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Financial & Economic Analysis Projects
Following are descriptions of a selection of projects that demonstrate our capabilities in the area of Financial and Economic Analysis.
Click on a Project below:
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Analysis of Rate & Regulatory Treatment
of Proposed Generating Facilities
The Iowa Utilities Board retained McFadden Consulting to
assist it in evaluating applications to construct or lease
new generating facilities. Section 476.53 of the Iowa Code
provides that if a regulated utility files an application
to construct or lease new generating facilities in Iowa,
the Board must establish, in advance, the regulatory and
ratemaking treatment for such facilities in a contested
proceeding. MidAmerican Energy Company has filed an application
to construct a gas-fired combined cycle generating unit
known as the Greater Des Moines Energy Center. Preliminary
issues in MidAmerican's application include cost of capital,
capital structure, depreciable life, jurisdictional allocation,
AFUDC, CWIP, construction costs, excess capacity, and the
impact of a rate settlement in a previous MidAmerican rate
case. MidAmerican proposed an in service date of Summer
2003. Hearings are scheduled for the Spring 2002.
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Feasibility of Constructing a Generating
Unit to Replace Purchased Power
The City of Fort Morgan, Colorado retained McFadden Consulting
to assess the feasibility of the City installing a gas-fired
combustion turbine. Fort Morgan's Electric Department
currently purchases all of its customers' power supplies
from the Western Area Power Administration (WAPA) and
the Municipal Energy Agency of Nebraska (MEAN). The City's
contract with MEAN expires in the near future and the
City wishes to explore the feasibility of constructing
a gas-fired combustion turbine to replace the purchases
from MEAN. McFadden Consulting completed the initial phase
of the project utilizing DECISIONmaker, a proprietary
strategic decision-making model developed by McFadden
Consulting. The second phase is currently underway.
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Turbine Feasibility Analysis
Project Development Ind. LLC (PDI), a subsidiary of Environmental
Oil Processing Technology, Inc. retained McFadden Consulting
to analyze the financial feasibility constructing and
operating a turbine fueled by waste oil that has been
converted to no. 2 diesel, and to provide expertise in
pricing and structuring a power sales agreement. PDI had
been considering acquiring a defunct refinery to convert
waste oil to useful petroleum products when it was approached
by a municipal utility about constructing a turbine on
the site. McFadden Consulting assessed the financial feasibility
utilizing DECISIONmaker, a proprietary strategic decision-making
model developed by McFadden Consulting.
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Acquisition of Gathering
and Transmission Facilities and Development of Gathering
and Transmission Rates
Mr. McFadden was retained by UMC Petroleum Corporation,
now known as Ocean Energy to provide rate and regulatory
assistance in its acquisition of certain gathering and
transmission facilities located in Montana from Northern
Natural Gas Company. The facilities were purchased
by Havre Pipeline Company, LLC, which is a joint venture
with UMC and other producers in the Bearpaw area. Historically,
the facilities were included in Northern’s integrated
pipeline system and, therefore, subject to the jurisdiction
of the Federal Energy Regulatory Commission. The
main scope of the project was to develop rates for both
the gathering system and the transmission system that
would be appropriate under either FERC or Montana Public
Service Commission regulations. The rates developed
by Mr. McFadden were ultimately filed with and accepted
by the Montana Commission. Assistance was also provided
in structuring the acquisition to insure the most favorable
regulatory treatment for ratemaking purposes. Mr.
McFadden also assisted Havre in preparing their annual
report to the Montana Commission for 1996, 1997, and 1998.
Most recently, he provided assistance in developing new
rates that were filed in with the Montana Commission in
the fall of 1998. Mr. McFadden filed direct testimony
in support of the company’s filing. A hearing was
scheduled for mid-June 1999. However, the Company
decided to withdraw its application.
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Assist in Structuring
of a Bid to Acquire a Natural Gas Gathering Company
We were retained by Colorado Interstate Gas Company, a
major interstate natural gas pipeline company, to assist
in structuring a bid to acquire a natural gas gathering
and processing company. Assisted in developing a strategy
that permitted the pipeline to structure its bid in a
manner that exploited its position in the marketplace.
Assistance was also provided in establishing a value for
the company and conducting the due diligence associated
with the bid.
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Economic Impact of
Utilizing Gas Versus Coal as Fuel for Generation
Acted as the project manager of an assignment to evaluate
the economic and environmental impacts of utilizing gas
as a fuel for electric generation. A specific portion
of this assignment was analyzing the impact of utilizing
gas instead of coal during the winter in three Denver
area generating stations. Various factors were considered
in assessing the economic impacts, including the cost
of gas and its transportation to the plants, the differential
in gas and coal price forecasts, capital costs associated
with a switch to natural gas, SO2 allowance costs, operating
and maintenance costs, and dispatch impacts.
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Review of Ontario Gas
Companies’ Proposed Expansion Feasibility Policies
McFadden Consulting was retained by Ontario Hydro’s
Power Worker’s Union to review the proposed system expansion
feasibility policies filed with the Ontario Energy Board
by Consumers Gas Company Ltd., Union Gas Ltd., and Centra
Gas Ontario, Inc. The project entailed an analysis of
the companies’ extension policies, including an in-depth
review of their economic feasibility tests and the treatment
of the avoided cost of alternative fuels. As part of this
analysis, the goals of an attachment policy, the perspectives
of the various stakeholders, the impact of key variables,
and the framework for considering quantifiable and non-quantifiable
factors were reviewed.
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Evaluation of Clean-Up
of Manufactured Gas Plant Sites
Assisted in evaluating Atlanta Gas Light Company’s
(AGL) clean-up efforts at several manufactured gas plant
sites. The purpose of the financial and management review
was to determine if AGL has managed its efforts in a reasonable
and cost-effective manner, and to determine the financial
and regulatory impacts of the costs associated with the
clean up. Specific areas of responsibility included financial,
regulatory, tax, and accounting impacts of AGL efforts.
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Development of a Mains
Extension Policy and Economic Test
We assisted BC Gas in a study to identify the benefits
and costs of expanding its natural gas system in BC Gas'
service territory, and to develop a possible mechanism
for incorporating these benefits and costs into a mains
extension test for the company. The study presented an
overview of extension policies and identified the key
variables that need to be considered in developing a mains
extension test. It also grouped the benefits and costs
into quantifiable and non-quantifiable considerations.
Finally, the analysis also identified administrative considerations
in developing a mains extension test. Testimony was presented
in a hearing before the British Columbia Utilities Commission.
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Development of Avoided
Costs
Developed estimates of avoided costs for BC Gas Utility,
Ltd. on facility-specific, customer class, and end-use
bases. Two different approaches were used. For customer
class and end-use avoided costs, incremental load shapes
were developed and run through the company's in-house
gas supply planning model. Facility-specific avoided costs
were estimated using a "proxy unit" approach
based on capital cost investments available from BC Gas'
upstream capacity suppliers. The facility-level avoided
costs were then segmented into demand and commodity components
that were then applied to the incremented load curves.
The avoided costs were used by BC Gas in developing its
IRP.
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Review of Electric
Department Extension Policy
Mr. McFadden reviewed the City of Fort Morgan, Colorado extension policy for
its electric department. Historically, the City had not exercised its authority
to collect the cost of extending service to new customers or upgrading service to
existing customers. Mr. McFadden was retained to review the extension policy and
determine an appropriate construction allowance. He developed a construction
allowance based on the gross embedded investment per customer for each customer class.
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Denver, Colorado 80209-3521
Phone: 303-733-0999
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