMER COUNSELOR 115 West Washington Street Suite 1500 South Indianapolis, IN 46204 [email protected] 317/232-2494 - Telephone 317/232-5923 - Facsimile

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