D.P.U. 15-80 Exhibit UnitiI-DLC-5 Page 1 of 311 Redacted
March 10, 2015
BY EMAIL
James Simpson, Vice President Concentric Energy Advisors 293 Boston Post Rd West, Ste 500 Marlborough, MA 01752
Fitchburg Gas and Electric Light Company d/b/a Unitil Request for Proposals
Dear Mr. Simpson,
On behalf of Fitchburg Gas and Electric Light Company d/b/a Unitil, enclosed please find a copy of Unitil’s Request for Proposals ("RFP") to provide Unitil with expert assistance in preparing several studies for dual gas and electric rate case filings.
Inquiries regarding this RFP should be directed by email to Joseph Conneely, Unitil Service Corp., at [email protected].
Thank you for your attention to this matter.
Sincerely,
/s/ Karen M. Asbury
Karen M. Asbury Director, Regulatory Services
Attachments
Karen Asbury, Director Regulatory Services
6 Liberty Lane West Hampton, NH 03842-1720
Phone: 6 03=773-6441 Fax 6 03-773-6641 Email: a [email protected]
II-00181
D.P.U. 15-80 Exhibit UnitiI-DLC-5 Page 2 of 311 Redacted
March 10, 2015
BY EMAIL
Scott Albert, Principal & Region Manager GDS Associates 1155 Elm Street, Suite 702 Manchester, NH 03101
Fitchburg Gas and Electric Light Company d/b/a Unitil Request for Proposals
Dear Mr. Albert:
On behalf of Fitchburg Gas and Electric Light Company d/b/a Unitil, enclosed please find a copy of Unitil’s Request for Proposals ("RFP") to provide Unitil with expert assistance in preparing several studies for dual gas and electric rate case filings.
Inquiries regarding this RFP should be directed by email to Joseph Conneely, Unitil Service Corp., at [email protected].
Thank you for your attention to this matter.
Sincerely,
/s/ Karen M. Asbury
Karen M. Asbury Director, Regulatory Services
Attachments
Karen Asbury, Director Regulatory Services
6 Liberty Lane West Hampton, NH 03842-1720
Phone: 6 03=773-6441 Fax 6 03-773-6641 Email: a [email protected]
II-00182
D.P.U. 15-80 Exhibit UnitiI-DLC-5 Page 3 of 311 Redacted
March 10, 2015
BY EMAIL
Mr. Paul Normand Management Applications Consulting 1103 Rocky Drive, Suite 201 Reading, PA 19609-1157
Fitchburg Gas and Electric Light Company d/b/a Unitil Request for Proposals
Dear Mr. Normand
On behalf of Fitchburg Gas and Electric Light Company d/b/a Unitil, enclosed please find a copy of Unitil’s Request for Proposals ("RFP") to provide Unitil with expert assistance in preparing several studies for dual gas and electric rate case filings.
Inquiries regarding this RFP should be directed by email to Joseph Conneely, Unitil Service Corp., at [email protected].
Thank you for your attention to this matter.
Sincerely,
/s/ Karen M. Asbury
Karen M. Asbury Director, Regulatory Services
Attachments
Karen Asbury, Director Regulatory Services
6 Liberty Lane West Hampton, NH 03842-1720
Phone: 6 03=773-6441 Fax 6 03-773-6641 Email: a [email protected]
II-00183
D.P.U. 15-80 Exhibit UnitiI-DLC-5 Page 4 of 311 Redacted
March 10, 2015
BY EMAIL
Robert B. Hevert, CFA, Managing Partner Sussex Economic Advisors, LLC 161 Worcester Road, Suite 503 Framingham, MA 01701
Fitchburg Gas and Electric Light Company d/b/a Unitil Request for Proposals
Dear Mr. Hevert:
On behalf of Fitchburg Gas and Electric Light Company d/b/a Unitil, enclosed please find a copy of Unitil’s Request for Proposals ("RFP") to provide Unitil with expert assistance in preparing several studies for dual gas and electric rate case filings.
Inquiries regarding this RFP should be directed by email to Joseph Conneely, Unitil Service Corp., at [email protected].
Thank you for your attention to this matter.
Sincerely,
/s/ Karen M. Asbury
Karen M. Asbury Director, Regulatory Services
Attachments
Karen Asbury, Director Regulatory Services
6 Liberty Lane West Hampton, NH 03842-1720
Phone: 6 03=773-6441 Fax 6 03-773-6641 Email: a [email protected]
II-00184
D.P.U. 15-80 Exhibit UnitiI-DLC-5 Page 5 of 311 Redacted
FITCHBURG GAS AND ELECTRIC LIGHT COMPANY d/b/a UNITIL
CONFIDENTIAL REQUEST FOR PROPOSALS
FOR RATE CASE STUDIES
INTRODUCTION
Fitchburg Gas and Electric Light Company d/b/a Unitil ("Unitil" or "Company")is seeking responses to this Request for Proposals ("RFP") to provide Unitil with expert assistance in preparing several studies for dual gas and electric rate case filings, which it currently intends to present to the Massachusetts Department of Public Utilities ("Department") on or about June 17, 2015, based on test year costs for the 12-month period ending December 31, 2014. As described below under Scope of Work, the Company is seeking assistance in three areas. Unless specified otherwise, the consultant undertakes all required analyses and studies with Unitil staff providing the underlying data and general guidance based on the specific characteristics of its operations. You may submit single bid(s) on any area and/or provide a combined bid on any or all areas. Combined bids must still be broken down between each area however. Bidders providing combined bids are also encouraged to provide single stand-alone bids as combined bids will be considered "all or nothing" unless otherwise specified. Although separate cases will be filed for Unitil’s gas and electric divisions, the Company anticipates a combined proceeding. Bidders responding with a proposal must provide services for both the gas and electric filings, as applicable.
Questions regarding this RFP should be directed by email to: Joseph Conneely, Senior Regulatory Analyst, Unitil Service Corp. [email protected]
BACKGROUND
The Company is wholly owned utility subsidiary of Unitil Corporation. The Company provides retail electric and natural gas distribution service in a 170-square- mile service area in north-central Massachusetts. This includes electric distribution service to 28,600 customers in the communities of Fitchburg, Townsend, Lunenburg and Ashby, and also local natural gas distribution service to approximately 15,600 customers in these four communities as well as in Westminster and Gardner. Unitil Corporation’s other utility subsidiaries include Unitil Energy Systems, Inc., an electric distribution utility operating in New Hampshire and Northern Utilities, Inc., a local natural gas distribution utility with operating divisions in New Hampshire and Maine. Unitil Corporation is also the parent company of Granite State Gas Transmission, Inc., an interstate natural gas pipeline. Other subsidiaries include Unitil Service Corp. which provides a variety of shared administrative and professional services, including regulatory, financial, accounting, human resources, engineering, operations, technology and energy supply management services on a centralized basis to all the utility subsidiaries.
II-00185
Unitil Request For Proposals Rate Case Studies Page 2
D.P.U. 15-80 Exhibit UnitiI-DLC-5 Page 6 of 311 Redacted
SCOPE OF PROPOSED WORK
This RPF includes the following scope of work in three areas:
1. Allocated Cost of Service Study, Mar.qinal Cost Study, Lead/La.q Study and Rate Design:
The chosen expert ("Winning Bidder") will be responsible for developing and supporting the following studies for the Company’s gas and electric divisions: (1) allocated or accounting cost of service studies ("ACSS") and (2) updates to the Company’s marginal cost studies approved in D.P.U. 11-01/02~ The Company will prepare the Company revenue requirement and cost of service for each division using in house models and personnel. The Winning Bidder will use the results of these studies prepared by the Company’s in house personnel to develop the ACSS and any other studies as applicable. For gas, the consultant’s work will include a functional breakout between production and distribution such that the components of indirect gas costs (Local Propane and Liquefied Natural Gas, Dispatch Acquisition and FERC Proceeding Costs, and Production Related Overhead as defined in the Company’s Cost of Gas Adjustment Clause tariff) will be separately identified as will the revenue required for distribution rates. For electric, the consultant’s work will include the development of a customer-owned streetlight revenue requirement. The City of Fitchburg purchased approximately 85% of the Company’s streetlights pursuant to M.G.L c. 164, §34A. These streetlights are designated as customer-owned street lights and are subject to the Company’s Tariff for Outdoor Light Delivery Service - Customer Owned Equipment and other operating and license agreements that govern, among other things, the operating and maintenance responsibilities of the City and the Company for the purchased street lights. Thus, an essential component of the ACSS and rate design work will be the development and allocation of the revenue requirement for the customer-owned street lighting tariff. The scope of work also includes the assignment of costs related to water heater rental programs for the gas and electric divisions and conversion burners for the gas division. These costs must be identified so they can be removed from the Company’s cost of service.
The Winning Bidder will also be responsible for developing rate design based on this ACSS and updated long-run marginal cost study. The Winning Bidder will fully understand these elements and their use in designing rates as well as the Department’s approved method of using each in determining the fairness and efficiency of the costs to serve each rate class. This Scope of Proposed work shall also include the development of weather-normalized billing determinants for the Company’s gas division for calculating weather normalized revenue.
Unitil will also consider the inclusion of fully developed lead/lag studies for operation and maintenance expense (other than purchased gas or electricity) (see D.P.U. 13-90, p. 64-66). The Winning Bidder will also develop lead/lag studies for purchased gas costs, electric purchased power and external transmission costs. Bidders are requested to specifically identify the cost associated with preparing such lead/lag studies.
Updates to Unitil’s electric marginal cost study approved in D.P.U. 11-01/02 were made in D.P.U. 13-90.
II-00186
Unitil Request For Proposals Rate Case Studies Page 3
D.P.U. 15-80 Exhibit UnitiI-DLC-5 Page 7 of 311 Redacted
2. Return on Equity
The Winning Bidder will prepare and support an appropriate cost of equity for the Company. The Winning Bidder shall propose a variety of approaches to determining the appropriate cost of equity, including but not limited to the Discounted Cash Flow model, the Risk Premium model, the Capital Asset Pricing Model, and the Comparable Earnings Approach. The Winning Bidder will fully understand and aid Unitil in using each of these methods and the Department’s method of using each in determining the appropriate cost of equity capital for companies under its jurisdiction. Consideration of the Department’s findings and directives related to the effect of decoupling on company risk, as set forth in D.P.U. 07-50-A (Order dated July 16, 2008), is particularly pertinent to this RFP.
3. Depreciation Studies
The Winning Bidder will undertake comprehensive depreciation studies for Unitil’s gas and electric divisions, or propose limited studies, that will support the appropriate depreciation rates for Unitil. The Winning Bidder will fully understand and aid Unitil and its retained outside consultants in using all of the necessary components of the depreciation studies as well as the Department’s method in determining the appropriate depreciation rates for all plant for natural gas companies and electric distribution companies under the Department’s jurisdiction.
Additional Scope of Work- All Three Areas
In addition to above, the Winning Bidder(s) will present direct, prefiled testimony that will support the area of work or study, defend the methods used to determine the results, and the Company’s position regarding these results, and will present a complete and comprehensive discussion as to how the chosen methods and models used to support the findings and recommendations will comport with Department precedent.
The Winning Bidder(s) will be required: to support his or her direct, prefiled testimony with responses to information requests as may be issued by the Department, the Attorney General or other intervening parties; to assist in the interrogation of testimony as may be submitted by other parties to the proceeding (to support or to challenge the Company’s proposal), which may include the filing of responsive testimony; to attend hearings for cross-examination; to respond to in-hearing record requests; and, to assist in the drafting and review of the legal briefs to be submitted to the Department.
FEE STRUCTURE AND TIMELINE
Based on the Scope of Proposed Work, each proposal should include completed Project Price Sheet(s), which are enclosed as Attachments 1 through 3. Costs through preparation of the filing are to be provided on a "not to exceed" basis. Post-filing activities may be bid on a time and materials basis. The attachments contain instructions as to the information required in submitting a completed proposal.
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D.P.U. 15-80 Exhibit UnitiI-DLC-5 Page 8 of 311 Redacted
Unitil Request For Proposals Rate Case Studies Page 4
In addition to this submittal, each bidder is required to prepare a schedule outlining the time required to accomplish the Scope of Proposed Work, and a date when the work can be completed.
Proposals shall be complete in order to avoid costs beyond the contract price. Each bidder shall, therefore, include all work which is indicated in the specification and which is normally considered a part of the type of work covered by the Scope of Proposed Work, whether or not such work is fully detailed.
BILLING
Consistent with the requirements of the Department, Unitil will require detailed hourly billing that will withstand the scrutiny of the Department for rate case cost recovery. This means that bills should be detailed enough to justify cost recovery to the Department while not divulging litigation work product, including the number of hours worked, the billing rate, and the specific nature of services performed. All other out-of- pocket expenses, including cost of travel or travel-related expenses, telephone, duplication, and delivery costs ("Other Direct Costs") should be tracked and identified separately on bills. Unitil will remit payment on all appropriate invoices within thirty (30) days of receipt.
RESPONSE DUE DATE
You are the only representative from your firm to receive this RFP. Unitil will accept one response for consideration from your firm. Kindly respond by sending one (1) Adobe electronic .pdf version (all on one file) of your completed response and pricing. This electronic file can be sent on CD ROM or e-mailed to [email protected] on or before 5:00 p.m., Eastern Time, March 20, 2015. For CD ROM, USPS and overnight delivery of your proposal is encouraged. Proposals received after the due date will be returned unopened.
RFP Response Care of: Joseph Conneely Unitil Service Corp. 6 Liberty Lane West Hampton, NH 03842
Unitil will not provide reimbursement for any costs or expenses incurred in connection with this RFP, including the costs of preparing and submitting a response, providing any additional information or attending an interview. All material that is submitted in response to this RFP will become the sole property of Unitil. Unitil expressly reserves the right to utilize any and all ideas submitted in the proposals received unless covered by legal patent or proprietary rights which must be clearly noted in the proposal submitted in response to the RFP. Interviews of the top-qualifying firms may be conducted at Unitil’s discretion on a specific day or days to be disclosed later in the RFP process. All top-qualifying respondents will be notified of the exact interview date(s) in advance.
II-00188
Unitil Request For Proposals Rate Case Studies Page 5
In the event you decide not to respond to this RFP, please give notice of your decision to Joseph Conneely via telephone (603-773-6472) or email ([email protected]) on or before 5 p.m., Eastern Time, March 18, 2015.
D.P.U. 15-80 Exhibit UnitiI-DLC-5 Page 9 of 311 Redacted
EVALUATION CRITERIA
Each response to this RFP will be evaluated against the following seven criteria: (1) corporate capability, including overall corporate capabilities, and corporate experience with similar issues; (2) project team capability, including qualifications of the proposed staff, and qualifications of the proposed staff in the above-described subject matter; (3) the technical approach, including the response to the RFP requirements and proposed innovative approaches; (4) proposal quality; (5) pricing, including the proposed price for the work and proposed unit rates, including markup; (6) a commercial review, including both minor and major commercial impediments (e.g. conflicts of interest, etc.); and (7)interviews, if conducted.
Accordingly, to facilitate our review, the proposal should include in concise but adequate detail the following information:
¯ Corporate capabilities and experience on similar projects in other jurisdictions and before the Department;
¯ A proposed project staff, including a Project Manager; ¯ The experience of the project team (not the firm) and resumes which indicate the
location of each individual; ¯ Two or three references for similar projects and for the proposed Project Manager; ¯ Identification and discussion of any actual or potential conflict of interest your firm
might have in providing services to Unitil; ¯ Each firm must certify in writing that its representation of Unitil will not create any
conflict of interest involving that firm; ¯ A description of the technical basis for your approach to completing the project,
including a narrative discussion of any proposed modifications to the Scope of Proposed Work;
¯ A work breakdown of project tasks and staff assigned to each task; ¯ An outline of the planned schedules and workpapers that will support the findings
and recommendations; ¯ A proposed project schedule; and ¯ Completed Project Price Sheet (s) (See Attachments 1 through 3).
ADDITIONAL PROPOSAL INSTRUCTIONS AND CONDITIONS
A. Limitations
1. This RFP does not commit Unitil to award a contract, pay any costs incurred in the preparation of a response, or procure or contract for services of any kind whatsoever. Unitil reserves the right, in its sole discretion, to accept or reject any or all responses as a result of the RFP, to negotiate with any or all firms considered, or to cancel this RFP in whole or in part. Unitil reserves the right to request additional information from all respondents.
II-00189
Unitil Request For Proposals Rate Case Studies Page 6
D.P.U. 15-80 Exhibit UnitiI-DLC-5 Page 10 of 311 Redacted
2. Respondents may be requested to clarify the contents of their proposal. Other than to provide such information as may be required by Unitil, no respondent will be allowed to alter its proposal or to add new information after the RFP due date.
3. Respondents may be required to participate in negotiations and to submit any price, technical or other revisions to its proposal which may result from such negotiations.
4. All material submitted in response to this RFP will become the sole property of Unitil, except as noted above.
5. All information provided by Unitil in this RFP or subsequent verbal or written communications shall be considered confidential and for express use only in connection with the preparation of the RFP response. Bidders may not use, disclose, or duplicate this RFP or any information contained herein for any purpose other than responding to this RFP. Your firm’s responses to this RFP will be treated in a confidential manner and will be filed under confidential cover if requested during discovery.
B. Proposal Submission.
1. Proposals must include a cover letter indicating the mailing address of the office from which the proposal is submitted, the name and email address of the individual who will represent the firm as the primary contact person for the proposal, and the telephone and facsimile numbers of the primary contact person.
2. Non-responsive proposals include, but are not limited to, those that: (a) are irregular or not in conformance with RFP requirements and instructions; (b) are conditional, incomplete, indefinite or ambiguous; (c) are intended to accomplish only part of the overall work within a particular area described herein; (d) have no signature or an improper one; or (e) are not submitted on time or are submitted at any time via facsimile.
Unitil may waive minor informalities or irregularities in a proposal that are merely a matter of form and not substance and the correction of which would not be prejudicial to other proposals.
C. Administrative Specifications
1. All proposals must be irrevocable for 90 days and signed by an authorized officer of the firm.
2. The Winning Bidder(s) must agree to provide Unitil with audit access on request during the term of the contract and for 2 years thereafter.
3. Unitil, at any time, in its sole discretion, may terminate its contract with the Winning Bidder(s), or postpone or delay all or any part of the contract, upon written notice.
4. All bidders are obligated to update any changes in their proposal prior to the proposal due date.
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D.P.U. 15-80 Exhibit UnitiI-DLC-5 Page 11 of 311 Redacted
Unitil Request For Proposals Rate Case Studies Page 7
D. Addenda: Errors and Omissions
1. If a respondent discovers any ambiguity, conflict, discrepancy, omission or other error in this RFP, immediately notify Joseph Conneely via email ([email protected]) of such error and request clarification or modification to the document.
2. Should Unitil find it necessary, modification to the RFP will be made by addenda.
3. If a respondent fails to notify Unitil of a known error or an error that reasonably should have been known prior to the final filing date for submission, the respondent shall assume the risk. If awarded the contract, the respondent(s) shall not be entitled to additional compensation or time by reason of the error or its late correction.
CONTRACT APPROVAL
Unitil’s selection of Winning Bidder(s) shall not be binding until it has been approved by Unitil’s Chief Financial Officer.
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D.P.U. 15-80 Exhibit UnitiI-DLC-5 Page 12 of 311 Redacted
Fitchburg Gas and Electric Light Company d/b/a Unitil Request for Proposal
Allocated Cost of Service Study, Marginal Cost Study Update, and Rate Design Attachment I a
PROJECT PRICE SHEET FOR SCOPE OF PROPOSED WORK (1)
PROPOSED WORK ELEMENTS
Project Planning and Administration
Research
Analyses or Studies
Prepare Direct, Pre-filed Testimony
Other Direct Costs
Total Not To Exceed (through filing)
Respond to Discovery
Assist in the Interrogation of Testimony
Prepare Rebuttal Testimony
Attend Hearings
Respond to In-Hearing Record Requests
Assist in Drafting of Legal Brief
Other Direct Costs
Total Cost Estimates (post-filing)
Grand Total
Gas Division
Electric Division
Total Costs
(1) Include all labor and other direct cost assumptions for all proposed work elements. Costs through preparation of the filing are not to exceed cost estimates and will not be reimbursed for costs over the estimates, unless prior written approval from Unitil has been obtained. Post-filing activities may be bid on a time and materials basis. Include separate spreadsheets that itemize the number of hours and hourly rate of each consultant expected to assist on the project, and other direct cost assumptions for all proposed work elements. A narrative description of the work covered by each task (e.g. for meetings, price assumes a certain number of meetings) will assist Unitil in evaluating the bids. The response must also include applicable labor rates and clearly identify any markups that will be applied under the Scope of Proposed Work.
II-00192
D.P.U. 15-80 Exhibit UnitiI-DLC-5 Page 13 of 311 Redacted
Fitchburg Gas and Electric Light Company d/b/a Unitil Request for Proposal
Lead/Lag Study Attachment I b
PROJECT PRICE SHEET FOR SCOPE OF PROPOSED WORK (1)
PROPOSED WORK ELEMENTS
Project Planning and Administration
Research
Analyses or Studies
Prepare Direct, Pre-filed Testimony
Other Direct Costs
Total Not To Exceed (through filing)
Respond to Discovery
Assist in the Interrogation of Testimony
Prepare Rebuttal Testimony
Attend Hearings
Respond to In-Hearing Record Requests
Assist in Drafting of Legal Brief
Other Direct Costs
Total Cost Estimates (post-filing)
Grand Total
Gas Division
O&M Lead/Lag
Study
Electric Division
O&M Lead/Lag
Study
Gas Division Purchased
Gas Lead/Lag
Study
Electric Division
Purchased Power and
Transmission Lead/Lag
Study
Total Costs
(1) Include all labor and other direct cost assumptions for all proposed work elements. Costs through preparation of the filing are not to exceed cost estimates and will not be reimbursed for costs over the estimates, unless prior written approval from Unitil has been obtained. Post-filing activities may be bid on a time and materials basis. Include separate spreadsheets that itemize the number of hours and hourly rate of each consultant expected to assist on the project, and other direct cost assumptions for all proposed work elements. A narrative description of the work covered by each task (e.g. for meetings, price assumes a certain number of meetings) will assist Unitil in evaluating the bids. The response must also include applicable labor rates and clearly identify any markups that will be applied under the Scope of Proposed Work.
II-00193
D.P.U. 15-80 Exhibit UnitiI-DLC-5 Page 14 of 311 Redacted
Fitchburg Gas and Electric Light Company d/b/a Unitil Request for Proposal
Return on Equity
Attachment 2
PROJECT PRICE SHEET FOR SCOPE OF PROPOSED WORK (1)
PROPOSED WORK ELEMENTS
Project Planning and Administration
Research
Analyses or Studies
Prepare Direct, Pre-filed Testimony
Other Direct Costs
Total Not To Exceed (through filing)
Respond to Discovery
Assist in the Interrogation of Testimony
Prepare Rebuttal Testimony
Attend Hearings
Respond to In-Hearing Record Requests
Assist in Drafting of Legal Brief
Other Direct Costs
Total Cost Estimates (post-filing)
Grand Total
Gas Division
Electric Division
Total Costs
(1) Include all labor and other direct cost assumptions for all proposed work elements. Costs through preparation of the filing are not to exceed cost estimates and will not be reimbursed for costs over the estimates, unless prior written approval from Unitil has been obtained. Post-filing activities may be bid on a time and materials basis. Include separate spreadsheets that itemize the number of hours and hourly rate of each consultant expected to assist on the project, and other direct cost assumptions for all proposed work elements. A narrative description of the work covered by each task (e.g. for meetings, price assumes a certain number of meetings) will assist Unitil in evaluating the bids. The response must also include applicable labor rates and clearly identify any markups that will be applied under the Scope of Proposed Work.
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D.P.U. 15-80 Exhibit UnitiI-DLC-5 Page 15 of 311 Redacted
Fitchburg Gas and Electric Light Company d/b/a Unitil Request for Proposal
Depreciation Study
Attachment 3
PROJECT PRICE SHEET FOR SCOPE OF PROPOSED WORK (1)
PROPOSED WORK ELEMENTS
Project Planning and Administration
Research
Analyses or Studies
Prepare Direct, Pre-filed Testimony
Other Direct Costs
Total Not To Exceed (through filing)
Respond to Discovery
Assist in the Interrogation of Testimony
Prepare Rebuttal Testimony
Attend Hearings
Respond to In-Hearing Record Requests
Assist in Drafting of Legal Brief
Other Direct Costs
Total Cost Estimates (post-filing)
Grand Total
Gas Division
Electric Division
Total Costs
(1) Include all labor and other direct cost assumptions for all proposed work elements. Costs through preparation of the filing are not to exceed cost estimates and will not be reimbursed for costs over the estimates, unless prior written approval from Unitil has been obtained. Post- filing activities may be bid on a time and materials basis. Include separate spreadsheets that itemize the number of hours and hourly rate of each consultant expected to assist on the project, and other direct cost assumptions for all proposed work elements. A narrative description of the work covered by each task (e.g. for meetings, price assumes a certain number of meetings) will assist Unitil in evaluating the bids. The response must also include applicable labor rates and clearly identify any markups that will be applied under the Scope of Proposed Work.
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D.P.U. 15-80 Exhibit UnitiI-DLC-5 Page 16 of 311 Redacted
PROPOSAL FOR:
RATE CASE STUDIES FOR
FITCHBURG GAS & ELECTRIC LIGHT COMPANY
_ALLOCATED COST OF SERVICE STUDY, MARGINAL COST STUDY,
LEAD/LAG STUDY AND RATE DESIGN
PREPARED FOR
MARCH 20, 2015
CONFIDENTIAL
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D.P.U. 15-80 Exhibit UnitiI-DLC-5 Page 17 of 311 Redacted
March 20, 2015
RFP Response
Care of: Joseph Conneely
Unitil Service Corp.
6 Liberty Lane West
Hampton, NH 03842
RE: Proposal to Provide Rate Case Studies for Fitchburg Gas and Electric Company
Dear Mr. Conneely,
Concentric Energy Advisors, Inc. ("Concentric") appreciates the opportunity to submit the following
proposals to Fitchburg Gas and Electric Company ("FG&E" or the "Company") to prepare studies for
the Company’s upcoming electric and gas rate cases before the Massachusetts Department of Public
Utilities: (i) Allocated Cost of Service Study ("ACSS"), Marginal Cost Study ("MCS"), Lead/Lag Study
and Rate Design and (~) Return on Equity. These proposals have been structured as two single stand-
alone bids; Concentric is not providing a combined bid for the two areas.
The primary contact person for each proposal is provided below along with the respective contact
information. Please feel free to contact us should you have any questions on our proposals or
qualifications. We look forward to the opportunity to work with FG&E on this assignment.
Very truly yours,
CONCENTRIC ENERGY ADVISORS~ INC.
ACSS, MCS, Lead/Lag Study and Rate Design: Return on Equity:
James D. Simpson Senior Vice President
293 Boston Post Road West
Suite 500
Marlborough, MA 01752
Email: ~ceadv~sors~com Direct: 508-263-6224
Fax: 508-303-3290
Ann E. Bulkley Vice President
293 Boston Post Road West
Suite 500
Marlborough, MA 01752
Email:
Direct: 508-263-6216
Fax: 508-303-3290
II-00197
D.P.U. 15-80 Exhibit UnitiI-DLC-5 Page 18 of 311 Redacted
CONFIDENTIAL
TABLE OF CONTENTS
I. Introduction ................................................................................................................... 1
II.
III.
Concentric’s Overall Capabilities .................................................................................. 1
Concentric’s Project Team ............................................................................................. 2
Lead/Lag Study ............................................................................................................. 4
Allocated Cost of Service Study ..................................................................................... 9
Marginal Cost Study ..................................................................................................... 14
VII. Rate Design .................................................................................................................. 15
VIII. References .................................................................................................................... 20
Xo
Project Schedule ........................................................................................................... 20
Pricing and Terms ....................................................................................................... 21
Attachments"
Ao Project Team R~sum~s
Bo Example Rate Design Data Request
Co Project Price Sheets
D. Project Schedules
E. Concentric’s Standard Terms and Conditions
CONCENTRIC ENERGY ADVISORS, INC. PAGE I
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D.P.U. 15-80 Exhibit UnitiI-DLC-5 Page 19 of 311 Redacted
CONFIDENTIAL
I. INTRODUCTION
Concentric Energy Advisors, Inc. ("Concentric") appreciates the opportunity to submit this proposal
to prepare an Allocated Cost of Service Study ("ACSS"), a Marginal Cost Study ("MCS"), a Lead/Lag
Study, and Rate Design for Fitchburg Gas and Electric Light Company’s ("FG&E") d/b/a Unitil
("Unitil" or the "Company") electric and gas rate cases currently planned for filing with the
Massachusetts Department of Public Utilities (the "Department" or "DPU") on or before June 17,
2015, using the twelve months ending December 31, 2014 as the test year.
As explained in detail throughout this proposal, Concentric is well-positioned to assist UNtil in all
four areas. Specifically:
We have extensive experience with FG&E, and other Unitil companies - Northern Utilities,
Unitil Energy Systems, and Granite State Gas Transmission - on many projects;
We have testified at the Department on many occasions and are accepted as experts in
proceedings before the Department; and
Our proposed project teams for all four areas have extensive experience performing ACSS,
Lead/Lag Studies, MCS and Rate Design for electric and gas utilities throughout North
America.
II. CONCENTRIC~S OVERALL CAPABILITIES
Concentric is an employee-owned management consulting and financial advisory firm focused on the
North American energy industry. Concentric is headquartered in Marlborough, Massachusetts with an
office in Washington, DC. We specialize in utility regulation, finance and M&A, energy markets,
management operations and planning, as well as civil litigation and alternative dispute resolution.
Concentric’s workforce is comprised of energy industry experts who have held positions with utility
companies, state and federal regulatory agencies, energy marketers, and global energy companies.
Concentric’s regulatory team in particular includes former regulators and utility executives who have
served as decision-makers and expert witnesses in state, provincial, and federal regulatory proceedings
across North America on a broad range of policy and rate matters.
Concentric’s ratemaking services range from high level rate case assistance (e.g., case management,
regulatory strategy, witness training) to addressing specific technical rate case requirements (e.g., cost
of service studies, marginal cost studies and pricing, revenue requirements, cash working capital, rate
design, tariff design, cost of capital, attrition of earnings, management prudence, and rate base
(including the fair value of rate base assets). Concentric’s consultants also have experience in
developing and supporting alternative ratemaking approaches, including: capital spending recovery
mechanisms, inflation adjustment mechanisms, incentive ratemaking approaches, and revenue
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decoupling; the alternative ratemaking approaches that Concentric develops are designed to fit with
e~ch client’s business conditions.
Concentric’s regulatory experts are closely attuned to the latest ratemaking practices, policies and
trends in North America, including, for example, the ever-increasing focus on the interface between
integrated resource planning and ratemaking, the application of complex rate design approaches to
achieve policy objectives, the application of resource planning and development practices to achieve
environmental and economic policy goals, the introduction of competitive forces into regulated
markets, and the use of regulatory incentive mechanisms to reward growth in efficiency.
Concentric has more than 20 individuals who have appeared as experts in regulatory proceedings
across North America, supported by a team of consultants that are experienced in all aspects of
developing the financial, economic and technical data fried as part of regulatory proceedings.
III. CONCENTRIC~S PROJECT TEAM
Witnesses
Concentric has formed separate teams for the Lead/Lag, ACSS, MCS and Rate Design projects.
James Simpson will be the Responsible Officer for the overall project and the expert witness for the
gas and electric Rate Design and gas and electric Marginal Cost Study update projects; Marisa Amory
will be the Rate Design Project Manager. Mr. Simpson has extensive experience on a variety of
ratemaking issues and approaches. He is currently providing consulting assistance on rate-related
matters for Unitil’s Grid Modernization filing, and he has testified as an expert witness on behalf of
UNtil on numerous occasions, in Massachusetts, Maine, and New Hampshire.
David Heintz will be the expert witness for the allocated cost studies. He has prepared allocated
cost studies, and testified in support these studies, on numerous occasions and in several
jurisdictions. Mr. Heintz has also testified as an expert witness on Lead/Lag Study for Ameren
Illinois in their last three rate cases. In addition, Mr. Heintz has provided consulting assistance to
Unitil in Granite State Transmission’s 2010 general rate filing (RP10-896) before the Federal Energy
Regulatory Commission.
Joseph Weiss will be the expert witness for the Lead/Lag Studies. He has significant experience
preparing Lead/Lag Studies and has testified as an expert witness on the issue; in addition, he has
been responsible for preparing numerous revenue requirement filings.
The primary team will be assisted by experienced analysts to prepare the needed studies. The
staffing assignments and responsibilities for each of the separate projects are shown in the table
below; short biographical summaries for the major contributors follow. R4sum4s are provided in
Attachment A.
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Task
Lead/Lag Study (gas and electric)
Allocated Cost of Service Study (gas and electric)
Marginal Cost Study (gas and electric)
Rate Design (gas and electric)
Notes
[2]
Expert Witness Project Manager
oseph Weiss [1]
David Heintz [2]
ames Simpsons [3]
ames Simpson Marisa Amory
Mr. Weiss will serve as Project Manager for the Lead/Lag Study project
Mr. Heintz will serve as Project Manager for the ACSS project
Mr. Simpson will serve as Project Manager for the MCS project.
Bio~ranhies
James D. Simpson, Senior Vice President, has over 35 years of experience with regulatory relations,
regulated pricing and business strategy. Since joining Concentric in 2005, he has been responsible for
projects related to rates, decoupling mechanisms, capital and O&M tracker mechanisms, incentive
ratemaking, marginal cost studies, cost of service adjustments, service quality measures, and demand
forecasts. Prior to joining Concentric, Mr. Simpson held senior executive positions at a natural gas
utility and an entrepreneurial company providing a proprietary service to generating companies. Mr.
Simpson also held staff and director level positions at the Wisconsin Public Service Commission and
the Massachusetts Department of Public Utilities; he has an M.S. in Economics from the University
of Wisconsin and a B.A. in Economics from the University of Minnesota.
David A. Heintz, Vice President, has over 30 years of experience working with regulated rates and
tariffs at both the federal and state levels. He also provides clients with analyses of natural gas projects,
markets and issues. Mr. Heintz’s areas of expertise include cost of service, allocation and rate design,
tariff terms and conditions, rate case preparation and regulatory issues. Prior to joining Concentric
Energy Advisors, Mr. Heintz was a Senior Engagement Manager with Navigant Consulting, Inc. and
has worked for the Federal Energy Regulatory Commission, interstate pipelines and a local distribution
company. Mr. Heintz holds an M.B.A. from the University of Pittsburgh and a B.S. in Economics
from the Pennsylvania State University.
Joseph S. Weiss, Senior Project Manager, has worked on projects involving revenue requirements,
class cost of service, allocation and rate design, cash working capital, rate of return, affiliate
transactions, and rate case preparation for gas and electric utilities. As a consultant, Mr. Weiss has
provided support for filings with several utility commissions and has filed testimony as an expert
witness on cash working capital. He has strong quantitative and research skills and experience in
accounting issues. Prior to joining Concentric Energy Advisors, Mr. Weiss was a Consultant with
Navigant Consulting, Inc. and has worked for a large Midwest investor-owned utility. Mr. Weiss has
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an M.B.A. from Southern Illinois University Edwardsville and a B.S. in Business Administration (magna cum laude) with a major in Accounting and Finance from Saint Louis University.
Marisa Ihara Amory, Senior Project Manager, has 10 years of experience in the energy industry
bringing technical expertise in econometric analysis, financial modeling, and database
management .... Amory has assisted clients with rate design, integrated resource planning, utility
prudency reviews, contractual disputes, acquisition/divestiture due diligence, market power studies
and energy market assessments. She has designed unit commitment and gas storage optimization
models and has performed valuations of various electric generation projects, natural gas pipeline and
storage facilities, fuel supply contracts and power purchase agreements. Ms. Amory served as an
Intern Engineer and Application Developer at General Electric Power Systems Energy Consulting
before joining Concentric and is a graduate of Brown University with a B.S. in Applied Mathematics.
IV. LEAD/LAG STUDY
Concentric understands that the Company seeks consulting assistance to prepare Lead/Lag Studies
for FG&E’s electric and gas rate case filings, and to support the studies in testimony and responses to
discovery questions. It is Concentric’s understanding that the Company will conduct a preliminary
analysis to determine if it would be cost effective to have a consultant prepare fully developed
Lead/Lag studies for gas and electric operation and maintenance expense.~ If UNtil determines that
fully developed Lead/Lag studies would not be cost effective, the Consultant will be directed to
prepare only the more narrowly focused Lead/Lag studies for purchased gas costs and electric
purchased power and external transmission costs. As discussed in the following sections of this
proposal, Concentric will employ a four-step process to prepare (a) the narrow scope (purchased gas
cost, purchased power) gas and electric Lead/Lag studies, or (b) the broad scope (purchased gas cost,
purchased power and O&M) gas and electric Lead/Lag studies:
1. Review FG&E’s current Lead/Lag methodology;
2. Collect, substantiate and validate financial and Lead/Lag data used in the studies;
3. Prepare Lead/Lag analysis; and
.
Prepare testimony and a written report of the study methodology, results and
recommendations suitable for submission to the Department to support the Company’s
working capital proposal in its forthcoming rate cases.
At Unitil’s request, Concentric will prepare, or assist in the preparation of the preliminary cost-effectiveness analysis, as an "out of scope" project task.
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A. PROJECT SCOPE
1. Research
To ensure the completeness of the Lead/Lag Studies, Concentric will determine whether the
Company has appropriately considered all component of revenues lags and expenses leads that
should be included in a Lead/Lag analysis. Concentric will work with the Company to resolve any
perceived exclusions or additions to the analyses. Concentric will also provide an opinion as to the
level of specificity that may be required in order to enhance the acceptability of the study results to
participants in the regulatory process. As directed by the Company, Concentric will either prepare
(a) fully developed Lead/Lag studies for gas and electric operation and maintenance expense as well
as separate Lead/Lag studies for purchased gas costs and electric purchased power and external
transmission costs; or (b) Lead/Lag studies for purchased gas costs and electric purchased power
and external transmission costs.
2~ Substantiation and validation of financial and Lead/Lag data used in the study
To the extent that the Company directs Concentric to prepare fully developed Lead/Lag studies for
gas and electric operation and maintenance expense as well as Lead/Lag studies for purchased gas
costs and electric purchased power and external transmission costs Concentric will perform the
tasks described below. Concentric’s Lead/Lag estimation process takes into account each of the
determinants of cash working capital for regulated companies. These determinants include:
¯ Billing ¯ Electric Purchased Power and Transmission Costs
¯ Collections ¯ Accounts Payable
¯ Payroll ¯
¯ Pensions and Benefits
¯ Purchased Gas Costs
Outsourced Expenses
Taxes (Income and Non-Income)
Concentric will provide Lead/Lag estimates for each of the above determinants of cash working
capital. Additionally, working with Company-specific data, Concentric will determine an estimate
of cash working capital to be included as part of overall revenue requirement in the Company’s rate
cases.
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Concentric’s Lead/Lag estimation process takes into account each of the determinants of cash
working capital for a regulated utility. These determinants include:
¯ Revenue Lags
o Service
o Billing
¯ Collections
Electric Purchased Power and
Transmission Costs
o Interest Expense
Expense Leads
o Payroll and Payroll Taxes
o Pensions and Benefits
o Accounts Payable
o Taxes
o Purchased Gas Costs
The table below provides an overview of the types of determinants, what is measured within each
determinant, the typical data requirements and sampling approaches, and the typical sources of data.
Note that the information provided in the table below may be adjusted or modified to best suit the
needs of the Company for the rate filings made before the Department (i.e., this will be adjusted to
meet the particular methodology to be utilized for the Company).
Service Lag - Time period between
delivery of service and
reading of meter. For
monthly service, the value is
typically one-half month.
- If records are available, data for
1% of meters for each meter
read cycle or route
- If records are not available, the
midpoint of service period
assumption may be reasonable
- Meter Read Scheduled Dates
and Billing Dates by Billing
Cycle and Month for the test
year
Billing Lag - Time period between reading
of meter and mailing the
customer’s bill
- Time period between mailing
the bill and the amount of
time given to the customer to
pay
Collections Lag - Average Daily Customer Receivables Balance for test
year
- Customer
Information System
(or databases)
- Customer
Information System
(or databases)
- Large Industrial
Customer Database,
Database o f Special
Accounts etc.
- Customer
Information System
(or databases)
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Payroll and
Payroll Taxes
Pensions and
Benefits
Accounts
Payable (Other
Operations and
Maintenance
Expenses)
- Time Period between the
mid-point of when labor
services were provided to the
Company and payment for
those services. May vary
between Union employees
and Management employees.
- Time period between the
mid-point of the coverage
period and when payment
was made for the coverage
- Time period between the
mid-point of the period in
which services were provided
and when payment was made
for those services
- Time period between the
midpoint of the tax year and
when payments were made
Taxes
- Payment Amounts (in total) by
pay period, pay period
beginning and ending dates,
and direct deposit and check
amounts
- For those paid by check, the
check issue date, the check
clearing date, and the check
amount(s)
-Amounts may include other
payroll deductions (to be
determined)
- Copies of monthly invoices for
the test year
- Sampling typically not used
- By vendor, invoice date,
payment date, and amount for
all invoices received in the test
year
-For those vendors paid by
check, the check issue date, the
check clearing date, and the
check amount, preferably by
vendor. Sampling could be
used here
-For all category of taxes,
payment dates and payment
amounts
- For property taxes, payment
dates and amounts by
municipality/parcel
- Company Payroll
Records and Bank
Records
- Company Bank and
Financial Institution Records
- Human Resources
- Accounts Payable
- Company Bank and
Financial Institution
Records
- Tax Register
- Company
Accounting or
Accounts Payable
System
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Purchased Gas
Costs
Purchased
Power and
Transmission
Costs
Interest
Expense
- Time period between the
mid-point of supply
deliveries (typically mid-
month) and the date on the
ACH or wire transfer
- Time period between the
mid-point of supply
deliveries (typically mid-
month) and the date on the
ACH or wire transfer
- The expense lead time
associated with payments
made on long term debt
- Contract Terms
- Invoice Dates
- Payment dates
- Payment amounts
- If payments are by check, then
check dates and check clearing
dates (to estimate a float)
- Contract Terms
- Invoice Dates
- Payment dates
- Payment amounts
- If payments are by check, then
check dates and check clearing
dates (to estimate a float)
- Fuel Accounting
Fuel Accounting
-All payments made on long
term debt. These payments are
typically made twice a year.
- Treasury
Concentric will provide Lead/Lag estimates for each of the above determinants of cash working
capital. Additionally, working with Company specific data, Concentric will determine an estimate of
cash working capital for inclusion as part of the overall revenue requirement for the rate filings.
Prepare testimony and written report of the study
Concentric will prepare testimony and exhibits which will support the working capital requirement in
the Company’s rate case revenue requirement. Concentric will also provide the workpapers supporting
the final Lead/Lag study results.
B. RELEVANT PROJECT EXPERIENCE
Concentric consultants have prepared about 20 Lead/Lag studies in the past ten years. The following
list is a representative sample.
Confidential New England Clients Concentric is preparing cash working capital studies for two New
England gas utilities as part of their general rate filing.
Ameren Concentric performed and testified to Ameren’s cash working capital
requirements in approximately 15 different proceedings in its two
regulatory jurisdictions.
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Virginia Natural Gas Concentric prepared a Lead/Lag study and associated testimony on
behalf o f the client. Testimony was filed as part o f a rate proceeding
before the State Corporation Commission of Virginia.
Northern Illinois Gas Company Concentric performed a cash working capital study for Northern
Illinois Gas Company, including a Lead/Lag study and testimony
during the subsequent rate case.
Integrys Energy Group Concentric provided expert testimony regarding the North Shore
Gas Company and The Peoples Gas Light and Coke Company’s cash
working capital requirements.
V. ALLOCATED COST OF SERVICE STUDY
A. PROJECT SCOPE
I. Introduction
Concentric understands that the Company seeks support in preparing an allocated cost of service
study for FG&E’s electric and gas rate case filings, based on a test year of twelve months ended
December 31, 2014; and that the Company intends to file with the Department on or about June 17,
2015. Concentric also understands that the Electric ACSS will include the development and allocation
of the revenue requirement to a new rate class for customer-owned street lighting, In addition, both
the Electric and Gas ACSS will require assignment of costs to the water heater rental programs so that
these non-jurisdictional costs are removed from the Company’s cost of service. The Gas ACSS will
also require the assignment of costs to the burner conversion program so that these costs can also be
excluded from the Company’s cost of service.
2. Approach, Methodology and Deliverables
i. Overview
Concentric’s consultants have prepared embedded cost of service studies and testified in support of
these studies for many utilities throughout the U.S. Concentric has developed a proprietary ACSS
model in Excel® that complies with industry standards and requirements for embedded cost of service
studies. Concentric has used this model to prepare ACSS analyses for many utilities in the northeast.
At its core, the model is a convenient way to display the costs of serving each rate class. Concentric’s
ACSS model provides the revenue requirement detail associated with the cost to serve each rate class.
The model develops the revenue requirement detail at an account or sub account level and has the
flexibility to use a variety of Chart of Accounts, including the widely used FERC Uniform System of
Accounts 0vERC Accounts). Some categories of costs - generally rate base, expense and revenues -
are assigned to each rate class on the basis of allocation factors; other categories - such as return and
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income taxes - are calculated for the class within the model. The allocation factors fall into three
categories:
Direct Assignments Based on Company Accounting and Records - Because utilities usually maintain
accounting records of revenues collected by customer class, current revenues can be directly assigned
to each rate class. Certain types of utility plant such as primary conductors or lighting that are
dedicated to serving either a single large customer or customer class are typically directly assigned.
External Allocators- These allocation factors are based on either (a) externally obtained factors or (b)
derived from special studies that are performed outside the ACSS model. Customer numbers,
volumes and pro forma revenues at current rates by rate class are examples of factors that are
developed outside the ACSS model. External analyses or "special studies" are needed for accounts
that contain costs related to several activities or classes. For example, a special study is typically
conducted to determine an allocation factor for meter costs using the number and type of meters by
class and historic or replacement costs for the meter type. Concentric has extensive experience in
developing the necessary required studies to support the allocation process.
Internal Allocators- These factors are developed from the results of allocation calculations performed
in the study. For example, Concentric’s ACSS model allocates Payroll taxes on the basis of Labor
Expense, where the labor expense component of many individual expense and plant accounts is
determined within the embedded cost of service model.
Concentric’s ACSS model keeps track of cost components on an unbundled functionalized basis, so
that results can be reported for delivery service separate from competitive (supply) service; results are
also separately reported for customer, demand and commodity components.
ii. General Process
The general process that will be employed consists of the following stages.
a. Initial Assessment
The initial assessment will focus on three goals:
¯ Gaining a better understanding of the broader strategic, operating, and regulatory context
within which the project is being conducted,
¯ Understanding the type of data that is available to develop the various cost analyses that are
used in an ACSS study, and
¯ Reaching agreement on the division of responsibilities between Fitchburg and Concentric for
the preparation of analyses and studies.
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b. Allocation Studies
There are three main types of allocation studies utilized within an ACSS study: (i) Demand Related
Studies; (~) Special Studies related to account-specific plant and operation and maintenance ("O&M")
expenses; and (iii) Classification Studies.
Demand Related Studies
A complex part of the allocation process is the allocation of demand costs. Several methodologies
have been used by electric utilities to develop allocation factors for the demand components of costs
all of which are based on the customers’ actual or implied demand. Concentric understands that the
Department’s order in the Company’s prior rate case (D.P.U. 11-01) made specific findings as to the
allocation of several classes of costs, e.g., substations and transformers. Concentric proposes to follow
these guidelines absent changes in the Company’s system or operation that would warrant a change in
methodology.
Special Studies
When direct assignment is not readily apparent from the description of the costs recorded in the
various utility plant and expense accounts, further analysis is conducted to derive an appropriate basis
for cost allocation.
Classification Studies
A critical step in preparing an ACSS study is to classify costs into three classification categories:
Customer Costs, Demand Costs, and Energy Costs. In some instances, the classification of these
costs is established by a study that determines the portion of an account that is associated with each
classification.
Concentric will use the following process to prepare allocation studies for each of the three cost
categories:
¯ Confer with the Company on the type of allocation studies that should be considered,
¯ Discuss data availability for use within the allocation studies,
¯ Create a project plan to ensure special studies are completed in a timely and appropriate
manner,
¯ Discuss delineation of responsibilities between the Company and the Concentric team (e.g., a
line loss study utilized to adjust demand data may be completed by the Company whereas
application of the study to the demand data may be completed by Concentric), and
¯ Conduct and review allocation studies.
c. Class Cost of Service Modeling
The modeling process will involve consolidating and integrating the results of all of the allocation
studies. This phase includes the determination of cost functionalization and classification as well as
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the incorporation of the various cost allocation studies. During this phase of the engagement
Concentric will:
¯ Confer with the Company on the functionalization and classification of costs,
¯ Incorporate cost allocation studies into ACSS model,
¯ Tie out ACSS model to cost of service/revenue requirement, and
¯ Review result of study with the Company and refine the modeling as needed.
iii. Rate Base Allocation
In Massachusetts, Concentric generally favors using allocation approaches that have previously been
accepted by the Department. We note that the methodology employed in the Company’s last electric
cost study has been found reasonably acceptable and our initial approach will be to verify its
applicability and update or modify it as needed. For example, we would allocate different categories
of plant and depredation reserves as follows:
Distribution Electric Distribution Plant balances will be allocated on the basis of outside analyses and
Plant studies conducted by Concentric, using an approach that reflects year-round cost
causation and system utilization concepts to assign Distribution System Plant items.
Current Department precedent assigns Gas Distribution Plant account balances to rate
classes by applying Proportional Responsibility factors derived from monthly system
throughput data. Since Proportional Responsibility allocations weight usage throughout
the year and within a month on a proportional basis, the method tends to assign more
costs to higher volume classes as compared to a demand allocation.
Customer If possible, Concentric will directly assign customer-related plant; many utilities maintain
Plant plant records to a level of detail that Meter investment can be directly assigned to rate
classes. Concentric will likely allocate Services Plant on the basis of outside analysis; the
Department has accepted approaches that utilize generally available plant account records
(number of services by class, and typical class service length, size and materials) and
Engineering Department determinations of current installed costs by service type.
General Plant Concentric will likely allocate general plant on internal allocation factors (e.g., labor or
distribution plant); Concentric would examine the major elements in the Company’s
General Plant accounts to determine relationships with other allocations in the ACOSS.
Typically, Concentric allocates much, if not all general plant in the same way that related
Production, Distribution and Customer plant has been allocated.
iv, O&M and Customer Accounts Expense Allocation
Concentric’s ACSS model assigns O&M expenses to rate classes by analyzing the costs recorded in
each account or sub account, to determine the basis upon which the costs are incurred. Where
possible, allocations will be made on the basis of direct assignments or outside analyses, such as the
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breakdown of Customer Records and Collections Expense (FERC Account 903) into cost types,
activities and corresponding cost drivers. The remaining accounts will be allocated on the basis of
appropriately selected external or internal allocators. Concentric assumes that the pro forma sales and
revenues will be developed by the Company. Concentric can assist in the development of these sales
and revenue adjustments as necessary.
Remaining Expense Categories
Depreciation and amortization are allocated on the same basis that the corresponding plant item was
allocated. Taxes other than income taxes are analyzed to determine the basis on which they are
incurred; plant related taxes are allocated on the plant allocator that is developed within Concentric’s
ACSS model, and labor related taxes are allocated on the labor allocator that is also developed within
the ACSS model. Federal and state taxes are determined within the model, based on calculated taxable
income by rate class.
vi. Results and Schedule
Concentric’s ACSS model has the ability to handle all the functions required by the Company’s internal
needs and the Department requirements and Concentric will adjust and modify the models standard
reports to meet these requirements. As a starting point, for purposes of preparing rate case filing
documents, Concentric will produce the following reports and schedules:
¯ Total Cost of Service by Service Classification (Class), with return on rate base calculated by
Class at current rates.
¯ Total Cost of Service with revenue requirements by Class that would produce the Company’s
proposed return on rate base for each Class.
¯ Total Cost of Service by Class, with return on rate base calculated by Class at proposed rates.
¯ Unbundled Cost of Service by Function and Class.
¯ Functionalized Rate Base by Class.
¯ Functionalized Unit Cost of Service by Class, per kW and kwh for demand and energy
classified costs and per customer for customer classified costs, to serve as the basis for the
design of the base rates.
¯ Allocator detail, by account or sub account, for all classes.
vii. Data Requirements
Concentric has prepared the following table to provide a general understanding of the data that
Concentric will require to perform the ACSS study. Concentric’s typical practice is to prepare a
detailed list of required data at the start of the project after an initial situational assessment.
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Expense and plant data by
Department Chart of
Accounts
Usage and customer count data by month by class
Peak hour data by class
Other Data
Test Year; proforma adjustments included for both Electric and Gas
Test Year; normalizing adjustments included for both Gas and Electric. Also,
data on 1) combined accounts (multiple services or meters, one bill) 2) master
metered accounts (one meter, multiple bills) and 3) one service, multiple
meters, multiple bins (e.g., apt building)
Electric coincident and non-coincident peaks for the Test Year; normalizing
adjustments included
Date relating to special studies from plant accounting or engineering
departments.
For the ACSS study, Concentric will also require reasonable access to the Company’s Engineering,
Customer Service, Accounting, and Rates personnel who can provide data and analysis concerning
the nature and purpose of plant assets, as well as various customer service and administrative
functions.
VI. MARGINAL COST STUDY
B. PROJECT SCOPE AND CONCENTRIC’S APPROACH
The Department has required utilities to include marginal cost studies in rate increase filings to support
proposed rate design since the mid-1980s; over the past 30 years, there has been a marked change in
Department requirements concerning the techniques and analyses to be used in marginal costs studies
and in how rate design should reflect marginal costs. Current Department directives and standards
emphasize statistical approaches to estimating marginal costs, while de-emphasizing the link between
rate design and marginal costs. In the past several years, Concentric has developed marginal cost
studies for both gas and electric clients in Massachusetts that comply with the Department standards;
we have considerable practice in applying appropriate statistical techniques to address unusual
historical patterns. Of particular relevance to this proposal, Concentric prepared a marginal cost study
update for New England Gas Company’s ("NEGC") 2010 rate case, D.P.U. 10-114, which was
approved by the Department.~
1. Approach to Preparing Marginal Cost Study Update.
To prepare the UNtil 2015 updated marginal cost estimates, Concentric will use the methodology that
we developed for the NEGC 2010 rate case. That is, we will update the Company’s 2010 gas and
2 New England Gas Company, March 31, 2011, at 355.
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electric marginal cost study results (D.P.U. 11-01/02) by increasing the 2010 marginal cost
components to reflect appropriate measures of inflation, and by updating the Fixed Carrying Charge
inputs3 to reflect values that the Company will use in the planned 2015 rate increase proceeding.
Concentric will prepare Marginal Cost Update schedules, as indicated in the table below.
¯ Copies of D.P.U. 11-01/02 Marginal Cost Study schedules for:
o Marginal Distribution Plant- Related Costs
o Marginal Distribution Operations and Maintenance Expense
o Marginal A&G Expense
o Marginal Materials and Supplies Expense
o Marginal General Plant
¯ Updated Distribution Plant Fixed Carrying Rate Calculation
¯ Updated Summary of Marginal Capacity Costs
¯ Price Escalation Factor Calculations
2. Information and Assistance to be Provided by the Company
Concentric’s data requirements to prepare an updated marginal cost study are minimal: we will request
(a) an Excel file of the gas and electric marginal cost studies approved by the Department in D.P.U.
11-01/024; and (b) the Fixed Carrying Charge Rate input values that Unitil will be proposing in the
2015 rate cases.
VII. RATE DESIGN
A. PROJECT SCOPE
Introduction
Concentric understands that, in recent years, the Companies’ opportunity to earn a reasonable return
have been significantly affected by several rate and ratemaking elements, as well as many cost-related
factors. The following rate and ratemaking elements could be addressed in the Companies’ 2015
rate case, or in current or upcoming Department proceedings:
¯ The rate design of the Companies’ base rates
¯ The Companies’ electric and gas decoupling mechanisms
3
4
i.e., cost of debt and equity, capital structure, tax rates, and depreciation rates. Concentric does not anticipate issues associated with confidentiality restrictions on the 2010 marginal cost studies; Concentric does not require that the Excel files be working spreadsheets with all formulas included.
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¯ FG&E Gas’ gas TIRF capital cost recovery mechanism
¯ A (proposed) FG&E electric capital cost recovery mechanism
¯ FG&E Gas’ proposed gas capital cost recovery mechanism, which the Department is
reviewing in the Company’s GSEP proceeding
¯ A Short-Term Investment Plan capital cost recovery mechanism that will be included in the
Company’s upcoming Grid Modernization Plan f’fling
The Companies will be challenged to construct regulatory strategies and to deliver consistent and
compelling messages for all of the proceedings that will or could address the rate and ratemaking
elements that are listed above. Concentric is uniquely qualified to help the Companies develop the
regulatory strategies and to deliver those messages: (a) Concentric is involved in rate-related and
other matters for FG&E electric’s Grid Modernization Plan filing, (b) we have designed and testified
in support of decoupling mechanisms and capital cost recovery mechanisms for many utilities in
Massachusetts and other New England states; and (c) we are regularly involved in ratemaking
proceedings at the Department and in other states.
B. CONCENTRIC’S RATE DESIGN APPROACH
Regulatory Strategy
We will work with Unitil to develop the regulatory strategy, which will coordinate the Companies’
rate-related proposals and the themes and messages that will be used to describe and explain the
Companies’ business conditions and imperatives, in the gas and electric proceedings that the
Companies are participating in.s We will use a structured collaborative process, led by Bob Yardley
and Jim Simpson, to identify the Company’s business needs and the rate-related messages and
proposals that can be coordinated and advanced in the Company’s upcoming filings.
2. Rate Design
We will use Concentric’s rate design model to design the Company’s base rates. This rate design
model, which has been used in rate proceedings for over a decade, is complete, precise and well-
documented. The rate design model will be linked to Concentric’s bill impact models and cost
studies. We will update and revise this rate design model to (a) reflect recent changes in the
Department’s rate design requirements, and (b) to meet the Company’s business objectives.
Concentric understands that the 2015 rate case is an opportunity for Unitil Electric to address issues related to net metering, and to propose modifications to rate design to address these issues.
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Concentric’s models are detailed, flexible, and very familiar to the Department staff. The rate design
model develops rate class revenue targets that reflect the ACSS results,6 accounting for Department
precedents related to rate continuity and customer impacts. These revenue targets will be used within
Concentric’s rate design model to calculate decoupling revenue targets in accordance with the
Companies’ proposed decoupling tariffs.
As part of the rate design project, Concentric will prepare Massachusetts standard revenue adjustments
to: (a) weather normalize gas distribution revenues and billing determinants,: (b) determine revenues
to low income rate classes at non-discounted rates, and (c) impute CGA revenues to transportation
customers, for gas rate impact purposes.
Rate Design and Billing Determinants Details
Adjustments to Booked Classified Sales Data: Concentric will work with the Company and the
Company’s revenue requirement witness to develop electric and gas adjustments to test year billing
determinants (a) to reconcile the billing data to booked data and (b) to account for large cancel and
re-bill adjustments that were related to periods outside the test year.
Weather Normalization: Concentric will weather normalize gas test year billing determinants and
develop an adjustment to test year base revenues to reflect the effect weather that is different from
normal.8 Concentric will prepare these weather normalization calculations at the rate class level, using
booked billing month customer and delivery (therm) data and weather data (actual and normal
Effective Degree Days, provided by the Company).
Other Adjustments: Consistent with Company practices and Department requirements and
precedents, Concentric will also prepare the following revenue and billing determinant calculations
for UNtil Electric and UNtil Gas:: (a) Low Income revenue adjustment calculated as the difference in
revenues to Low Income customers (Gas R-2 and R4; Electric RD-2) at discounted rates and at non-
discounted residential rates, (c) Pension Expense Factor revenues to reflect the pension expense
recoverable costs as determined by the Company’s revenue requirements witness, and (d) other
revenue adjustments that are related to revenues that flow through the Unitil’s cost tracking
mechanisms. For UNtil Gas, Concentric prepare a revenue adjustment to reflect normalized gas cost
revenues and normalized fixed production cost revenues.
The Department has established rate design precedents concerning the use of marginal cost study results to develop
floor prices for special contracts and interruptible service and minimum annual charge provisions for dual fuel
agreements. Although the Company does not currently have any arrangements that require these marginal-cost based
rates, if Concentric is selected to prepare the Company’s marginal cost study, Concentric will develop these marginal
cost based rates, and will meet with the Company to identify current tariffs that should be revised or new tariffs that
should be created and filed to include these marginal cost based rates.
Concentric will also prepare adjustments to the Company’s booked billing determinant and revenue data to remove
the effects of billing adjustments and errors.
Concentric has prepared weather normalization adjustments for other gas LDCs; we will use a methodology that has
been approved by the Department.
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4, Recent Changes in Department Rate Design Precedents
Concentric will design the Company’s proposed rates to comply with several significant modifications
to Department rate design precedents that have occurred since the Company’s 2010 and 2013 rate
cases.
Cost Based Rates: Concentric will determine class revenue targets in a manner that complies with the
Act Relative to Competitively Priced Electridty in the Commonwealth9, which requires that base
distribution rates should be designed using a cost-allocation method that is based on equalized rates
of return for each customer class, with the resulting increase to any rate class to be limited to 10 per
cent of that class’s test year revenues.1°’11 Concentric’s rate design model has been developed to
calculate the customer impact caps, and allocate any revenue shortfalls to customer classes as directed
by the Department.
Inclining Block Rates: In recent rate cases,12 the Department has directed the companies to eliminate
the inverted rate structures that the DPU had been requiring since 2010, and to design rates based on
a flat volumetric rate structure. Because the Department limited these decisions on flat rate structures
to the facts of those cases, Concentric’s testimony in the Company’s rate case will demonstrate that
the Department’s decision on inclining rates should also be applied to UNtil Gas’ rate structures.
Other Rate-Related Tasks
Concentric understands that the selected consultant will also be responsible for developing rates for
Customer-owned street lighting service, based on the results of the electric ACSS.
6, Data Requirements
For the rate design project, Concentric will require standard rate design data including monthly billing
determinant data, and effective degree day data. We have included an example set of rate design data
requests to the Company as Attachment B; these data requests will be revised after a preliminary
discussion with the Company.
9 Senate Bill 2395, signed into law, August 3, 2012.
10 Section 20 of an Act Relative to Competitively Priced Electricity in the Commonwealth, St. 2012, c. 209 revises G.L. c. 164, ~ 94 by inserting after section 94H the following section:
Section 94I. In each base distribution rate proceeding conducted by the department under section
94, the department shall design base distribution rates using a cost-allocation method that is based on equalized rates of return for each customer class; provided, however, that if the resulting impact of employing this cost-allocation method for any 1 customer class would be more than 10 per cent, the department shall phase in the elimination of any cross subsidies between rate classes on a revenue neutral basis phased in over a reasonable period as determined by the department.
11 In CMA’s 2013 rate case, D.P.U 13-75, the Department established a second customer impact cap, which limited the
distribution rate increase to any rate class to no more than 200 percent of the overall distribution rate increase. Concentric will evaluate the merits of this second customer impact cap while designing the Company’s proposed rates, respectively.
12 Columbia Gas of Massachusetts (D.P.U. 13-75) and FG&E (D.P.U. 13-90).
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7. Information and Assistance to be Provided by the Company
Concentric does not expect to need office space at the Company’s facilities; however, if Concentric
determines that on site meetings would be the most efficient way to obtain data or information, or
otherwise conduct the project, we will make arrangements with the Company that do not disrupt or
interfere with Company business operations.
C. RELEVANT PROJECT EXPERIENCE
Concentric has substantial recent project experience in allocated and marginal cost studies and rate
design, including evaluating changes to rate structures and/or service classes to more closely align
costs and revenues, as demonstrated by the table below:
2007 Test Year Billing Determinants; Other Revenues; Embedded Cost of New England Natural Gas Company (MA)
N STAR Gas (MA)
Liberty Utilities (EnergyNorth Gas)
2008
2010
2014
2014
2010
2007
2008
2013
2010
2008
2013
2013
2010
Western Massachusetts Electric CompaW
Southern Connecticut Gas Company
Connecticut Natural Gas Corporation
National Grid Gas (M_A)
New England Gas (RI)13
Central Maine Power
Northern Utilities, Inc. (NH and ME)
Atlanta Gas Light
Service Study; Marginal Cost of Service Study; Rate Design and Proposed Tariffs
Test Year Billing Determinants; Other Revenues; Embedded Cost of Service Study; Marginal Cost of Service Study; Rate Design Rate Consolidation and Proposed Tariffs
Test Year Billing Determinants; Other Revenues; Embedded Cost of Service Study; Marginal Cost of Service Study; Rate Design and Proposed Tariffs Revenue Decoupling
Embedded Cost of Service Study; Marginal Cost of Service Study
Rate Design, Marginal Cost Study, Functional Cost Study, Decoupling
Inflation Adjustment Factor Marginal Cost of Service Study
Embedded Cost of Service Study; Revenue Decoupling
Embedded Cost of Service Study; Revenue Decoupling
Embedded Cost of Service Study
Marginal Cost Study; Rate Design, Rate Consolidation
Embedded Cost of Service Study; Rate Design, Revenue Decoupling
Embedded Electric Cost Study
Capital Cost Tracldng Mechanism, Rate design principles
Embedded Cost of Service Study
Now National Grid RI.
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CONFIDENTIAL
Virginia Natural Gas 2011 Embedded Cost of Service Study
Northern Indiana Public 2010 Embedded Gas and Electric Cost of Service Study, Rate Consolidation, Service Company Rate Design
2013 Embedded Gas and Electric Cost of Service Study, Rate Consolidation, Rate Design
VIII. REFERENCES
Steve Hall
Director, Regulatory and Government 603-328-2721
Liberty Utilities
Don Hannibal
Manager, Pricing and Analysis
UIL Holdings Corporation
Charles Goodwin
Director, Regulatory & Tariffs
UIL Holdings Corp
Richard Chin
Senior Regulatory Policy and Rates Analyst
NSTAR
Tom Byrne
Senior Director Regulatory Affairs
Ameren Missouri
Ron Stafford
Director Regulatory Accounting
Ameren Illinois
C harle s. G-o o dwin~uine to c om
203-499-2175
ricIaaid chin~nu,com 781-441-8185
314-554-2514
314-206-0584
IX. PROJECT SCHEDULE
The Company intends to file its rate case on or about June 17, 2015. As the Lead/Lag Study is
needed to compute a component of the Company’s rate base, Concentric’s schedule assumes that
the Lead/Lag study will need to be completed by June 3, 2015, the MCS and ACSS studies will need
to be completed by June 7, 2015, the Rate Design study will need to be completed by June 14, 2015.
Concentric’s project schedules are provided in Attachment D; these schedules demonstrate that
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Concentric will meet those deadlines, assuming that the Company’s responses to our data requests
are provided on a timely basis. Based on these anticipated dates Concentric proposes to begin work
immediately with a kick-off meeting at the Company’s offices to discuss the data that is currently
available and additional data that will be required to complete the analysis.
X. PRICING AND TERMS
Concentric’s pricing for each project task is summarized in the table below; budget details are provided
in Attachment C. As shown in the table below, Concentric will provide consulting services as
described in this proposal up to the filing of the case for the cost study, rates and limited Lead/Lag
study tasks for a not-to-exceed budget o~ Also as shown in the table below, Concentric will
provide consulting services up to and including the filing of the case as described in this proposal for
the cost study, rates and full Lead/Lag study for a not-to-exceed budget of~ Attachment C
contains the completed Project Price Sheets in addition to detailed budgets by task for each area. The
post-filing activities will be charged on a "time and materials" basis at Concentric’s 2015 billing rates,
discounted by ~ The estimated post-filing consulting hours are based on Concentric’s
experience with similar projects in Massachusetts but actual consulting hours may be different, based
on issues raised by the Department and intervenors during the proceeding.
Prefiling
Post filing
Total Gas
Prefiling
Post tiling
Total Electric
Post filing
Total UNtil
14
15 The Full Lead/Lag study includes analyses of purchased gas cost, purchased power and O&M The Limited Lead/Lag study includes analyses of purchased gas cost and purchased power.
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XI. ADMINISTRATIVE
Concentric’s Standard Terms and Conditions are included as Attachment E.
Concentric certifies that our representation of UNtil will not create any conflicts of interest.
Lastly, this proposal is irrevocable for 90 days.
Sincerely,
James D. Simpson
Senior Vice President
293 Boston Post Road West
Suite 500
Marlborough, MA 01752
Email: ~).ceadvisor~ocom
Direct: 508-263-6224
Fax: 508-303-3290
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ATTACHMENT A RI~SUMI~ OF JAMES n. SIMPSON
James D. Simpson
Senior Vice President
Mr. Simpson has over 35 years of experience with regulatory relations, regulated pricing and business strategy. Since joining Concentric in 2005, he has been responsible for projects related to rates~ decoupling mechanisms, capital and O&M tracker mechanisms, incentive ratemaking~ marginal cost studies, cost of service adjustments~ service quality measures, and demand forecasts. Prior to joining Concentric, Mr. Simpson held senior executive positions at a natural gas utility and an entrepreneurial company providing a proprietary service to generating companies. Mr. Simpson also held staff and director level positions at the Wisconsin Public Service Commission and the Massachusetts Department of Public Utilities; he has an M.S. in Economics from the University of Wisconsin and a B.A. in Economics from the University of Minnesota.
REPRESENTATIVE PROJECT EXPERIENCE
Regulatory Affairs
Representative engagements and responsibilities include: ¯ Designed rates and prepared testimony for Northeast electric and gas utilities ¯ Prepared rate consolidation studies and testimony for Northeast gas utilities ¯ Prepared decoupling and cost tracking mechanisms and testimony for Northeast electric and gas
utilities
¯ Prepared marginal cost studies and testimony for Northeast electric and gas utilities ¯ Prepared forecasts of gas demand for Northeast gas utilities ¯ Prepared assessment of forecast methodology and forecast accuracy for Northeast utilities ¯ Served as primary rate design witness for Bay State Gas Company, Northern Utilities (Maine and
New Hampshire) and Granite State Gas Transmission on issues including rate reclassification, restructuring, market competitiveness, and earnings stability
¯ Prepared strategic assessment of PBR options for South Central utility ¯ Prepared validation of sales forecast and analysis of declining use per customer for Northeast gas
utility ¯ Prepared rate design for Mid Atlantic utility rate increase filing
Business Strategy and Operations
Representative engagements and responsibilities include: ¯ Held position of Chief Operating Officer for a major New England gas company, responsible for all
regulated business activities including Gas Supply, Operations, Engineering, Marketing and Sales, and Planning
¯ Developed marketing plan and developed and implemented sales strategies ¯ Developed brand awareness strategy; created coordinated electronic and physical marketing
materials; created and implemented a trade publication strategy. Simplified and shortened sales process; focused on prospective client decision making and understanding of company value proposition
¯ Implemented new Optimal Growth strategy to identify opportunities and track investments
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ATTACHMENT A RI~SUMI~ OF JAMES n. SIMPSON
Led team that created plan to align company structure and culture with new competition-based growth and customer-focus strategy. Led organization during implementation of new strategy, structure, and culture
Contract Negotiations
Representative engagements and responsibilities include: ¯ Successfully negotiated contract for first new North America operations site in four years ¯ Persuaded state regulators to reverse established regulatory policies in conflict with company strategy ¯ Successfully negotiated unique contract with largest customer on company’s system, reversing ten
years of unproductive discussions ¯ Directed negotiation of groundbreaking labor contract that allowed company to use outside
contractors, reduce the union work force by 10% ¯ Negotiated agreement with pipeline for short term incremental capacity at significant savings ¯ Negotiated company’s commitment to conduct residential customer choice pilot program that
provided stakeholders with residential unbundling experience
PROFESSIONAL HISTORY
Concentric Energy Advisors, Inc. (2005- Present) Senior Vice President Vice President Assistant Vice President Executive Advisor
Separation Technologies, Inc. (2001- 2004) Vice President, Business Development
Bay State Gas Company (1982- 2000) Senior Vice President, Large Customer Sales and Regulatory Affairs (1999 - 2000) Senior Vice President/COO of Regulated Utility Business (1996- 1999) Vice President, Market Analysis and Pricing (1993- 1996) Director/Manager of Rates (1982 - 1993)
Massachusetts Department of Public Utilities (1978-1982) Director Senior Analyst
Wisconsin Public Service Commission (1977 - 1978) Senior Analyst
EDUCATION
M.S., Economics, University o f Wisconsin B.A., Economics, University of Minnesota, magna cum laude
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ATTACHMENT A R~SUM~ OF DAVID A. HEINTZ
David A. Heintz
Vice President
Mr. Heintz is a Vice President who has over 30 years of experience working with regulated rates and tariffs at both the federal and state levels. He also provides clients with analyses of natural gas projects, markets, and issues. Mr. Heintz’s areas of expertise include cost of service, allocation and rate design, tariff terms and conditions, rate case preparation, and regulatory issues.
REPRESENTATIVE PROJECT EXPERIENCE
Regulatory Analysis, Ratemaking, Cost of Service
¯ Cash Working Capital witness for Ameren Illinois Company in its 2009, 2011, 2012 and 2013 Illinois rate filings.
¯ Assisted a customer group served by Dominion Cove Point LNG in a FERC rate proceeding, Docket No. RPll-2136.
¯ Prepared a cost of service study for Virginia Natural Gas, Case No. PUE-2011-00142.
¯ Assisted a customer group served by Tennessee Gas Pipeline Company in a FERC rate proceeding, Docket No. RPl1-1566.
¯ Filed testimony on the proper design of Kern River Gas Transmission Period Two rates in Docket RP04-274-023 on behalf of a Kern River shipper.
¯ Prepared a cost of service study for Atlanta Gas Light Company, Docket No. 31647-U.
¯ Project manager for preparation of Granite State Gas Transmission FERC rate filing, Docket No. RP10-896. Witness on issues of billing determinants, revenues, cost allocation and rate design.
¯ Participated in the development of a gas cost of service and rate re-redesign for Northern Indiana Public Service Company.
¯ Assisted a customer group served by Southern Natural Gas Company in a FERC rate proceeding, Docket No. RP09-427. Assisted this same group in Southern’s 2013 settlement extension.
¯ Assisted ISO-NE in the evaluation of de-list bids and new capacity offers for the first two Forward Capacity Auctions conducted by ISO-NE.
¯ Prepared a cost of service study and rate design proposals for National Grid Rhode Island (Gas).
¯ Prepared cost of service studies for New England Gas Company in two Massachusetts rate filings.
¯ Assist New England Gas in the preparation of periodic filings before the Massachusetts Department of Public Utilities including Gas Cost and Local Distribution Adjustment filings.
¯ Prepared cost of service studies for Connecticut Natural Gas Corporation and Southern Connecticut Gas Company in their Phase 2 rate design proceeding before the Connecticut Department of Public Utility Control.
¯ Prepared a cost of service study and rate design proposals for Northwest Natural Gas Company (WA) which included the phase out a commercial rate class.
¯ Prepared a cost of service study for Puget Sound Energy and assisted in the development of a revenue decoupling mechanism.
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ATTACHMENT A R~SUM~ OF DAVID A. HEINTZ
¯ Prepared cost of service studies for Peoples Gas Light and Coke Company and North Shore Gas Company. Assisted in the development of a revenue decoupling mechanism for these companies.
¯ Performed a cost of service study for Arkansas Oklahoma Gas Corporation. Provided testimony on cost of service and rate design.
¯ Participated in the development of the revenue requirements for the gas and electric operating companies of a major mid-west utility.
¯ Participated in a review of the cost of service and rate design methodologies for the natural gas transmission affiliate of a Canadian Crown Corporation.
¯ Performed an electric cost of service and rate review for the City of Veto Beach, Florida.
¯ Performed a cost of service study for Chesapeake Utility Corporation, Delaware Division, and provided testimony on rate design issues.
¯ Performed cost of service and rate design studies integrating the rates and tariffs of Providence Gas Company and Valley Gas Company. Provide testimony on cost of service and proposed new rate designs for the integrated company.
¯ Performed cost of service study for an investor owned Canadian electric utility.
¯ Reviewed and provided support for the deferred purchased gas balances of a Louisiana local distribution company.
¯ Provided support and cost of service analysis for a Pennsylvania electric utility in a FERC complaint case.
¯ Assisted a Canadian marketing company in its intervention in Northern Border Pipeline Company FERC rate proceeding. Filed testimony on various cost-of-service and rate design issues.
¯ Assisted an Indiana local distribution company in the preparation of a general rate case and unbundling filing. Assisted in the development of the proposed unbundled services and tariffs.
¯ Assisted a New Jersey local distribution company with its initial filing under New Jersey’s Electric Discount and Energy Competition Act.
¯ Assisted a major Southwest utility in the preparation of a cost of service and rate design study for filing with the regulatory commission.
¯ Reviewed and evaluated an electric cost-of-service and unbundling model for the Ontario Energy Board. This model is to be used by the municipal electric utilities in their filings to the Board.
¯ Assisted a group of Midwest local distribution companies served by Northern Natural Gas Company in a FERC rate proceeding. Filed testimony on various cost-of-service and rate design issues.
¯ Reviewed the rate harmonization proposal of a major Canadian gas utility for potential shortcomings alternative approaches.
¯ Responsible for the development, defense, implementation and administration of the Boston Gas Company’s rates in rate cases and CGA filings. Prepared annual sales, revenue, margin and gas cost forecasts for budgeting and financial reporting. Directed the company’s load research project. Represented the company in regulatory proceedings.
¯ Responsible for all aspects of United Gas Pipeline Company’s rate department, including cost-of- service allocation and rate design, certificates and analysis of other pipeline FERC filings. Represented the company and supported its positions through testimony and negotiations with regulatory agencies, customers and intervenors.
Responsible for the development of cost-of-service, allocation and rate design studies and filings for Consolidated Natural Gas Company. Analyzed supplier rate and certificate filings. Represented the
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ATTACHMENT A RI~SUMI~ OF DAVID A. HEINTZ
company and supported its position in negotiations with regulatory agencies, customers and intervenors.
Responsible for the development and support of FERC staff’s position on allocation and rate design issues in pipeline rate and certificate filings.
Valuation and Appraisal
Assisted in the preparation of a report to the FERC on appraised value and insurance recommendations in a certificate proceeding.
Market Analysis
Assisted the Province of New Brunswick in the preparation of its Stage I document for the establishment of natural gas distribution within the Province.
Expert Witness Testimony Presentation
¯ Federal Energy Regulatory Commission
¯ Arkansas Public Service Commission
¯ Connecticut Department of Public Utility Control
¯ Delaware Public Service Commission
¯ Georgia Public Service Commission
¯ Illinois Commerce Commission
¯ Massachusetts Department of Public Utilities
¯ New York State Public Service Commission
¯ New Jersey Board of Public Utilities
¯ Pennsylvania Public Utility Commission
¯ State of Rhode Island and Providence Plantations Public Utility Commission
¯ Washington Utilities and Transportation Commission
PROFESSIONAL HISTORY
Concentric Energy Advisors, Inc. (2006- Present) Vice President Assistant Vice President
Navigant Consulting (1998 - 2006) Managing Consukant
Boston Gas Company (1993-1998) Director, Rates and Revenue Analysis
United Gas Pipeline Company (1992-1993) Director, Rates and Regulatory Affairs
Consolidated Natural Gas Company (1985 - 1992) Manager, Regulatory Projects
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ATTACHMENT A RI~SUMI~ OF DAVID A. HEINTZ
Federal Regulatory Energy Commission (1979 - 1985) Industry Economist, Allocation and Rate Design Branch
EDUCATION
M.B.A., Katz Graduate School of Business, University of Pittsburgh, 1989 B.S., Economics, Behrend College, Pennsylvania State University, 1978
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ATTACHMENT A RI~SUMI~ OF MARISA IHARA AMORY
Marisa Ihara Amory
Senior Project Manager
Ms. Amory has over 10 years of experience consulting in the energy industry with technical expertise in econometric analysis, financial modeling, and database management. Ms. Amory has assisted clients with rate design, integrated resource planning, utility prudency reviews, contractual disputes, acquisition/divestiture due diligence, market power studies and energy market assessments. She is proficient in VBA, MATLAB, SQL and SPSS.
REPRESENTATIVE PROJECT EXPERIENCE
Demand Forecasting & Supply Planning
Developed natural gas demand forecasts and assisted in the development of long-term Integrated Resource Plans on behalf of several utilities located in the Northeast, Midwest, and Pacific Northwest.
¯ Reviewed the demand forecasting methodology for a multi-state gas utility and recommended certain process changes to improve the methodology and accuracy of the forecast.
¯ Reviewed the demand forecasting methodology for a Canadian electric utility. Analyzed and evaluated the statistical and quantitative projection methods used, including end-use and econometric forecasting techniques.
Regulatory Affairs
¯ Developed a marginal cost study for a Northeast utility utilizing regression analysis.
¯ On behalf of several gas utilities, evaluated rate design restructuring and its impacts on customer bills.
¯ Investigated a Northeast utility’s declining natural gas use per customer by efficiently and effectively performing regression analysis of billing data for each individual customer and successfully synthesizing the trends.
¯ Designed a model to calculate needed contributions in aid of construction (CIAC) for a Northeast gas utility.
¯ Performed market research to estimate cost of new entry for electric generating capacity in New England for the ISO-NE LICAP proceeding with FERC.
¯ Analyzed a generation facility’s cost of service for FERC filing of a Reliability Must Run contract with ISO-NE.
Market Assessments
Performed extensive market research to evaluate demand for planned expansions and new market entry by various pipelines, Local Distribution Companies (LDCs), LNG import terminals, and natural gas and LNG storage facilities.
Analyzed Florida’s current and projected natural gas market including demand from growing electric generation and traditional LDC markets. Filed an independent report at FERC.
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ATTACHMENT A RI~SUMI~ OF MARISA IHARA AMORY
Conducted buy-side due diligence regarding an investment in an existing natural gas storage project in the eastern United States.
Developed models to optimize withdrawal/injection scheduling for natural gas and LNG storage facilities utilizing real options theory, Monte Carlo simulation, and linear programming.
Electric Distribution Reliability Studies
¯ Analyzed effect of utility deregulation on existing and future reliability of New York State’s electric distribution system for the New York State Energy Research and Development Authority (NYSERDA). Developed statistical models to analyze major causes of power interruption and presented recommendations for improvement to the New York State Energy Planning Board.
¯ Developed an hour by hour thermal model to investigate the effects of ambient temperature and load on transformer insulation life.
Transaction Support and Valuation
Provided sell-side transaction support for favorable sale of over 2,300 MW of fossil and nuclear capacity, including the sale of Atlantic City Electric’s minority interests in Keystone and Conemaugh Generating Stations, IPL’s 70% interest in Duane Arnold Nuclear Plant, CMS Energy’s sale of Palisades Nuclear Plant, and Wisconsin Energy’s sale of Point Beach Nuclear Plant.
¯ Collaborated with technical staff and developed financial information memorandums and continued cost of operation financial models
¯ Expeditiously evaluated bids and Power Purchase Agreements in a well documented and defensible manner utilizing comparable sales analyses and DCF analyses with Monte Carlo simulation to evaluate risks such as commodity pricing and outage risks.
¯ Drafted expert testimony and responses to help achieve regulatory approvals from state agencies.
Litigation Support
Performed research and analyses to support litigation strategies in various energy related arbitrations including fuel supply contracting, damages, and LDC prudence issues. Prepared expert testimony, discover and briefing materials.
Developed analyses to support expert witness testimony in a North American gas supply contract arbitration case.
¯ Estimated financial damages for purposes of energy contract disputes involving civil litigation
¯ Provided litigation support to a mid-west utility regarding proposed gas purchase disallowances for storage utilization, hedging activity, and pipeline capacity decisions.
PROFESSIONAL HISTORY
Concentric Energy Advisors, Inc. (2004- Present) Senior Project Manager Project Manager Senior Consultant Consultant Assistant Consultant Analyst
CONCENTRIC ENERGY ADVISORS, INC. PAGE
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D.P.U. 15-80 Exhibit UnitiI-DLC-5 Page 49 of 311 Redacted
ATTACHMENT A RI~SUMI~ OF MARISA IHARA AMORY
General Electric Power Systems Energy Consulting (2000 - 2001) Application Developer (2001) Intern Engineer (2000)
EDUCATION
B.S., Applied Mathematics, Brown University, magna cum laude, 2003
CONCENTRIC ENERGY ADVISORS, INC. PAGE A-9
II-00229
D.P.U. 15-80 Exhibit UnitiI-DLC-5 Page 50 of 311 Redacted
ATTACHMENT A RI~SUMI~ OF JOSEPH S. WEISS
Joseph S. Weiss
Senior Project Manager
Mr. Weiss has worked on projects involving revenue requirements, class cost of service, allocation and rate design, cash working capital, rate of return, affiliate transactions, and rate case preparation for gas and electric utilities. As a consultant, Mr. Weiss has provided support for filings with several utility commissions and recently filed testimony as an expert witness on cash working capital. He has strong quantitative and research skills and experience in accounting issues. Prior to joining Concentric Energy Advisors, Mr. Weiss was a Consultant with Navigant Consulting, Inc. and has worked for a large Midwest investor-owned utility. Mr. Weiss has an M.B.A. from Southern Illinois University Edwardsville and a B.S. in Business Administration (magna cum laude) with a major in Accounting and Finance from Saint Louis University.
REPRESENTATIVE PROJECT EXPERIENCE
Rates/Regulatory Projects
¯ Worked on a draft report concerning the gas/electric interdependency of the Pacific Northwest Region.
¯ Supported lead-lag analysis and testimony for a Canadian electric utility.
¯ Provided rate case support of a gas rate case filing for a Midwestern gas utility. Work included assisting in a lead-lag study.
¯ Involved in the calculation and support of a return on equity for a natural gas company.
¯ Assisted with the preparation of six gas and electric rate case filings for a Midwestern utility. The project included work associated with a gas and electric lead-lag study and the preparation of the minimum filing requirements associated with the rate case.
¯ Assisted in the effort to collect and organize plant addition documentation for six Midwest utilities associated with the state commission’s audit of rate base.
Involved in providing required data in response to data requests of the Illinois Commerce Commission.
¯ Assisted in providing responses and corrections to deficiencies identified by the Illinois Commerce Commission in filing requirements.
¯ Involved in the preparation of an electric rate case filing for an electric transmission and distribution provider in Texas. Work included the completion of the rate filing package associated with the rate case.
¯ Managed the preparation of the minimum filing requirements for a Midwestern holding company that held 3 different utility companies. Also managed the preparation of a lead-lag study for the utility.
¯ Managed the preparation of a lead-lag study for an electric rate case filing for a utility in Missouri.
¯ Worked on the completion of filing requirements for an interstate pipeline’s rate filing.
¯ Assisted with an allocated cost of service study and rate design related to an electric rate filing for a Midwestem utility.
¯ Managed the completion of a gas and electric lead-lag study for separate gas and electric rate flings for a Midwestern utility.
CONCENTRIC ENERGY ADVISORS, INC. PAGE A-10
II-00230
D.P.U. 15-80 Exhibit UnitiI-DLC-5 Page 51 of 311 Redacted
ATTACHMENT A RI~SUMI~ OF JOSEPH S. WEISS
Managed the preparation of gas and electric rate case filings for a Midwestern utility. The project included work associated with a gas and electric lead-lag study and the preparation of the minimum filing requirements associated with the rate case.
Market Research Experience
¯ Conducted research on gas and electric revenue decoupling mechanisms.
¯ Researched recent and proposed pipeline projects.
¯ Research to support expert testimony in a return on equity rate proceeding.
PROFESSIONAL HISTORY
Concentric Energy Advisors, Inc. (2007- Present) Senior Project Manager Project Manager Senior Consultant Consultant
Navigant Consulting, Inc. (2006- 2007) Consultant
Ameren Corporation (2005- 2006)
Consultant and Tax Intern
EDUCATION
B.S.B.A, Accounting and Finance, Saint Louis University, magna cum laude, December 2005
CONCENTRIC ENERGY ADVISORS, INC. PAGE A-11
II-00231
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D.P.U. 15-80 Exhibit UnitiI-DLC-5 Page 54 of 311 Redacted
ATTACHMENT C
PROJECT PRICE SHEETS
Fitchburg Gas and Electric Light Company d/b/a Unitil
Request for Proposal
Allocated Cost of Service Study, Marginal Cost Study Update, and Rate Design
Attachment la
PROJECT PRICE SHEET FOR SCOPE OF PROPOSED WORK (1)
PROPOSED WORK ELEMENTS Gas Electric Total
Division Division Costs
Project Planning and Administration
Research
Analyses or Studies
Prepare Direct, Pre-filed Testimony
Other Direct Costs
Total Not To Exceed (thru filing)
Respond to Discovery
Assist in the Interrogation of Testimony
Prepare Rebuttal Testimony
Attend Hearings
Respond to In-Hearing Record
Reauests
Assist in Drafting of Legal Brief
Prepare Compliance Filing Schedules
Other Direct Costs
Total Cost Estimates (post filing)
Grand Total
Include all labor and other direct cost assumptions for all proposed work elements. Costs
through preparation of the filing are not to exceed cost estimates and will not be reimbursed
for costs over the estimates, unless prior written approval from Unitil has been obtained. Post filing activities may be bid on a time and materials basis. Include separate
spreadsheets that itemize the number of hours and hourly rate of each consultant expected
to assist on the project, and other direct cost assumptions for all proposed work elements.
A narrative description of the work covered by each task (e.g. for meetings, price assumes
a certain number of meetings) will assist Unitil in evaluating the bids. The response must
also include applicable labor rates and clearly identify any markups that will be applied under the Scope of Proposed Work.
CONCENTRIC ENERGY ADVISORS, INC. PAGE C-1
II-00234
D.P.U. 15-80 Exhibit UnitiI-DLC-5 Page 55 of 311 Redacted
ATTACHMENT C
PROJECT PRICE SHEETS
Fitchburg Gas and Electric Light Company d/b/a Unitil
Request for Proposal
Allocated Cost of Service Study
Attachment l a (ACSS)
PROJECT PRICE SHEET FOR SCOPE OF PROPOSED WORK (1)
PROPOSED WORK ELEMENTS Gas Electric Total
Division Division Costs
Project Planning and Administration
Research
Analyses or Studies
Prepare Direct, Pre-filed Testimony
Other Direct Costs
Total Not To Exceed (thru filing)
Respond to Discovery
Assist in the Interrogation of Testimony
Prepare Rebuttal Testimony
Attend Hearings
Respond to In-Hearing Record
Reauests
Assist in Drafting of Legal Brief
Prepare Compliance Filing Schedules
Other Direct Costs
Total Cost Estimates (post filing)
Grand Total
Include all labor and other direct cost assumptions for all proposed work elements. Costs
through preparation of the filing are not to exceed cost estimates and will not be reimbursed
for costs over the estimates, unless prior written approval from Unitil has been obtained. Post filing activities may be bid on a time and materials basis. Include separate spreadsheets that itemize the number of hours and hourly rate of each consultant expected
to assist on the project, and other direct cost assumptions for all proposed work elements.
A narrative description of the work covered by each task (e.g. for meetings, price assumes
a certain number of meetings) will assist Unitil in evaluating the bids. The response must
also include applicable labor rates and clearly identify any markups that will be applied
under the Scope of Proposed Work.
CONCENTRIC ENERGY ADVISORS, INC. PAGE C-2
II-00235
D.P.U. 15-80 Exhibit UnitiI-DLC-5 Page 56 of 311 Redacted
ATTACHMENT C
PROJECT PRICE SHEETS
Fitchburg Gas and Electric Light Company d/b/a Unitil
Request for Proposal
Allocated Cost Study Project Budget (Gas)
Concentric Energy Advisors Itemized Project Pricing Cost Assumptions
Task I
Task 2
Task 3
Task 4
Task 5
Task 6
Task 7
Task 8
Task 9
Task 10
Task 11
Task Description
Project Planning and Administration
Indudes Meetings xvith dient
Researda / Data Development
Situational assessment. Issue data requests. Analyze data;
prepare follow up requests; inte,~qew/confer with regulatory,
engineering, custom er service personnel
Analyze initial data; prepare follow up requests to Unitil;
in t einqmv / co n fer with Unitil regu lat o ry, engin eerin g, cu s t o m er
s ervice p ers onnel
Allocated Embedded Cost-of-Service Study
Allocator development; perform spedal studies; inputs to
ECOS Model. Prepare ECOS results; reflect revenue
requirement revisions, as necessau; discuss revenue allocation
implications.
Prepare Direct, Prefiled Testim ony
Indudes exdaange of drafts electronically
Support Direct Prefiled Testimony
Prepare responses to DiscoveiT
Assist in the Interrogation of Testimony
Assist in the revimv and devdopment of strategy for
Intervenor testim ony
Develop data requests and cross questions for intervenors
Prepare rebuttal testim ony
Indudes exdaange of drafts electronically
Attend Hearings for Cross Examination
Cross Examination (Prepare for hearings, attend hearings)
Prepare for and attend hearings for cross examination on rebuttal
Respond to In-hearing Record Requests2
Answer record requests
Assist in Drafting of Lega1 Brief
Comments on drafts, discussions xvith attorneys, provide
rcferen ces
Compliance Related Work
TOTAL Hours
Hourly Rate, Discounted by~ from 2015 Standard Rates
TOTAL $ Estimate for Consultin~ Hours ~
Project tasks up to and induding Rate Case filing
Hours
Cost ~
Post-filing project tasks
Hours
Cost
Prefiling Direct Costs
Postfiling Direct Costs
Total Other Direct Costs GRAND TOTAL
CONCENTRIC ENERGY ADVISORS, INC. PAGE C-3
II-00236
D.P.U. 15-80 Exhibit UnitiI-DLC-5 Page 57 of 311 Redacted
ATTACHMENT C
PROJECT PRICE SHEETS
Fitchburg Gas and Electric Light Company d/b/a Unitil
Request for Proposal
Allocated Cost Study Project Budget (Electric)
Concentric Energy Advisors Itemized Project Pricing Cost Assumptions
Task Description Task 1 Project Planning and Administration
Indudes Meetings with dient
Task 2 Research / Data Development
Situational assessment. Issue data requests. Analyze data;
prepare t~ollow up requests; interview/conifer ~vith regulatory,
engineering, cus tom er s ervice p ers onnel
Analyze initial data; prepare follo~v up requests to Unitil;
interview / confer with Unitil regulatory, cngineering, cus tomer
s ervice p ers onnel
Task 3 Allocated Embedded Cost-of-Service Study
Allocator development; perform spedal studies; inputs to
ECOS Model. Prepare ECOS results; reflect revenue
requirement revisions, as necessau; discuss revenue allocation
implications.
Task 4 Prepare Direct, Prefiled Testimony
Indudes exchange of drafts electronically
Task 5 Support Direct Prefiled Testimony
Prepare responses to Discovery
Task 6 Assist in the Interrogation of Testimony
Assist in the review and development of strategy for
Intervenor testimony
Develop data requests and cross questions for intervenors
Task 7 Prepare rebuttal testimony
Indudes exchange of drafts electronically
Task 8 Attend Hearings for Cross Examination
Cross Examination (Prepare for hearings, attend hearings)
Prepare for and attend hearings for cross examination on rebuttal
Task 9 Respond to In-hearing Record Requests2
Answer record requests
Task 10 Assist in Drafting of Legal Brief
Comments on drafts, discussions ~vith attorneys, provide
references
Task 11 Compliance Related Work
TOTAL Hours
Hourly Rate, Discounted b~ from 2015 Standard Rates TOTAL $ Estimate for Consulting Hours ~
Project tasks up to and induding Rate Case filing
t Iours
Cost ~
Post-filing project tasks
Hours
Cost
Prefiling Direct Costs
Postfiling Direct Costs
Total Other Direct Costs GRAND TOTAL
CONCENTRIC ENERGY ADVISORS, INC. PAGE C-4
II-00237
D.P.U. 15-80 Exhibit UnitiI-DLC-5 Page 58 of 311 Redacted
ATTACHMENT C
PROJECT PRICE SHEETS
Fitchburg Gas and Electric Light Company d/b/a Unitil
Request for Proposal
Marginal Cost Study Update
Attachment l a (MCS)
PROJECT PRICE SHEET FOR SCOPE OF PROPOSED WORK (1)
PROPOSED WORK ELEMENTS
Project Planning and Administration
Research
Analyses or Studies
Prepare Direct, Pre-filed Testimony
Other Direct Costs
Total Not To Exceed (thru filing)
Respond to Discovery
Assist in the Interrogation of Testimony
Prepare Rebuttal Testimony
Attend Hearings
Respond to In-Hearing Record Reauests
Assist in Dra~ing of Legal Brief
Prepare Compliance Filing Schedules
Other Direct Costs
Total Cost Estimates (post filing)
Grand Total
Gas Electric Total Division Division Costs
Include all labor and other direct cost assumptions for all proposed work elements. Costs
through preparation of the filing are not to exceed cost estimates and will not be reimbursed
for costs over the estimates, unless prior written approval from Unitil has been obtained. Post filing activities may be bid on a time and materials basis. Include separate spreadsheets that itemize the number of hours and hourly rate of each consultant expected
to assist on the project, and other direct cost assumptions for all proposed work elements. A narrative description of the work covered by each task (e.g. for meetings, price assumes
a certain number of meetings) will assist Unitil in evaluating the bids. The response must also include applicable labor rates and clearly identify any markups that will be applied under the Scope of Proposed Work.
CONCENTRIC ENERGY ADVISORS, INC. PAGE C-5
II-00238
D.P.U. 15-80 Exhibit UnitiI-DLC-5 Page 59 of 311 Redacted
ATTACHMENT C
PROJECT PRICE SHEETS
Fitchburg Gas and Electric Light Company d/b/a Unitil
Request for Proposal
Marginal Cost Update Expert Witness Testimony and Analysis (Gas)
Concentric Energy Advisors Itemized Project Pricing Cost Assumptions
Task I
Task 2
Task 3
Task 4
Task 5
Task 6
Task 7
Task 8
Task 9
Task 10
Task 11
Task Description
Project Planning and Administration
Preliminary- Project Planning
Project statu s m eetings
Research / Data Devdopment
Issue data requests to Unitil
Reviexv data
Marginal Cost Study Analysis and Studies
Prepare MCS Update Modal
Prepare MCS Update studies and analyses
Prepare Direct, Prefiled Testim ony
Indudes exchange of drafts dectronicallv
Support Direct Prefiled Testim o ny
Prepare responses to Discovery
Assist in interrogation of testimony
Assist in the revie~v and devdopment of strategy- for
Intervenor testim ony
Devdop data requests and cross questions for inter~enors
Prepare rebuttal testim ony
Indudes exchange of drafts dectronicall¥
Attend hearings for cross examination
Cross Examination on prefiled testimony (Prepare for
hearings, attend hearings)2
Prepare for and attend hearings for cross examination on
rebuttal
Respond to In-hearing Record Requests2
Answer record requests
Assist in Drafting of Legal Brief
Comments on drafts, discussions xvith attorneys, provide
referen ces
Compliance Related Work
TOTAL Hours
Hourly Rate, Discounted b3~% from 2015 Standard
Rates
TOTAL $ Estimate for Consulting Hours
Project tasks up to and induding Rate Case filing
Hours
Cost
Post-filing project tasks
Hours
Cost
Prefiling Direct Costs
Postfiling Direct Costs
Total Other Direct Costs
GRAND TOTAL
CONCENTRIC ENERGY ADVISORS, INC. PAGE C-6
II-00239
D.P.U. 15-80 Exhibit UnitiI-DLC-5 Page 60 of 311 Redacted
ATTACHMENT C
PROJECT PRICE SHEETS
Fitchburg Gas and Electric Light Company d/b/a Unitil
Request for Proposal
Marginal Cost Update Expert Witness Testimony and Analysis (Electric)
Concentric Energy Advisors Itemized Project Pricing Cost Assumptions
Task I
Task 2
Task Description Project Planning and Adminis tration
Preliminary Proj ect Planning
Project status meetings
Research / Data Development
Issue data requests to Unitil
Reviexv data
Task 3
Task 4
Task 5
Task 6
Task 7
Task 8
Task 9
Task 10
Task 11
Marginal Cost Study Analysis and Studies
Prepare MCS Update Model
Prepare MCS Update studies and analyses
Prepare Direct, Prefiled Tes timony
Indudes exchange of drafts electronically
Supp oft Direct Prefiled Testimony
Prepare responses to Discovery
Assist in interrogation of testimony
Assist in the review and development of strategy for
Intervenor testimony
Develop data requests and cross questions for intervenors
Prepare rebuttal testimony
Indudes exchange of drafts electronically
Attend hearings for cross examination
Cross Examination on prefiled testimony (Prepare for
hearings, attend hearings)2
Prepare for and attend hearings for cross examination on
rebuttal
Respond to In-heanng Record Requests-
Answer record requests
Assist in Drafting of Legal Brief
Comments on drafts, discussions with attorneys, provide
references
Compliance Related Work
TOTAL Hours
Hourly Rate, Discounted b~% from 2015 Standard Rates TOTAL $ Estimate for Consulting Hours
Project tasks up to and induding Rate Case filing
Hours
Cost
Post-filing proj ect tasks
Hours
Cost
Prefiling Direct Cos ts
Postfiling Direct Costs
Total Other Direct Costs GRAND TOTAL
CONCENTRIC ENERGY ADVISORS, INC. PAGE C-7
II-00240
D.P.U. 15-80 Exhibit UnitiI-DLC-5 Page 61 of 311 Redacted
ATTACHMENT C
PROJECT PRICE SHEETS
Fitchburg Gas and Electric Light Company d/b/a Unitil
Request for Proposal
Rate Design
Attachment l a (Rate Design)
PROJECT PRICE SHEET FOR SCOPE OF PROPOSED WORK (1)
PROPOSED WORK ELEMENTS
Project Planning and Administration
Research
Analyses or Studies
Prepare Direct, Pre-filed Testimony
Other Direct Costs
Total Not To Exceed (thru filing)
Respond to Discovery
Assist in the Interrogation of Testimony
Prepare Rebuttal Testimony
Attend Hearings
Respond to In-Hearing Record
Reauests
Assist in Drafting of Legal Brief
Prepare Compliance Filing Schedules
Other Direct Costs
Total Cost Estimates (post filing)
Grand Total
Gas Electric Total
Division Division Costs
Include all labor and other direct cost assumptions for all proposed work elements. Costs
through preparation of the filing are not to exceed cost estimates and will not be
reimbursed for costs over the estimates, unless prior written approval from Unitil has been obtained. Post filing activities may be bid on a time and materials basis. Include separate
spreadsheets that itemize the number of hours and hourly rate of each consultant
expected to assist on the project, and other direct cost assumptions for all proposed work
elements. A narrative description of the work covered by each task (e.g. for meetings,
price assumes a certain number of meetings) will assist Unitil in evaluating the bids. The
response must also include applicable labor rates and clearly identify any markups that
will be applied under the Scope of Proposed Work.
CONCENTRIC ENERGY ADVISORS, INC. PAGE C-8
II-00241
D.P.U. 15-80 Exhibit UnitiI-DLC-5 Page 62 of 311 Redacted
ATTACHMENT C
PROJECT PRICE SHEETS
Fitchburg Gas and Electric Light Company d/b/a Unitil
Request for Proposal
Rates Expert Witness Testimony and Analysis (Gas)
Concentric Energy Advisors Itemized Project Pricing Cost Assumptions
Task Description
Task I Project Planning and Administration
Preliminary Project Planning
Project kicko ff m eeting - regulato ry strategy
Proiect status meetings Task 2 Research / Data Devdopment
Issue data requests to Unitil
Review responses, review billing determinants
Discuss data with Unitil
Task 3 Rate Design
Meet with Unitil, lead discussion of rate design objectives
Develop coordinated rate related strategy
Prepare rate design model with links to ACSS results, bill
impact models
Prepare bill impact models
Prepare adjustments to billing determinants, revenues
Design rates, share results with Company - iterative process
Prepare deliver}, service tariffs
Task 4 Prepare Direct, Prefiled Testimony
Initial draft and revisions
Task 5 Prepare responses to Discovery Process
Respond to questions
Task 6 Assist in interrogation of testimony
Assist in the review and development of strategy for
Intervenor testimony
Devdop data requests and cross questions for intervenors
Task 7 Prepare rebuttal testimony
Indudes exchange of drafts electronically
Task 8 Attend hearings for cross examination
Cross Examination on prefiled testimony (Prepare for
hearings, attend hearings)2
Prepare for and attend hearings for cross examination on
rebuttal
Task 9 Respond to In-hearing Record Requests2
Ansxver record requests
Task 10 Assist in Drafting of Legal Brief
Comments on drafts, discussions xvith attorneys, provide
references
Task 11 Compliance Related Work
TOTAL Hours
Hourly Rate, Discounted b~ from 2015 Standard Rates TOTAL $ Estimate for Consulting Hours
Project tasks up to and induding Rate Case filing
Hours
Cost
Post-filing project tasks
Hours
Cost
Prefiling Direct Costs
Post filing Direct Costs
Total Other Direct Costs
GRAND TOTAL
CONCENTRIC ENERGY ADVISORS, INC. PAGE C-9
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D.P.U. 15-80 Exhibit UnitiI-DLC-5 Page 63 of 311 Redacted
ATTACHMENT C
PROJECT PRICE SHEETS
Task I
Task 2
Task 3
Task 4
Task 5
Task 6
Task 7
Task 8
Task 9
Task 10
Task 11
Fitchburg Gas and Electric Light Company d/b/a Unitil
Request for Proposal
Rates Expert Witness Testimony and Analysis (Electric)
Concentric Energy Advisors Itemized Pro ect Pricin~ Cost
Task Description
Project Planning and Administration
Prelimin ary Pro j ect Planning
Project ki&o ff meeting
Project status meetings
Research / Data Development
Issue data requests to Unitil
Review responses, review billing determinants
Discuss data with Unitil
Rate Design
Develop ratemaldng alternatives
Meet with Unitil, lead discussion of rate design objectives
Prepare rate design modal xvith links to ACSS results, bill
impact models
Prepare bill impact models
Prepare adjustments to billing determinants, revenues
Design rates, share results xvith Company - iterative process
Prepare driveU se,~Tice tariffs; (possibly) prepare alternative
ratemaking tariffs
Prepare Direct, Prefiled Testimony
Initial draft and revisions
Prepare responses to DiscoveU Process
Respond to questions
Assist in interrogation of testimony
Assist in the reviexv and devdopment of strategy for
Intervenor testimony
Develop data requests and cross questions for intet~enors
Prepare rebuttal testimony
Indudes exchange of drafts electronically
Attend hearings for cross examination
Cross Examination on prefiled testimony (Prepare for
hearings, attend hearings)2
Prepare for and attend hearings for cross examination on
rebuttal
Respond to In-hearing Record Requests2
Ansxver record requests
Assist in Drafting of Legal Brief
Comments on drafts, discussions xvith attorneys, provide
references
Compliance Rdated Work
TOTAL Hours
Hourly Rate, Discounted b3~ from 2015 Standard Rate TOTAL $ Estimate for Consulting Hours
Project tasks up to and induding Rate Case filing
Hours
Cost
Post-filing project tasks
Hours
Cost
Prefiling Direct Costs
Postfiling Direct Costs
Total Other Direct Costs
GRAND TOTAL
CONCENTRIC ENERGY ADVISORS, INC. PAGE C-10
II-00243
D.P.U. 15-80 Exhibit UnitiI-DLC-5 Page 64 of 311 Redacted
ATTACHMENT C
PROJECT PRICE SHEETS
Fitchburg Gas and Electric Light Company d/b/a Unitil
Request for Proposal
Lead/Lag Study
Attachment 1 b
PROJECT PRICE SHEET FOR SCOPE OF PROPOSED WORK (1)
PROPOSED WORK ELEMENTS
Project Planning and Administration
Research
Analyses or Studies
Prepare Direct, Pre-filed Testimony
Other Direct Costs
Total Not To Exceed (thru filing)
Respond to Discovery
Assist in the Interrogation of Testimony
Prepare Rebuttal Testimony
Attend Hearings
Respond to In-Hearing Record
Reauests
Assist in Drafting of Legal Brief
Prepare Compliance Filing Schedules
Other Direct Costs
Total Cost Estimates (post filing)
Grand Total
Electric Gas Electric Gas Division Division
Division Division Purchased Purchased
O&M O&M Gas Power and Lead/Lag Lead/Lag Lead/Lag Transmission
Study Study Study Lead/Lag
Study
Total Costs
Gas
Division
O&M, Purchased
Gas Lead/Lag
Studies
Include all labor and other direct cost assumptions for all proposed work elements. Costs through preparation of the
filing are not to exceed cost estimates and will not be reimbursed for costs over the estimates, unless prior written
approval from Unitil has been obtained. Post filing activities may be bid on a time and materials basis. Include
separate spreadsheets that itemize the number of hours and hourly rate of each consultant expected to assist on the project, and other direct cost assumptions for all proposed work elements. A narrative description of the work
covered by each task (e.g. for meetings, price assumes a certain number of meetings) will assist Unitil in evaluating
the bids. The response must also include applicable labor rates and clearly identify any markups that will be applied
under the Scope of Proposed Work.
Electric
Division
O&M, Purchased
Power Lead/Lag
Study
CONCENTRIC ENERGY ADVISORS, INC. PAGE C-11
II-00244
D.P.U. 15-80 Exhibit UnitiI-DLC-5 Page 65 of 311 Redacted
ATTACHMENT C
PROJECT PRICE SHEETS
Fitchburg Gas and Electric Light Company d/b/a Unitil
Request for Proposal
Lead/Lag Study Expert Witness Testimony and Analysis (Gas O&M)
Concentric Energy Advisors Itemized Project Pricing Cost Assumptions
Task Description
Task 1 Project Planning and Administration
Prelim in aM- Pro j ect Plan ning
Project -kickoff meeting
Task 2 Research / Data Development
Issue data requests to Unitil
Reviexv res~p onses and folloxv up requests>>
Discuss data with Unitil
Task 3 O&M Lead / Lag Study
Meet with Unitil, discussion of study
Develop studies of lead/lags by item
Prep are overall m o del
Prepare adjustments to individual lead/lags
Review and discuss results xvith Company
Task 4 Prepare Direct, Pret-tled Testimony
Initial draft and revisions
Task 5 Prepare responses to DiscoveU Process
Respond to questions
Task 6 Assist in interrogation of testimony
Assist in the revimv and development of strategy for Intervenor
tes tim o ny
Develop data requests and cross questions for intervenors
Task 7 Prepare rebuttal testimony
Indudes exchange of drafts electronimlly
Task 8 Attend hearings for cross examination
Cross Examination on preftled testimony (Prepare for hearings,
attend hearings)2
Prepare for and attend hearings for cross examination on
rebuttal
Task 9 Respond to In-hearing Record Requests2
Ansxver record requests
Task 10 Assist in Drafting of Legal Brief
Comments on drafts, discussions with attorneys, provide
references
Task 11 Compliance Related Work
TOTAL Hours
Hourly Rate, Discounted b~% from 2015 Standard Rates
TOTAL $ Estimate for Consulting Hours
Project tasks up to and induding Rate Case filing
Hours
Cost
Post-t-fling project tasks
Hours
Cost
Prefiling Direct Costs
Postfiling Direct Costs
Total Other Direct Costs
GRAND TOTAL
CONCENTRIC ENERGY ADVISORS, INC. PAGE C-12
II-00245
D.P.U. 15-80 Exhibit UnitiI-DLC-5 Page 66 of 311 Redacted
ATTACHMENT C
PROJECT PRICE SHEETS
Fitchburg Gas and Electric Light Company d/b/a Unitil
Request for Proposal
Lead/Lag Study Expert Witness Testimony and Analysis (Electric O&M)
Concentric Energy Advisors Itemized Project Pricing Cost Assumptions
Task Description
Task 1 Project Planning and Administration
Preliminary Pro j ect Planning
Project ~cko ff meeting
Task 2 Research / Data Development
Issue data requests to Unitil
Reviexv responses and folloxv up requests
Discuss data with Unitil
Task 3 O&M ~ad [ Lag Study
Meet with Unitil, discussion of study
Develop studies of lead/lags by item
Prepare overall model
Prep are adju s tm ents to individual lead/lags
Review and discuss results xvith Company
Task 4 Prepare Direct, Preilled Testimony
Initial draft and revisions
Task 5 Prepare responses to DiscoveU Process
Respond to questions
Task 6 Assist in interrogation of testimony
Assist in the reviexv and development of strategy for Intervenor
tes tim o ny
Develop data requests and cross questions for intervenors
Task 7 Prepare rebuttal testimony
Indudes exchange of drafts electronimlly
Task 8 Attend hearings for cross examination
Cross Examination on prefiled testimony (Prepare for hearings,
attend hearings)2
Prepare for and attend hearings for cross examination on
rebuttal
Task 9 Respond to In-heating Record Requests2
Ansxver record requests Task 10 Assist in Drafting of~galBrief
Comments on drafts, discussions with attorneys, provide
references
Task 11 Compliance Related Work
TOTAL Hours
Hourly Rate, Discounted b~ from 2015 Standard Rates
TOTAL $ Estimate for Consulting Hours
Project tasks up to and induding Rate Case filing
t Iours
Cost
Post-fding proiect tasks
Hours
Cost
Prefiling Direct Cos ts
Po s tilling Direct Co s ts
Total Other Direct Costs
GRAND TOTAL
CONCENTRIC ENERGY ADVISORS, INC. PAGE C-13
II-00246
D.P.U. 15-80 Exhibit UnitiI-DLC-5 Page 67 of 311 Redacted
ATTACHMENT C
PROJECT PRICE SHEETS
Fitchburg Gas and Electric Light Company d/b/a Unitil
Request for Proposal
Lead/Lag Study Expert Witness Testimony and Analysis (Purchase Gas)
Concentric Energy Advisors Itemized Project Pricing Cost Assumptions
Task 1
Task 2
Task 3
Task 4
Task 5
Task 6
Task 7
Task 8
Task 9
Task 10
Task 11
Task Description
pr0iect Planning and Administration
Preliminary" Project Planning Project Ncko ff meeting
Research / Data Development
Issue data requests to Unitil
Review responses and follow up requests
Purchased Gas Lead / Lag Study
Meet with Unitil, discussion of study
Develop studies of lead/lags by item
Prepare overall model
Prepare adjustments to individual lead/lags
Review and discuss results with Company
Prepare Direct, Prefiled Testimony
Initial draft and revisions
Prepare responses to Discovery Process
Respond to questions
Assist in interrogation of testimony
Assist in the review and development of strategy for Inter~renor
testimony
Develop data requests and cross questions for intervenors
Prep are rebu ttal tes tim o ny
Indudes exchange o f drafts electronically
Attend hearings for cross examination
Cross Examination on prefiled testimony (Prepare for hearings,
attend hearings)2
Prepare for and attend hearings for cross examination on
rebuttal
Respond to In-hearing Record Requests2
Answer record requests
Assist in Drafting of Legal Brief
Comments on drafts, discussions with attorneys, provide
re t~eren ce s
Compliance Related Work
TOTAL t Iours
Hourly Rate, Discounted b~% from 2015 Standard Rates
TOTAL $ Estimate for Consulting Hours
Project tasks up to and induding Rate Case filing
Hours
Cost
Post-filing project tasks
IIours
Cost
Prefiling Direct Co sts
Postfiling Direct Costs
Total Other Direct Costs
GRAND TOTAL
CONCENTRIC ENERGY ADVISORS, INC. PAGE C-14
II-00247
D.P.U. 15-80 Exhibit UnitiI-DLC-5 Page 68 of 311 Redacted
ATTACHMENT C
PROJECT PRICE SHEETS
Fitchburg Gas and Electric Light Company d/b/a Unitil
Request for Proposal
Lead/Lag Study Expert Witness Testimony and Analysis (Purchase Power)
Concentric Energy Advisors Itemized Project Pricing Cost Assumptions
Task Description
Task 1 project Planning and Administration
Preliminary" Project Planning
project -kicko ff meeting
Task 2 Research / Data Development
Issue data requests tO Uniti!
Review responses and follow up requests
Task 3 Purchased Po~verLead / Lag Study
Meet xvith Unitil, discussion of study
Develop studies of lead/lags by item
Prepare overall model
Prepare adjustments to individual lead/lags
Review and discuss results with Company
Task 4 Prepare Direct, Prefiled Testimony
Initial draft and revisions
Task 5 Prepare responses to Discovery Process
Respond to questions
Task 6 Assist in interrogation of testimony
Assist in the review and development of strategy for Intervenor
testimony
Develop data requests and cross questions for intervenors
Task 7 Prepare rebuttal testimony
Indudes exchange o f drafts electronically
Task 8 Attend hearings for cross examination
Cross Examination on prefiled testimony (Prepare for hearings,
attend hearings)2
Prepare for and attend hearings for cross examination on
rebuttal
Task 9 Respond to In-hearing Record Requests2
Answer record requests
Task 10 Assist in Drafting of Legal Brief
Comments on drafts, discussions with attorneys, provide
references
Task 11 Compliance Related Work
TOTAL t Iours
Hourly Rate, Discounted b3~% from 2015 Standard Rates
TOTAL $ Estimate for Consulting Hours
Project tasks up to and induding Rate Case filing
Hours
Cost
Post-filing project tasks
IIours
Cost
Prefiling Direct Co sts
Postfiling Direct Costs
Total Other Direct Costs
GRAND TOTAL
CONCENTRIC ENERGY ADVISORS, INC. PAGE C-15
II-00248
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II-00249
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II-00250
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II-00251
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II-00252
D.P.U. 15-80 Exhibit UnitiI-DLC-5 Page 73 of 311 Redacted
ATTACHMENT E STANDARD TERMS AND CONDITIONS
CONCENTRIC ENERGY ADVISORS, INC.
STANDARD TERMS AND CONDITIONS
Scope- Concentric Energy Advisors, Inc. ("Concentric") will perform the services set forth in the Letter or
Proposal of which these Terms and Conditions (Terms) are a part. The provisions of these Terms shall
control in the case of conflict with any provisions of the Letter or Proposal.
Fees and Expenses- Unless otherwise stated, fees for services by Concentric shall be based upon the rates,
at the time the work is performed, o f the personnel actually involved in the assignment. Report production
and printing, reproduction, and telephone charges will be billed to you at Concentric’s standard charges for
such materials for services. Expenses of consultants while on assignment or any other charge incurred or
expenditure made on your behalf will be charged at our cost.
Payment- Concentric will submit monthly invoices reflecting actual work performed and expenses incurred.
Payment shall be due in U.S. funds 30 days after the date of an invoice. Amounts past due more than 30
days shall bear interest at an annual rate of 12% from the due date until payment is received.
Sales Tax- You are responsible for paying any local, state, or federal sales, use, or ad valorem tax that might
be assessed on our services.
Independent Contractor- It is understood and agreed that Concentric shall for all purposes be an independent
contractor, shall not hold itself out as representing or acting in any manner for you, and shall have no
authority to bind you to any contract or in any other manner.
Termination- These terms shall be subject to the right of either party to terminate at any time upon not less
than ten (10) days prior written notice to the other party. Upon termination, you shall pay the full amount
due for services rendered and costs and expenses incurred and not paid for up to that time, and the costs
of returning consultant personnel to home base and other reasonable costs and expenses incurred in
effecting termination and returning documents.
Responsibility Statement- Concentric agrees that the services provided for herein will be performed in
accordance with recognized professional consulting standards for similar services and that adequate
personnel will be assigned for that purpose. If, during the performance of these services or within six
months following completion of the assignment, such services shall prove to be faulty or defective by
reason of a failure to meet such standards, Concentric agrees that upon prompt written notification from
you prior to the expiration of the six month period following the completion of the assignment containing
any such fault or defect, such faulty portion of the services shall be redone at no cost to you up to a
maximum amount equivalent to the cost of the services rendered under this assignment. The foregoing
shall constitute Concentric’s sole liability with respect to the accuracy or completeness of the work and the
activities involved in its preparation. In no event shall Concentric, its agents, employees, or others
providing materials or performing services in connection with work on this assignment be liable for any
direct, consequential or special loss or damage, whether attributable to breach of contract, tort, including
negligence, or otherwise; and except as herein provided, you release, indemnify, and hold Concentric, its
CONCENTRIC ENERGY ADVISORS, INC. PAGE E-1
II-00253
D.P.U. 15-80 Exhibit UnitiI-DLC-5 Page 74 of 311 Redacted
ATTACHMENT E STANDARD TERMS AND CONDITIONS
agents, employees, or others providing materials or performing services in connection with work on this
assignment harmless from any and all liability including costs of defense, settlement and reasonable
attorney’s fees.
Work Product- Any report or other document prepared pursuant to these Terms shall be for your use only.
Concentric’s prior written consent is required for the use of (or reference to) its report or any other
document prepared pursuant to these Terms in connection with a public offering of securities or in
connection with any other financing. Concentric hereby agrees, however, to the Client’s reference to the
work product in connection with any proxy relating to a combination between two parties. It is understood
and agreed that Concentric’s use of its proprietary computer software, methodology, procedures, or other
proprietary information in connection with an assignment shall not give you any rights with respect to such
proprietary computer software, methodology, procedures or other proprietary information. Concentric
may retain and further use the technical content of its work hereunder.
o Excused Pe{TCormance - Concentric shall not be deemed in default of any provision hereof or be liable for any
delay, failure in performance, or interruption of service resulting directly or indirectly from acts of God,
civil or military authority, civil disturbance, war, strikes or other labor disputes, fires, other catastrophes, or
other forces beyond its reasonable control, whether or not such event may be deemed foreseeable.
10. Related Litigation- In the event that Concentric employees (current or former), subcontractors or agents are
compelled to provide testimony, produce documents, or otherwise incur costs or expend time in any legal
proceeding related to Concentric’s work for you, you agree to reimburse Concentric at its regular billing
rate per hour for its time expended, and for any expenses incurred (at Concentric’s direct cost).
11. Notices- All notices given under or pursuant to the Terms shall be sent by Certified or Registered Mail,
Return Receipt Requested, and shall be deemed to have been delivered when physically delivered if to
Concentric Energy Advisors, Inc., 293 Boston Post Road West, Suite 500, Marlborough, MA 01752,
Attention Mr. John j. Reed, Chairman and Chief Executive Officer, and if to you at the address shown on
the Letter or Proposal of which these Terms are a part or such other address as you may designate by
written notice to us.
12. Complete Agreement- It is understood and agreed that these Terms and the Letter or Proposal of which they
are a part embody the complete understanding of the parties and that any and all provisions, negotiations
and representations not included herein are hereby abrogated and that these terms cannot be changed,
modified or varied except by written instrument signed by both parties. In the event you issue a purchase
order or memorandum or other instrument covering the services herein provided, it is hereby specifically
agreed and understood that such purchase order, memorandum, or instrument is for your internal purposes
only, and any and all terms and conditions contained therein, whether printed or written, shall be of no
force or effect unless agreed to in writing by Concentric. No waiver by either parties of a breach hereof or
default hereunder shall be deemed a waiver by such party of a subsequent breach or default of like or similar
nature.
CONCENTRIC ENERGY _ADVISORS, INC. PAGE E-2
II-00254
D.P.U. 15-80 Exhibit UnitiI-DLC-5 Page 75 of 311 Redacted
ATTACHMENT E STANDARD TERMS AND CONDITIONS
13. Governing Law- This Agreement (consisting of the Letter or Proposal and these terms) shall be construed
and otherwise governed pursuant to the laws of the Commonwealth of Massachusetts. The attached
Proposal, of which these General terms and Conditions (terms) form a part, constitutes an agreement of
the parties hereto, and supersedes any previous agreement or understanding. It may not be modified except
in writing, and only if executed by both parties.
AGREED AND ACCEPTED:
CLIENT SIGNATURE
TITLE:
COMPANY:
DATE:
CONCENTRIC ENERGY _ADVISORS, INC. PAGE E-3
II-00255
D.P.U. 15-80 Exhibit UnitiI-DLC-5 Page 76 of 311 Redacted
PROPOSAL FOR:
RATE CASE STUDIES FOR
FITCHBURG GAS & ELECTRIC LIGHT COMPANY
RETURN ON EQUITY
PREPARED FOR
MARCH 20, 2015
CONFIDENTIAL
II-00256
D.P.U. 15-80 Exhibit UnitiI-DLC-5 Page 77 of 311 Redacted
March 20, 2015
RFP Response
Care of: Joseph Conneely
Unitil Service Corp.
6 Liberty Lane West
Hampton, NH 03842
RE: Proposal to Provide Rate Case Studies for Fitchburg Gas and Electric Company
Dear Mr. Conneely,
Concentric Energy Advisors, Inc. ("Concentric") appreciates the opportunity to submit the following
proposals to Fitchburg Gas and Electric Company ("FG&E" or the "Company") to prepare studies for
the Company’s upcoming electric and gas rate cases before the Massachusetts Department of Public
Utilities: (i) Allocated Cost of Service Study ("ACSS"), Marginal Cost Study ("MCS"), Lead/Lag Study
and Rate Design and (~) Return on Equity. These proposals have been structured as two single stand-
alone bids; Concentric is not providing a combined bid for the two areas.
The primary contact person for each proposal is provided below along with the respective contact
information. Please feel free to contact us should you have any questions on our proposals or
qualifications. We look forward to the opportunity to work with FG&E on this assignment.
Very truly yours,
CONCENTRIC ENERGY ADVISORS~ INC.
ACSS, MCS, Lead/Lag Study and Rate Design: Return on Equity:
James D. Simpson Senior Vice President
293 Boston Post Road West
Suite 500
Marlborough, MA 01752
Email: ~ceadv~sors~com Direct: 508-263-6224
Fax: 508-303-3290
Ann E. Bulkley Vice President
293 Boston Post Road West
Suite 500
Marlborough, MA 01752
Email:
Direct: 508-263-6216
Fax: 508-303-3290
II-00257
D.P.U. 15-80 Exhibit UnitiI-DLC-5 Page 78 of 311 Redacted
CONFIDENTIAL
TABLE OF CONTENTS
I. Introduction ...................................................................................................................... 1
II. Scope of Work ................................................................................................................... 2
III. Review of Massachusetts ROE Methodology .................................................................. 4
IV. Proposed Schedule, Budget and Terms ........................................................................... 5
V. Proposed Project Team .................................................................................................... 6
VI. Summary of Concentric’s Relevant Experience & References ........................................ 7
VII. Administrative Items ........................................................................................................ 7
Attachments:
A. Project Price Sheet
B. Project Team R4sum4s
C. Relevant Experience
D. Concentric’s Standard Terms and Conditions
CONCENTRIC ENERGY ADVISORS, INC. PAGE I
II-00258
D.P.U. 15-80 Exhibit UnitiI-DLC-5 Page 79 of 311 Redacted
CONFIDENTIAL
I. INTRODUCTION
Concentric Energy Advisors, Inc. ("Concentric") understands that Fitchburg Gas and Electric
Light Company d/b/a Unitil ("UNtil" or the "Company") is seeking expert assistance in the
preparation and support of an appropriate cost of equity (or "ROE") for the Company. We also
understand that the selected consultant will be expected to propose a variety of approaches to
determining the appropriate cost of equity including the Discounted Cash Flow ("DCF") model,
the Risk Premium model, and the Capital Asset Pricing Model ("CAPM").
As discussed throughout this proposal, Concentric’s strong project management skills, coupled
with the technical and financial expertise of our team, offer our clients a higher level of service,
and deeper base of resources, than have traditionally been deployed for ROE services.
Concentric’s team-based approach to producing ROE analyses and testimony provides our clients
with a deep base of experience and capability in this area, while enabling us to carefully control
project expenses.
Concentric’s expert testimony incorporates a thorough understanding of academic research on the
traditional financial models used to estimate the cost of equity, including DCF, CAPM, Risk
Premium Model, and Comparable Earnings analyses. We explain the theoretical derivation of
these various methods, as well as the underlying assumptions that are required for each method.
We also cite academic research supporting the application of alternative models to estimate the
appropriate cost of equity for a specific utility under different market conditions.
Our Cost of Capital Team is comprised of seven testifying expert witnesses who have filed
testimony on cost of capital matters before numerous state and provincial regulatory commissions
as well as before the Federal Energy Regulatory Commission ("FERC") and National Energy
Board of Canada ("NEW’). Concentric’s cost of capital witnesses are backed by a team of 12
consultants who are highly experienced in all aspects of developing the financial, economic and
technical data filed in the proceedings. The Cost of Capital Team has provided expert testimony
and support to our clients in more than 100 cost of capital cases in 23 jurisdictions across North
America.
Our team not only has considerable experience with cost of capital determinations for utilities, but
also possesses expert knowledge of the regulatory framework under which the rate proceedings
will occur. Our staff has significant experience in providing cost of capital and capital structure
testimony for natural gas and electric utilities, natural gas pipelines, and electric transmission
companies.
CONCENTRIC ENERGY ADVISORS, INC. PAGE 1
II-00259
II. SCOPE OF ~vVORK
D.P.U. 15-80 Exhibit UnitiI-DLC-5 Page 80 of 311 Redacted
CONFIDENTIAL
Concentric’s approach to providing expert cost of capital testimony balances the theoretical
application of the traditional models with a market-based view of the cost of capital.
Strategy- In developing the cost of capital recommendations, Concentric understands that it
is important to establish a dialogue with the regulatory commission, and to continually offer
a fresh approach on ROE and capital structure issues. For that reason, Concentric reviews
previous commission decisions and works with the Company staff and counsel to consider
the appropriateness of addressing the issues raised by the commission, the Staff and the
Attorney General, or other intervening parties in the pre-filed direct case. We understand
that simply repeating previous positions and arguments is often not persuasive and can be
frustrating to commissions. Concentric places a great emphasis on bringing fresh arguments
to commissions on critical ROE issues.
Investor-focused. Market-based- Concentric leverages our day-to-day experience in the
capital and transactions markets to develop ROE testimony and recommendations that are
focused on investor expectations and return requirements. We frame our ROE
recommendation in the context of current financial market and economic conditions, and
we explain how the ultimate ROE award may affect the utility’s financial integrity and ability
to attract capital. Specifically, we consider how equity investors might respond to current
and expected economic and financial market conditions, and we explain how those
conditions affect the determination of the appropriate cost of equity for a regulated public
utility. The effect of current market conditions on the ROE estimation models is of
particular importance in the determination of a reasonable ROE. Therefore, in addition to
providing a summary of those conditions, Concentric’s testimony discusses the effects of
market conditions on each of the specific ROE estimation models to provide the
commission with an understanding of the benefits and weaknesses of each model.
Industry, Expertise- Concentric’s knowledge of the utility industry and financial markets
allows us to distinguish between long-term trends and short-term anomalies. In addition,
Concentric’s expertise in other aspects of the regulatory process, including rate design,
planning and revenue requirements provides an understanding of the issues that are faced by
companies on a national level and the approaches that have been approved by regulators in
other jurisdictions, which offers the ability to benchmark the subject company to the
industry and proxy companies. This expertise is particularly important with the
requirements of D.P.U 07-50-A where the Commission determined that the effect of
decoupling on the risk profile of Massachusetts utilities will be decided on a case-specific
basis. Concentric’s understanding of industry practice surrounding decoupling allows us to
provide the commission with the necessary information on decoupling mechanisms on a
national scale.
CONCENTRIC ENERGY ADVISORS, INC. PAGE 2
II-00260
D.P.U. 15-80 Exhibit UnitiI-DLC-5 Page 81 of 311 Redacted
CONFIDENTIAL
Informed Judgment and Perspective - Concentric has the experience and perspective
necessary to interpret the results of the various ROE estimation techniques, and apply
informed judgment to derive an ROE recommendation that is reasonable under current
financial market conditions. Concentric’s expert testimony and analysis provide the range of
results from various models as well as the rationale underlying our specific recommendation
from within that range.
Clear, Concise Testimony- Concentric understands the importance of communicating
complex financial and technical concepts in a clear and concise manner. Our written
testimony and reports are organized to focus on the critical issues that affect the ultimate
ROE determination. While pre-filed rebuttal testimonies can often be very technical in
nature, we provide an executive summary of our principle recommendations and
conclusions that is designed to provide the commission with a clear understanding of the
value drivers that are in dispute and the effects of those drivers on the company’s return and
ability to attract capital.
Databases- Concentric maintains a variety of different databases that enable us to develop
our testimonies in the most efficient manner possible and also to provide updates to our
analyses and recommendations with little lead time. For example, we update our ROE
models weekly to reflect the most current growth rates, dividend payments, and Beta
coefficients. In addition, we maintain databases that enable us to perform a comparative risk
analysis between your company and the proxy group. In particular, we continually update
information with regard to test year conventions, the implementation of revenue decoupling
mechanisms, revenue stabilization mechanisms, and other cost recovery mechanisms and
riders for potential proxy companies. Further, we have an extensive library of reports from
credit rating agencies and equity analysts on the utility and energy industries that are used to
understand the perspective of these analysts and the effect of certain issues on the cost of
equity.
Ongoing Support- Concentric provides ongoing support throughout the rate case,
including: responding to data requests, preparing rebuttal and surrebuttal testimony in
response to specific points raised by intervening parties, assisting in settlement negotiations,
supporting counsel in hearing preparation and developing cross examination questions,
appearing at hearings to explain our recommendations and defend our expert testimony, and
assisting with post-hearing briefs and statements of position. Concentric’s team-based
approach provides our clients with experienced project managers and analysts who can
respond to the ongoing needs of the case with efficiency and expertise that is derived from
the experience of managing and working on more than 75 cost of capital cases over the past
five years.
CONCENTRIC ENERGY ADVISORS, INC. PAGE 3
II-00261
D.P.U. 15-80 Exhibit UnitiI-DLC-5 Page 82 of 311 Redacted
CONFIDENTIAL
III. REVIEW OF MASSACHUSETTS PRECEDENT D.P.U 0 7-50-A
D.P.U. 07-50-A is the Commission decision that resulted from an industry-wide collaborative
discussion about establishing the proper regulatory and financial incentives for distribution
companies to fully pursue the economic, price, reliability, and environmental benefits that are
available from energy efficiency and demand response programs as well as fostering the
development of renewable resources. Concentric experts were fully engaged in that proceeding,
have a detailed understanding of the positions that were offered on the effect of decoupling
mechanisms on utility risk profiles, and provided testimony to the Commission. As noted
previously, in D.P.U 07-50-A, the Commission determined that the effect of a decoupling
mechanism on a company’s risk profile is to be decided in the context of the rate proceeding.
Therefore, the Commission established, as part of the filing requirements, that "each distribution
company must include an analysis of the effects of decoupling on its required ROE as part of the
direct testimony submitted as part of any base rate application to implement decoupling.’’1
In addition to the traditional approach to estimating the cost of capital, discussed in greater detail
in Section II above, Concentric’s testimony would include a testimony specifically addressing the
effect of decoupling on the recommended ROE. The analysis that supports this portion of the
testimony would include an analytical review of the Company’s historical earnings as well as a
thorough review of the earnings, rate mechanisms, and regulatory environments of the proxy
companies. That analysis would include the following:
1. Analysis of the Company’s recent historical earned return on equity;
.
.
Decomposition of the Company’s historical earned return on equity to determine the
reason behind any failure to achieve the authorized return;
A comparison of the company’s earned return with the earned returns of the proxy
companies;
4. A review of the rate stabilization mechanisms implemented by the proxy companies;
.
Review of the ratemaking mechanisms in other jurisdictions, including but not limited to
decoupling, weather normalization, test year valuation of ratebase, infrastructure recovery
mechanisms, regulatory lag, bad debt cost recovery and pension benefit recovery
mechanisms; and
6. A review of analyst and rating agency expectations with respect to decoupling.
D.P.U. 07-50-A, July 16, 2008, p. 74.
CONCENTRIC ENERGY ADVISORS, INC. PAGE 4
II-00262
D.P.U. 15-80 Exhibit UnitiI-DLC-5 Page 83 of 311 Redacted
CONFIDENTIAL
PROPOSED SCHEDULE~ BUDGET AND TERMS
Concentric is able to produce written direct testimony and exhibits under relatively tight time
deadlines due to our experience in developing expert witness testimony for our clients related to
ROE,. In addition, because Concentric’s team has developed databases of research on the
universe of proxy companies and automated ROE estimation models, our project team would
have immediately available many up-to-date databases of proxy company data to draw on for the
analyses described in Section V. As outlined in the preparation of direct testimony, including
research, analysis, drafting, auditing and formatting, is expected to require approximately ~
hours to complete. Given Concentric’s experience in these types of cases, we would expect that
those hours would be spent over the course of four weeks, depending on the coordination
required with other Company witnesses. For example, if the assignment were to be awarded by
the end of March, Concentric could prepare final testimony by April 30th, assuming that all the
company-specific information was available during that period, with the analyses and estimated
ROE provided prior to the completion of the final written testimony to be used in developing the
revenue requirement. The remainder of the schedule is established by the regulatory process itself.
Concentric has significant experience in every aspect of the regulatory process and is confident
that we can meet the tightest of regulatory deadlines. Importantly, our deep pool of analytical
resources allows our cost of capital team to scale up in situations where the allotted time to
respond to an issue is constrained.
Concentric recognizes that litigation costs can be difficult to project beyond the filing of the initial
testimony and that this can present budgeting challenges and become a source of frustration to
our clients. Therefore, our pricing approach involves a capped not to exceed price of ~
through the submission of direct testimony and a good faith estimate of costs for the rebuttal
testimony, hearings, cross examination preparation and brief preparation (if required). We only
bill for services rendered should the case settle before hearings are conducted. Below is a
summary of anticipated costs and associated project phases, reflecting proceedings comprised of
one round of rebuttal testimony and a single evidentiary hearing at the end of the regulatory
process. We have assumed that as part of the proceedings, we would respond to two intervening
expert witnesses on the topic of ROE. Additionally, our fixed cost proposals for the direct
testimony includes an initial set of analyses to establish the recommended ROE and one additional
update to the analyses closer to the filing date, if necessary. To the extent that the filing schedule
for direct testimony changes significantly, such that there is a need to further update the analyses,
Concentric will notify the Company and will mutually agree to any revision to the not-to exceed
budget.
CONCENTRIC ENERGY ADVISORS, INC. PAGE 5
II-00263
~ ..............................................................................
Pre- filing tasks
Post-filing tasks
Total
D.P.U. 15-80 Exhibit UnitiI-DLC-5 Page 84 of 311 Redacted
CONFIDENTIAL
The prices noted in Attachment A reflect a ~ discount off Concentric’s Standard Billing
Rates.
go PROPOSED PROJECT TEAM
Ann Bulkley, Vice President, will be the Responsible Officer and will provide testimony in support
of the Company on cost of capital and ROE. John Trogonoski, Senior Project Manager, will serve
as the Project Manager for this assignment. Mr. Trogonoski will be responsible for providing
analysis and advice as the Company considers various aspects of ROE issues in its upcoming rate
case. Mr. Trogonoski has extensive experience managing cost of capital engagements and
addressing the issues that arise in all phases of a case. The project team will also include a
consultant from Concentric’s Analytical Team with significant cost of capital expertise.
Concentric’s team-based approach provides our clients with access to the full Cost of Capital
Team for the purposes of analytical support as well as the review and collaboration of a team of
almost 20 professionals with knowledge and experience in this subject area. The breadth of our
team provides the flexibility to handle multiple projects that are ongoing simultaneously across the
cost of capital practice. This provides our clients the assurance that Concentric can meet the rapid
response time that is often required after the filing of direct testimony. Short biographical
summaries of the proposed project team are included below and rfisumfis for the core project team
members are provided in Attachment B.
Ann E. Bulkley, Vice President, has nearly two decades of management and economic
consulting experience in the energy industry. Ms. Bulkley has extensive state and federal
regulatory experience on both electric and natural gas issues including rate of return, cost of equity
and capital structure issues. Ms. Bulkley has worked on acquisition teams with investors seeking to
acquire utility assets, providing valuation services including an understanding of regulation, market
expected returns, and the assessment of utility risk factors. Ms. Bulkley has assisted clients with
valuations of public utility and industrial properties for ratemaking, purchase and sale
considerations, ad valorem tax assessments, and accounting and financial purposes. Ms. Bulkley
was instrumental in developing the firm’s cost of capital practice including developing the
analytical foundation, providing strategic advice to clients and providing expert testimony. In
addition, Ms. Bulkley has experience in the areas of contract and business unit valuation, strategic
alliances, market restructuring and regulatory and litigation support. Prior to joining Concentric,
CONCENTRIC ENERGY ADVISORS, INC. PAGE 6
II-00264
D.P.U. 15-80 Exhibit UnitiI-DLC-5 Page 85 of 311 Redacted
CONFIDENTIAL
Ms. Bulkley held senior expertise-based consulting positions at several firms, including Reed
Consulting Group and Navigant Consulting, Inc. where she specialized in valuation. Ms. Bulkley
holds an M.A. in economics from Boston University and a B.A. in economics and finance from
Simmons College. Ms. Bulkley is a Certified General Appraiser licensed in the Commonwealth of
Massachusetts and the State of Michigan.
John P. Trogonoski, Senior Project Manager, is a financial and economic consultant with over
20 years of experience in utility regulation, financial analysis, business valuation, property taxation,
and program administration. Since joining Concentric in 2008, Mr. Trogonoski has assisted clients
with a variety of regulatory matters including drafting expert testimony and reports on cost of
capital and business and financial risk analysis. As a member of the Staff of the Colorado Public
Utilities Commission, Mr. Trogonoski supervised the financial analysts in the energy and
telecommunications sections and filed expert testimony on rate of return, revenue requirement,
cost allocation, rate design, incentive regulation, and policy matters. He has a Master’s degree in
Business Administration and an undergraduate degree in Marketing from the University of
Colorado at Denver.
VI. SUMMARY OF CONCENTRIC’S RELEVANT EXPERIENCE & REFERENCES
Examples of the firm’s relevant experience are provided in Attachment C. Below is contact
information for clients whom we would be pleased if you contacted as references for our work.
I(entton Grant
Vice President Finance and Rates
UNS Electric Inc.
Karen Wilkes
Manager Public Affairs
Atmos Energy
~ ~ COFI..2
520-884-3614
VII. ADMINISTRATIVE ITEMS
Concentric’s Standard Terms and Conditions are included as Attachment D.
Concentric certifies that our representation of UNtil will not create any conflicts of interest.
Lastly, this proposal is irrevocable for 90 days.
CONCENTRIC ENERGY ADVISORS, INC. PAGE 7
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D.P.U. 15-80 Exhibit UnitiI-DLC-5 Page 86 of 311 Redacted
CONFIDENTIAL
VIII. CONCLUSION
Please feel free to contact me should you have any questions on our proposal or qualifications.
We look forward to the opportunity to work with FG&E on this assignment.
Sincerely,
Ann E. Bulkley
Vice President
293 Boston Post Road West
Suite 500
Marlborough, MA 01752
Email: ab~lkI.ev (~.cea &,q s o.v. s ~ c ore.
Direct: 508-263-6216
Fax: 508-303-3290
CONCENTRIC ENERGY ADVISORS, INC. PAGE 8
II-00266
D.P.U. 15-80 Exhibit UnitiI-DLC-5 Page 87 of 311 Redacted
ATTACHMENT A PROJECT PRICE SHEET
Fitchburg Gas & Electric ROE Expert Witness Testimony and Analysis
Concentric Energy Advisors Itemized Project Pricing Cost Assumptions
Task A
Task B
Task C
Task D
Task E
Task F
Task G
Task H
Task I
T ask j
Task K
Task L
Task Description
Project Planning and Administration
Indudes Fdckoff call xvith client; status updates throughout
engagem en t
Research
Research prior cases, proxy group characteristics, risk
assessm ent research
Analyses or Studies
Complete ROE modeling, develop market overviexv
Prepare Direct, Pre-Filed Testimony
Draft, review, audit and prepare testimony and exhibits for
filing
Other Direct Costs
Copying, printing, purchase of analyst and research reports
Respond to Discovery
Respond to interrogatories from intervening ~vitnesses
Prepare Rebuttal Testimony
Draft, review, audit and prepare testimony and exhibits for
filing. Conduct analyses in support or-rebuttal positions
Assist in the Interrogation of Testimony
Assist counsel in development of interrogatory requests and
cross examination questions on intervening ROE witness
testim ony and analyses.
Attend Hearings
Prepare for and attend hearing proceding to support filed
testimony.
Respond to In-Hearing Record Requests
Assist in Drafting of Brief
Assist counsel in the ROE portion of the post-hearing brief.
Other Direct Costs
Copying, printing, purchase of reports, travel expenses
TOTAL Hours
Hourly Rate - tasks to Reply Comments, Discounted b~
from 2015 Standard Rates
TOTAL $ Estimate for Consulting Hours
Tasks up to and induding filing Direct Testimony
Hours
Cost
Post-filing project tasks
Hours
Cost
Other Direct Costs
GRAND TOTAL
CONCENTRIC ENERGY ADVISORS, INC. PAGE A-1
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D.P.U. 15-80 Exhibit UnitiI-DLC-5 Page 88 of 311 Redacted
ATTACHMENT A PROJECT PRICE SHEET
Fitchburg Gas and Electric Light Company d/b/a Unitil
Request for Proposal
Return on Equity
Attachment 2 PROJECT PRICE SHEET FOR SCOPE OF PROPOSED WORK
PROPOSED WORK ELEMENTS
Project Planninq and Administration
Research
Analyses or Studies
Prepare Direct, Pre-filed Testimony
Other Direct Costs
Total Not To Exceed (through filing)
Respond to Discovery
Assist in the Interroqation of Testimony
Prepare Rebuttal Testimony
Attend Hearinqs
Respond to In-Hearinq Record Requests
Assist in Draftinq of Legal Brief
Other Direct Costs
Total Cost Estimates (post-filing)
G rand Total
Total Costs
(1) Include all labor and other direct cost assumptions for all proposed work elements. Costs through preparation of the filing
are not to exceed cost estimates and will not be reimbursed for costs over the estimates, unless prior written approval from Unitil has been obtained. Post-filing activities may be bid on a time and materials basis. Include separate spreadsheets that itemize the number of hours and hourly rate of each consultant expected to assist on the project, and other direct cost assumptions for all proposed work elements. A narrative description of the work covered by each task (e.g. for meetings, price assumes a certain number of meetings) will assist Unitil in evaluating the bids. The response must also include applicable labor rates and clearly identify any markups that will be applied under the Scope of Proposed Work.
CONCENTRIC ENERGY ADVISORS, INC. PAGE A-2
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D.P.U. 15-80 Exhibit UnitiI-DLC-5 Page 89 of 311 Redacted
ATTACHMENT B
R~SUM~ OF ANN E. BULKLEY
Ann E. Bulkley Vice President
Ms. Bulkley has nearly two decades of management and economic consulting experience in the energy
industry. Ms. Bulldey has extensive state and federal regulatory experience on both electric and natural gas
issues including rate of return, cost of equity and capital structure issues. Ms. Bulldey has advised clients
seeking to acquire utility assets, providing valuation services including an understanding of regulation,
market expected returns, and the assessment of utility risk factors. Ms. Bulldey has assisted clients with
valuations of public utility and industrial properties for ratemaking, purchase and sale considerations, ad
valorem tax assessments, and accounting and financial purposes. In addition, Ms. Bulldey has experience
in the areas of contract and business unit valuation, strategic alliances, market restructuring and regulatory
and litigation support.
REPRESENTATIVE PROJECT EXPERIENCE
Regulatory Analysis and Ratemaking
Ms. Bulldey has provided a range of advisory services relating to regulatory policy analysis and many
aspects of utility ratemaking. Specific services have included: cost of capital and return on equity
testimony, cost of service and rate design analysis and testimony, development of ratemaking strategies;
development of merchant function exit strategies; analysis and program development to address residual
energy supply and/or provider of last resort obligations; stranded costs assessment and recovery;
performance-based ratemaking analysis and design; and many aspects of traditional utility ratemaking (e.g.,
rate design, rate base valuation).
Cost of Capital
Ms. Bulkley has provided expert testimony on the cost of capital testimony before several state regulatory commissions. In addition, Ms. Bulkley has prepared and provided supporting analysis for at least forty Federal and State regulatory proceedings over the past seven years. Ms. Bulkley’s expert testimony experience includes:
¯ Northern States Power Company: Before the North Dakota Public Service Commission, provided expert testimony on the cost of capital for the company’s North Dakota electric utility operations.
¯ WE Energies: Before the Michigan Public Service Commission, provided expert testimony in support of the company’s cost of capital for its electric utility operations.
¯ Atmos Energy: Provided expert testimony in support of the company’s return on equity and capital structure before the Public Utilities Commission for the State of Colorado.
¯ UNS Electric: Provided expert testimony in support of the company’s return on equity and capital structure before the Arizona Corporation Commission.
¯ Portland Natural Gas Transmission: Provided testimony strategy as well as analytical support for cost of capital testimony before the Federal Energy Regulatory Commission.
¯ In addition to the specific cases listed above, Ms. Bulkley has provided testimony strategy as well as analytical support on cost of capital in several cases in the following states: Arizona, Colorado, Connecticut, Massachusetts, Minnesota, New Mexico, New York, North Carolina, South Carolina, South Dakota, Virginia, and Utah.
CONCENTRIC ENERGY ADVISORS, INC. PAGE B-1
II-00269
D.P.U. 15-80 Exhibit UnitiI-DLC-5 Page 90 of 311 Redacted
ATTACHMENT B
R~SUM~ OF ANN E. BULKLEY
Valuation
Ms. Bulldey has provided valuation services to utility clients, unregulated generators and private equity
clients for a variety of purposes including ratemaldng, fair value, ad valorem tax, litigation and
damages, and acquisition. Ms. Bulldey’s appraisal practices are consistent with the national standards
established by the Uniform Standards of Professional Appraisal practice. In addition, Ms. Bulldey has
relied on other simulation based valuation methodologies.
Representative projects/clients have included:
Northern Indiana Fuel and Light: Provided expert testimony regarding the fair value of the company’s natural gas distribution system assets. Valuation relied on cost approach.
Kokomo Gas: Provided expert testimony regarding the fair value of the company’s natural gas distribution system assets. Valuation relied on cost approach.
Prepared fair value rate base analyses for Northern Indiana Public Service Company for several electric rate proceedings. Valuation approaches used in this project included income, cost and comparable sales approaches.
Confidential Utility Client: Prepared valuation of fossil and nuclear generation assets for
financing purposes for regulated utility client.
Prepared a valuation of a portfolio of generation assets for a large energy utility to be used for
strategic planning purposes. Valuation approach included an income approach, a real options
analysis and a risk analysis.
Assisted clients in the restructuring of NUG contracts through the valuation of the
underlying assets. Performed analysis to determine the option value of a plant in a
competitively priced electricity market following the settlement of the NUG contract..
Prepared market valuations of several purchase power contracts for large electric utilities in
the sale of purchase power contracts. Assignment included an assessment of the regional
power market, analysis of the underlying purchase power contracts, a traditional discounted
cash flow valuation approach, as well as a risk analysis. Analyzed bids from potential
acquirers using income and risk analysis approached. Prepared an assessment of the credit
issues and value at risk for the selling utility.
Prepared appraisal of a portfolio of generating facilities for a large electric utility to be used for financing purposes.
Prepared an appraisal of a fleet of fossil generating assets for a large electric utility to establish
the value of assets transferred from utility property.
Conducted due diligence on an electric transmission and distribution system as part of a buy-
side due diligence team.
Provided analytical support for and prepared appraisal reports of generation assets to be used
in ad valorem tax disputes.
Provided analytical support and prepared testimony regarding the valuation of electric
distribution system assets in five communities in a condemnation proceeding.
¯ Valued purchase power agreements in the transfer of assets to a deregulated electric market.
Ratemal~’ng
Ms. Bulkley has assisted several clients with analysis to support investor-owned and municipal utility clients in the preparation of rate cases. Sample engagements include:
CONCENTRIC ENERGY ADVISORS, INC. PAGE B-2
II-00270
D.P.U. 15-80 Exhibit UnitiI-DLC-5 Page 91 of 311 Redacted
ATTACHMENT B
R~SUM~ OF ANN E. BULKLEY
Assisted several investor-owned and municipal clients on cost allocation and rate design
issues including the development of expert testimony supporting recommended rate
alternatives.
Worked with Canadian regulatory staff to establish filing requirements for a rate review of a newly regulated electric utility. Analyzed and evaluated rate application. Attended hearings and conducted investigation of rate application for regulatory staff. Prepared, supported and defended recommendations for revenue requirements and rates for the company. Developed rates for gas utility for transportation program and ancillary services.
Strategic and Financial Advisory Services
Ms. Bulkley has assisted several clients across North America with analytically based strategic planning, due diligence and financial advisory services.
Representative projects include:
¯ Preparation of feasibility studies for bond issuances for municipal and district steam clients.
¯ Assisted in the development of a generation strategy for an electric utility. Analyzed various
NERC regions to identify potential market entry points. Evaluated potential competitors and
alliance partners. Assisted in the development of gas and electric price forecasts. Developed
a framework for the implementation of a risk management program.
¯ Assisted clients in identifying potential joint venture opportunities and alliance partners.
Contacted interviewed, and evaluated potential alliance candidates based on company-
established criteria for several LDCs and marketing companies. Worked with several LDCs
and unregulated marketing companies to establish alliances to enter into the retail energy
market. Prepared testimony in support of several merger cases and participated in the
regulatory process to obtain approval for these mergers.
¯ Assisted clients in several buy-side due diligence efforts, providing regulatory insight and
developing valuation recommendations for acquisitions of both electric and gas properties.
PROFESSIONAL HISTORY
Concentric Energy Advisors, Inc. (2002- Present) Vice President Assistant Vice President Project Manager
Navigant Consulting, Inc. (1995 - 2002)
Project Manager
Cahners Publishing Company (1995) Economist
EDUCATION
M.A., Economics, Boston University, 1995 B.A., Economics and Finance, Simmons College, 1991 Certified General Appraiser licensed in the Commonwealth of Massachusetts and the State of Michigan
CONCENTRIC ENERGY ADVISORS, INC. PAGE B-3
II-00271
D.P.U. 15-80 Exhibit UnitiI-DLC-5 Page 92 of 311 Redacted
ATTACHMENT C
RI~SUMI~ OF JOHN P. TROGONOSKI
John P. Trogonoski
Senior Project Manager
Mr. Trogonoski is a Project Manager with more than 20 years of experience in utility regulation, financial
analysis, business valuation, property taxation, and program administration. Since joining Concentric in
2008, Mr. Trogonoski has assisted clients with a variety of regulatory matters including expert testimony
and reports on cost of capital and business and financial risk analysis. As a member of the Staff of the
Colorado Public Utilities Commission, Mr. Trogonosld supervised the financial analysts in the energy and
telecommunications sections and fried expert testimony on matters such as rate of return, revenue
requirement, cost allocation, rate design, incentive regulation, and public policy. He has an M.S. in
Business Administration and a B.S. in Marketing from the University of Colorado at Denver.
REPRESENTATIVE PROJECT EXPERIENCE
UTILITY CONSULTING
Since joining Concentric Energy Advisors in February 2008, Mr. Trogonoski has: ¯ Filed expert testimony on behalf of Hydro-Quebec Distribution and Transmission in support of
the Company’s request to the R~gie de l’energie to modify- its allowed return on equity. Performed risk analysis to determine whether it was appropriate to consider a U.S. peer group of regulated electric utilities as an appropriate proxy group for purposes of establishing the allowed ROE for Hydro-Quebec. This analysis included review of the business and financial risks of Canadian and U.S. peer groups on factors that are important to investors in assessing the relative risks of these companies and the regulatory protections that help to mitigate those risks.
¯ Prepared expert testimony and exhibits for return on equity analysis for numerous North American gas and electric utility clients. This included preparing direct testimony, responding to data requests, drafting rebuttal testimony in response to intervening witnesses, assisting with hearing preparation, and drafting post-hearing statements of position.
¯ Performed regulatory due diligence for clients considering the potential acquisition of a natural gas distribution company and an electric transmission company. Due diligence included a review of the regulatory framework in the jurisdiction of the target company, potential cost disallowances, an assessment of the projected ROE and capital structure, an evaluation of the reasonableness of projected capital spending based on forecasted economic growth in the service territory, and the implications of these factors on the value of the target company.
¯ Assisted in the development of a conservation program for New Jersey American Water, which was filed with the Board of Public Utilities in conjunction with the company’s rate case. The program included rebates for various indoor and outdoor plumbing fixtures, as well as estimated penetration of the proposed rebate programs, and a cost/benefit analysis in support of the various rebates.
¯ Prepared rebuttal testimony for Central Maine Power in response to a complaint from Staff of the
Maine Public Utilities Commission concerning the billing and collection practices of the utility.
Demonstrated that increase in late payments was attributable to economic conditions during the
recession rather than to decision by the company to outsource the billing and collection function
to a third-party provider.
¯ Reviewed de-list bids filed with the ISO New England by a merchant generation company that
wished to withdraw from the Forward Capacity Market. Also prepared user manuals for ISO
CONCENTRIC ENERGY ADVISORS, INC. PAGE B-4
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D.P.U. 15-80 Exhibit UnitiI-DLC-5 Page 93 of 311 Redacted
ATTACHMENT C
RI~SUMI~ OF JOHN P. TROGONOSKI
New England to assist project sponsors in completing a request to provide new supply generation in the Forward Capacity Market, and to assist market participants in completing a request to de- list existing capacity.
¯ Analyzed the internal policies and tariff of New Mexico Gas in response to service outages, and determined if the time to restore service to customers was consistent with other major gas distribution outages that have occurred across the United States. Offered recommendations to improve the Company’s communication with regulators and customers.
¯ Assisted in the development of a business valuation for Poseidon Water, LLC by reviewing and validating cost assumptions for construction costs, water rates, and electricity prices. Also developed cost of capital studies for proxy groups of regulated water utilities and wholesale power generators for use in this valuation.
¯ Analyzed financial information presented by the City of Richmond for purposes of testing the reasonableness of various assumptions used to support the issuance of new municipal bonds. Reviewed projected revenues and expenses and generated alternative scenarios for consideration by management.
EXPERT REPORTS
¯ Drafted a research report for the Ontario Energy Board that reviewed low-income energy assistance programs that have been implemented in other jurisdictions, including Canada, the United States, the United Kingdom, the European Union countries, Australia, and New Zealand. Attended hearing and responded to questions related to research report on behalf of OEB staff.
¯ Drafted a report for the Ontario Energy Board that proposed revisions to the Board’s existing rules for Demand Side Management for gas distribution companies in Ontario. Participated in workshop and responded to questions from stakeholders regarding the proposed changes to the Board’s rules.
REGULATORY EXPERIENCE
While at the Colorado Public Utilities Commission, Mr. Trogonoski: ¯ Supervised financial analysts in the energy and telecommunications units from 2004 to 2008. In
this capacity, he was responsible for the financial analysis, accounting, and auditing work of between t-lve and nine financial analysts. This included preparation of expert testimony and recommendations concerning rate cases, applications for alternative forms of regulatory treatment, performance of managerial and financial audits, compliance with relevant statutes and Commission rules, and review of applications for certificates of public convenience and necessity, transfers of authority, franchise agreements, and discontinuance of service.
¯ Provided expert testimony on rate of return issues, capital structure, cost of debt, financial integrity, and credit quality in numerous rate case proceedings involving energy, telecommunications and water companies including Xcel Energy, Qwest Corporation, and Atmos Energy.
¯ Performed managerial and financial audits of regulated energy and telecommunications companies using the regulatory and accounting guidelines in the Uniform System of Accounts relied upon by the Federal Energy Regulatory Commission, the Federal Communications Commission, the Financial Accounting Standards Board, and the Commission’s rules and regulations.
¯ Led Staff’s review of an application for relaxed regulatoU treatment by Qwest Corporation. Provided expert testimony regarding Qwest’s market share in Colorado relative to cable providers, wireless providers, and Competitive Local Exchange Carriers. Assisted professional market research firm in designing questionnaire to examine customer preferences for purchasing
CONCENTRIC ENERGY ADVISORS, INC. PAGE B-5
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D.P.U. 15-80 Exhibit UnitiI-DLC-5 Page 94 of 311 Redacted
ATTACHMENT C
RI~SUMI~ OF JOHN P. TROGONOSKI
telecommunications services, expectations concerning price and quality of those services, and desire for regulation over those services.
¯ Led Staff’s investigation into a Competitive Local Exchange Carrier who was providing regulated telephone service to over 14,000 customers without the requisite Commission authority and without an effective tariff. This investigation resulted in a Commission order to cease and desist provision of regulated services, an order to transfer customers to an alternative provider, and sanctions against the principals.
¯ Administered the Colorado High Cost Support Mechanism, which provided universal telecommunications service to customers in rural, high costs areas through an assessment on all Colorado customers. Also, later supervised the position that administered this program.
PUBLICATIONS AND RESEARCH
"Autopilot Error: \Vhy Similar U.S. and Canadian Risk Profiles Yield Varied Rate-making Results" (with John Trogonoski), Public Utilities Fortnightly, May 2010
PROFESSIONAL HISTORY
Concentric Energy Advisors, Inc. (2008 - Present) Senior Project Manager Project Manager Senior Consultant
Colorado Public Utilities Commission (2004- 2008) Supervisory Financial Analyst, Telecommunications and Energy
Colorado Public Utilities Commission (1999- 2004) Financial Analyst, Telecommunications, Energy and Water
State of Colorado, Division of Property Taxation (1994-1999) Property Tax Specialist
Nobel Sysco, Inc. (1992 - 1994) Marketing Associate
State of Colorado, Division of Property Taxation (1989-1991) Tax Appraiser Consultant
EDUCATION
M.S. in Business Administration, University of Colorado at Denver, 1987 B.S. in Marketing, University of Colorado at Denver, 1986
CONCENTRIC ENERGY ADVISORS, INC. PAGE B-6
II-00274
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D.P.U. 15-80 Exhibit UnitiI-DLC-5 Page 107 of 311 Redacted
ATTACHMENT D STANDARD TERMS AND CONDITIONS
CONCENTRIC ENERGY ADVISORS~ INC.
STANDARD TERMS AND CONDITIONS
,
,
o
,
o
Scope- Concentric Energy Advisors, Inc. ("Concentric") will perform the services set forth in the
Letter or Proposal of which these Terms and Conditions (Terms) are a part. The provisions of these
Terms shall control in the case of conflict with any provisions of the Letter or Proposal.
Fees and Expenses- Unless otherwise stated, fees for services by Concentric shall be based upon the
rates, at the time the work is performed, of the personnel actually involved in the assignment. Report
production and printing, reproduction, and telephone charges will be billed to you at Concentric’s
standard charges for such materials for services. Expenses of consultants while on assignment or any
other charge incurred or expenditure made on your behalf will be charged at our cost.
Payment- Concentric will submit monthly invoices reflecting actual work performed and expenses
incurred. Payment shall be due in U.S. funds 30 days after the date of an invoice. Amounts past due
more than 30 days shall bear interest at an annual rate of 12% from the due date until payment is
received.
Sales Tax- You are responsible for paying any local, state, or federal sales, use, or ad valorem tax that
might be assessed on our services.
Independent Contractor- It is understood and agreed that Concentric shall for all purposes be an
independent contractor, shall not hold itself out as representing or acting in any manner for you, and
shall have no authority to bind you to any contract or in any other manner.
Termination- These terms shall be subject to the right of either party to terminate at any time upon not
less than ten (10) days prior written notice to the other party. Upon termination, you shall pay the full
amount due for services rendered and costs and expenses incurred and not paid for up to that time,
and the costs of returning consultant personnel to home base and other reasonable costs and expenses
incurred in effecting termination and returning documents.
Responsibili~ Statement- Concentric agrees that the services provided for herein will be performed in
accordance with recognized professional consulting standards for similar services and that adequate
personnel will be assigned for that purpose. If, during the performance of these services or within six
months following completion of the assignment, such services shall prove to be faulty or defective by
reason of a failure to meet such standards, Concentric agrees that upon prompt written notification
from you prior to the expiration of the six month period following the completion of the assignment
containing any such fault or defect, such faulty portion of the services shall be redone at no cost to
you up to a maximum amount equivalent to the cost of the services rendered under this assignment.
The foregoing shall constitute Concentric’s sole liability with respect to the accuracy or completeness
of the work and the activities involved in its preparation. In no event shall Concentric, its agents,
employees, or others providing materials or performing services in connection with work on this
assignment be liable for any direct, consequential or special loss or damage, whether attributable to
breach of contract, tort, including negligence, or otherwise; and except as herein provided, you release,
CONCENTRIC ENERGY ADVISORS, INC. PAGE D-1
II-00287
D.P.U. 15-80 Exhibit UnitiI-DLC-5 Page 108 of 311 Redacted
ATTACHMENT D STANDARD TERMS AND CONDITIONS
indemnify, and hold Concentric, its agents, employees, or others providing materials or performing
services in connection with work on this assignment harmless from any and all liability including costs
of defense, settlement and reasonable attorney’s fees.
o Work Product- Any report or other document prepared pursuant to these Terms shall be for your use
only. Concentric’s prior written consent is required for the use of (or reference to) its report or any
other document prepared pursuant to these Terms in connection with a public offering of securities
or in connection with any other financing. Concentric hereby agrees, however, to the Client’s
reference to the work product in connection with any proxy relating to a combination between two
parties. It is understood and agreed that Concentric’s use of its proprietary computer software,
methodology, procedures, or other proprietary information in connection with an assignment shall not
give you any rights with respect to such proprietary computer software, methodology, procedures or
other proprietary information. Concentric may retain and further use the technical content of its work
hereunder.
o Excused pe~Cormance - Concentric shall not be deemed in default of any provision hereof or be liable for
any delay, failure in performance, or interruption of service resulting directly or indirectly from acts of
God, civil or military authority, civil disturbance, war, strikes or other labor disputes, fires, other
catastrophes, or other forces beyond its reasonable control, whether or not such event may be deemed
foreseeable.
10. Related Litigation- In the event that Concentric employees (current or former), subcontractors or
agents are compelled to provide testimony, produce documents, or otherwise incur costs or expend
time in any legal proceeding related to Concentric’s work for you, you agree to reimburse Concentric
at its regular billing rate per hour for its time expended, and for any expenses incurred (at Concentric’s
direct cost).
11. Notices- All notices given under or pursuant to the Terms shall be sent by Certified or Registered
Mail, Return Receipt Requested, and shall be deemed to have been delivered when physically delivered
if to Concentric Energy Advisors, Inc., 293 Boston Post Road West, Suite 500, Marlborough, MA
01752, Attention Mr. John j. Reed, Chairman and Chief Executive Officer, and if to you at the
address shown on the Letter or Proposal of which these Terms are a part or such other address as you
may designate by written notice to us.
12. Complete Agreement- It is understood and agreed that these Terms and the Letter or Proposal of which
they are a part embody the complete understanding of the parties and that any and all provisions,
negotiations and representations not included herein are hereby abrogated and that these terms cannot
be changed, modified or varied except by written instrument signed by both parties. In the event you
issue a purchase order or memorandum or other instrument covering the services herein provided, it
is hereby specifically agreed and understood that such purchase order, memorandum, or instrument is
for your internal purposes only, and any and all terms and conditions contained therein, whether
printed or written, shall be of no force or effect unless agreed to in writing by Concentric. No waiver
by either parties of a breach hereof or default hereunder shall be deemed a waiver by such party of a
subsequent breach or default of like or similar nature.
CONCENTRIC ENERGY ADVISORS, INC. PAGE D-2
II-00288
D.P.U. 15-80 Exhibit UnitiI-DLC-5 Page 109 of 311 Redacted
ATTACHMENT D STANDARD TERMS AND CONDITIONS
13. Governing Law- This Agreement (consisting of the Letter or Proposal and these terms) shall be
construed and otherwise governed pursuant to the laws of the Commonwealth of Massachusetts. The
attached Proposal, of which these General terms and Conditions (terms) form a part, constitutes an
agreement of the parties hereto, and supersedes any previous agreement or understanding. It may not
be modified except in writing, and only if executed by both parties.
AGREED AND ACCEPTED:
CLIENT SIGNATURE
TITLE:
COMPANY:
DATE:
CONCENTRIC ENERGY ADVISORS, INC. PAGE D-3
II-00289
D.P.U. 15-80 Exhibit UnitiI-DLC-5 Page 110 of 311 Redacted
PROPOSAL TO
Unitil Service Corp.
FITCHBURG GAS AND ELECTRIC LIGHT COMPANY
PROPOSAL FOR GAS AND ELECTRIC RATE CASE STUDIES
March 20, 2015
Prepared by"
Managemem Applications Consulting, Inc. 1103 Rocky Drive, Suite 201
Reading, PA 19609
Phone: (610) 670-9199 / Fax: (610) 670-9190
II-00290
D.P.U. 15-80 Exhibit UnitiI-DLC-5 Page 111 of 311 Redacted
FITCHBURG GAS AND ELECTRIC LIGHT COMPANY d/b/a UNITIL
PROPOSAL FOR GAS AND ELECTRIC RATE CASE STUDIES
TABLE OF CONTENTS
Io
II. A. B. C. D. E.
III. IV. V. VI.
WHY MAC ........................................................................................................................... 1 COST OF SERVICE STUDIES ......................................................................................... 2
Accounting Cost Study ................................................................................................... 2 Marginal Cost Study ...................................................................................................... 2 Rate Design Assistance ................................................................................................... 3 Depreciation Studies ...................................................................................................... 3 Lead-Lag Analysis .......................................................................................................... 3
STAFFING ........................................................................................................................... 4 REFERENCES ..................................................................................................................... 4 SCHEDULE .......................................................................................................................... 6 PRICING ASSUMPTIONS ................................................................................................ 6
ATTACHMENTS
1 Project Price Sheet for Scope of Proposed Work- Company Cost of Service Studies, Allocated Cost of Service Study, Marginal Cost Study, Rate Design, and Lead-Lag Analysis
2 Detailed Cost Estimate
3 Staffing of Tasks and Witnesses and Resumes
4 Schedule
5 Billing Rates
6 Billing Terms and Conditions
II-00291
D.P.U. 15-80 Exhibit UnitiI-DLC-5 Page 112 of 311 Redacted
MANAGEMENT APPUCATIONS CONSULTING, iNC.
1103 Rocky Drive ¯ Suite 201 . Reading, PA 19609-1157 ¯ 610/670-9199 ¯ fax 610/670-9190 .www.manapp.com
March 20, 2015
Ms. Karen M. Asbury Director, Regulatory Services Unitil Service Corp. 6 Liberty Lane West Hampton, NH 03842
Dear Ms. Asbury:
On behalf of Management Applications Consulting, Inc. (MAC), I would like to thank you for considering MAC for your consulting needs. Based on your request for proposal (RFP), MAC has provided a proposal to address all of the subject areas described in your RFP (except Attachment 2 - Return on Equity) where MAC could provide assistance in the preparation of a general rate case for Fitchburg Gas and Electric Company’s ("Unitil" or "Company") Gas and Electric Divisions.
I. WHY MAC
After you review this proposal, we believe you will find that MAC is an excellent firm to
undertake this area (Item 1):
MAC Corporate Capability - MAC specializes in the preparation of rate cases and has prepared similar cases for other Massachusetts and New England gas and electric utilities including those for Unitil. Our recent experience with the Unitil and most recent Bay State (gas) rate cases have allowed us to maintain a working knowledge of current Massachusetts Department of Public Utilities ("DPU" or "Department") precedent.
Project Team- MAC’s project team is comprised of very senior, experienced consultants most of whom have at least 30 years of directly applicable experience filing rate cases and have directly applicable knowledge of Unitil history and operational practice garnered from previous rate cases.
Technical Approach- MAC’s approach is to build upon the technically sound and previously DPU-accepted revenue requirements, ACS, and MCS. We have previously developed several models that were specifically designed for the Company.
Pricing- MAC maintains low overheads and can offer senior experts in their field at very reasonable billing rates compared to the industry.
Commercial Review- While MAC has assisted virtually every gas and electric utility in New England at some time in the past, we know of no conflict of interest that could impede our ability to satisfy the needs of this assignment.
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FITCHBURG GAS AND ELECTRIC LIGHT COMPANY d/b/a UNITIL
PROPOSAL FOR GAS AND ELECTRIC RATE CASE STUDIES
II. COST OF SERVICE STUDIES
This overall task can be considered to be five inter-related subtasks"
Accounting Cost of Service Studies- This task includes preparing an accounting class cost of service study (ACS or COSS) in accordance with recent DPU precedents.
Marginal Cost of Service Studies- Preparing a marginal cost of service study (MCS) for the delivery capacity-related function utilizing the econometric techniques mandated by DPU precedents. MAC’s approach is to only update key economic parameters and consumption statistics from the Company’s last compliance filing results.
Designing Rates - Design delivery rates based on recent DPU requirements.
Depreciation Studies - Prepare detailed analyses of each account using an updated historical database to derive appropriate service lives, cost of removal, and accrual rates.
Lead Lag Studies- Compute revenue and expense lag on all major components of revenue requirements using a streamlined approach made possible through use of MAC’s well established spreadsheet models and data sampling techniques.
Each of these areas will be further discussed below.
Accounting Cost Study
MAC has a long history of preparing and filing accounting cost studies for the Company. Mr. Michael J. Morganti has previously developed ACS models for the Company’s gas and electric divisions using MAC’s proprietary software. These cost models obtain their needed revenue requirements input directly from the Company’s revenue requirements models. In addition, MAC provides the references between the revenue requirements and the ACS as mandated by the DPU. The Company maintains an adequate load research program to support the development of capacity and energy-related allocators. In addition, MAC’s previous requests for accounting and engineering special studies and customer accounting and general accounting data
extracts should be similar for the new studies. Thus, the Unitil staff should have no difficulty producing the input data necessary to complete the ACS studies. Mr. Morganti will be the primary consultant developing the cost study models. Mr. Paul M. Normand will be the witness supporting the cost studies. Mr. Normand is well qualified for this task, having provided similar services recently in New England.
Uo Marginal Cost Study
Assuming that the MCS requirement continues in force, MAC has extensive experience filing marginal cost studies before the DPU. MAC has filed several MCS studies on behalf of both Bay State and Unitil. We will require some limited data
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FITCHBURG GAS AND ELECTRIC LIGHT COMPANY d/b/a UNITIL
PROPOSAL FOR GAS AND ELECTRIC RATE CASE STUDIES
D.P.U. 15-80 Exhibit UnitiI-DLC-5 Page 114 of 311 Redacted
Co
Do
updating. MAC will provide an abbreviated data request to update the Company’s last compliance study with respect to a few key parameters and consumption statistics (recently also completed for Bay State). Mr. Normand will be the sponsoring witness.
Rate Design Assistance
Unitil will be required to develop detailed bill frequency data for the test year to support the selection of any block sizes. Based on the Company’s general practice of keeping rates simple, MAC sees little technical challenge in the design of rates for existing rate classes. An additional rate design task required with this filing will be Customer-Owned Street Lighting. This will require modification to the cost study to add an additional column with which to derive the detailed costs.
As in the past, MAC assumes that the Company will be responsible for tariff administration.
MAC has not included the costs for the efforts to modify miscellaneous service charges.
Depreciation Studies
MAC is imminently qualified to perform depreciation studies for the Company, since it has performed the prior depreciation studies for Fitchburg’s Gas and Electric Divisions.
As with our other efforts, we will be providing a general data request along with the necessary templates to guide you through the data gathering efforts for each study. A preliminary result will be prepared and reviewed by all in formalizing this portion of the work effort. For this phase of your requirements, we strongly recommend that the analyses proceed at the earliest possible timetable in order to ensure their completion in a timely manner for use in the revenue requirements of the filing.
The project team supporting Mr. Normand for the depreciation study consists of Mr. James Aikman and Ms. Marcy Stefan who have a long history of such studies in Massachusetts and especially New England. Mr. Aikman will review and comment on final results as needed.
Lead-Lag Analysis
MAC has proposed to do a lead-lag study for both electric and gas divisions. The details of these estimates are also shown on Attachment lb. After initial discussions with accounts payable, payroll and benefits, tax and other accounting personnel, we will provide templates and guidance for your staff to complete so that we can
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FITCHBURG GAS AND ELECTRIC LIGHT COMPANY d/b/a UNITIL
PROPOSAL FOR GAS AND ELECTRIC RATE CASE STUDIES
III.
complete the studies at the most reasonable cost possible. Mr. Normand will be the project manager for this task as well as the witness as he has considerable experience in this area.
STAFFING
MAC’s project team will consist of:
Paul Normand- Project manager, witness for ACS, MCS, Rate Design, Depreciation, and Lead-Lag
Michael Morganti- ACS and Lead-Lag study principal developer, Revenue Requirements consultant
Marcy Stefan - Marginal Cost update, Depreciation
Debbie Gajewski- Rate Design
These consultants are well known to Unitil and have successfully completed several previous assignments for Unitil and the Company in the past. The resumes of Paul Normand, Michael Morganti, Marcy Stefan, and Debbie Gajewski are shown as Attachment 3.
The primary contact person representing MAC is:
Paul M. Normand, Principal Management Applications Consulting, Inc.
1103 Rocky Drive, Suite 201, Reading, Pennsylvania 19609
Phone: (610) 670-9199 / Fax: (610) 670-9190 Email" p-aormaad~~~.com
REFERENCES
Accounting and Marginal Studies, Rate Design (Paul Normand, Michael Morganti)
Unitil Service Corporation 6 Liberty Lane West Hampton, NH 03842 Phone # 603-773-6441
Karen Asbury, Director, Regulatory Services
The Berkshire Gas Company 115 Cheshire Road
Pittsfield, MA 01201 Phone # 413-445-0244
Karen L. Zink, President and Chief Operating Officer
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FITCHBURG GAS AND ELECTRIC LIGHT COMPANY d/b/a UNITIL
PROPOSAL FOR GAS AND ELECTRIC RATE CASE STUDIES
Columbia Gas of Massachusetts 4 Technology Drive, Suite 250 Westborough, MA 01581 Phone # 508-836-7273
Joseph A. Ferro, Manager, Regulatory Policy
Central Maine Power 83 Edison Drive Augusta, ME 04336 Phone # 704-731-4242
Ann Theriault, Manager, Pricing and Analysis
Depreciation
National Grid NH One Metro Tech Center Brooklyn, NY 11201-3850 Phone # 718-403-2772
Najat Coye, Manager of Electric Transmission
Unitil Service Corp. 6 Liberty Lane West Hampton, NH 03842 Phone # 603-773-6441
Karen Asbury, Director, Regulatory Services
C. Lead-Lag Study (Micha el Morganti)
National Grid NH One Metro Tech Center Brooklyn, NY 11201-3850 Phone # 718-403-2772
Najat Coye, Manager of Electric Transmission
Unitil Service Corp. 6 Liberty Lane West Hampton, NH 03842 Phone # 603-773-6441
Karen Asbury, Director, Regulatory Services
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FITCHBURG GAS AND ELECTRIC LIGHT COMPANY d/b/a UNITIL
PROPOSAL FOR GAS AND ELECTRIC RATE CASE STUDIES
NorthWestern Energy 40 Broadway
Butte, MT 59701 Phone # 406-497-3362
Joseph Schwartzenberger, Director Regulatory Affairs
Piedmont Natural Gas 4720 Piedmont Row Drive Charlotte, NC 28210 Phone # 704-731-4242
David Carpenter, Managing Director of Regulatory Affairs
No SCHEDULE
A preliminary schedule is shown as Attachment 4. Each of the major tasks identified on Attachment 2 are listed. All tasks, including the lead-lag study, are shown using an assumed award date of March 27 and a start date the following week. The schedule demonstrates that a June 17 filing is practical at the presem time.
The development of the lead-lag and depreciation studies will commence immediately so that the results can be incorporated into the revenue requirements. Once various supporting studies are completed, the cost of service can be finalized. Since the test year per books data is already available, many of the cost study activities can begin at the start of this project. The schedule shows that rate design activities can begin well before the cost study results are available. Using estimated COSS results, a full set of rate design calculations can be completed and submitted for management review before COSS results are finalized. Once rate design models have been completed, they can be updated quickly with the final cost study results.
PRICING ASSUMPTIONS
The tasks leading up to the filing are reasonably well understood and are estimated on Attachment 1 with some confidence, based on past experience. These prices are quoted as "Not to Exceed" up to the actual filing date.
The efforts following the initial filings vary considerably from case to case making it impossible to provide a "Not to Exceed" price quotation. The efforts required after the initial filing are dependent on the number of interveners, the number of interrogatories issued, the number of days of cross examination, the extent of rebuttal, whether the interveners present witnesses, the number of record requests, the amount of assistance required by the attorneys in the briefing stage, and the efforts required to prepare the compliance filings. MAC has little or no control over these efforts. The estimated costs for the activities on Attachment 1 assume that the filing will be consistent with previous
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FITCHBURG GAS AND ELECTRIC LIGHT COMPANY d/b/a UNITIL
PROPOSAL FOR GAS AND ELECTRIC RATE CASE STUDIES
Unitil filings. We will work closely with you and at your direction to ensure that we do only those tasks which you believe are necessary. MAC proposes to undertake this assignment on a time-and-materials basis utilizing our current rates and based on our standard terms and conditions (Attachments 5 and 6, respectively).
The various required tasks are predicated on the assumption that the Company will provide requested data in a timely fashion so that a June 17 filing can be accomplished. In order to provide cost-effective services to you, we have assumed that we will prepare written data requests and input data spreadsheets and that your staff will assemble the initially requested data, enter it into our spreadsheets, and return completed files by e-mail. This places a heavier burden on your staff but should prove to be quite efficient based on our past experience. We also encourage weekly tele-conference calls to discuss all aspects of the case using an agenda of issues to ensure efficient participation of personnel. We have found this approach to be very cost-effective and encourage its use.
In order for you to make a June 17, 2015 filing using the 12 months ending December 31, 2014, it is necessary to begin some of the work immediately. This deadline or filing date must assume that preliminary results are essentially completed no later than the week ending June 5, 2015, including rate design. This will allow a review period, allowing time for possible changes, updates, and final preparation during the following week.
MAC’s representation of Unitil Service Corp. will not create any conflict of interest, actual or potential, if MAC were awarded any of the Fitchburg Gas and Electric Light Company Rate Case Studies. MAC also does not represent any party that is not or may be adverse to Unitil Service Corp.
If you have any additional matters you would like to discuss, please call at your earliest convenience. Please indicate your authorization to proceed with this assignment by returning a signed copy to MAC. Thank you.
Very truly yours,
Paul M. Normand President
AUTHORIZATION TO PROCEED: Circle tasks awarded: Cost of Service Studies Rate Design Lead-Lag Study
PMN/r~p Signature
Enclosures
Na me
Title Date
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FITCHBURG GAS AND ELECTRIC LIGHT COMPANY d/b/a UNITIL
PROPOSAL FOR GAS AND ELECTRIC RATE CASE STUDIES
Attachment 1
Project Price Sheet for Scope of Proposed Work
Company Cost of Service Studies Allocated Cost of Service Studies
Marginal Cost Studies Rate Design
And Lead-Lag Analysis
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FITCHBURG GAS AND ELECTRIC LIGHT COMPANY d/b/a UNITIL
PROPOSAL FOR GAS AND ELECTRIC RATE CASE STUDIES
Fitchburg Gas and Electric Light Company d/b/a Unitil Request for Proposal
Allocated Cost of Service Study, Marginal Cost Study Update, and Rate Design Attachment la
PROJECT PRICE SHEET FOR SCOPE OF PROPOSED WORK (1)
PROPOSED WORK ELEMENTS Gas Electric
Division Division Total Costs
Project Planning and Administration
Research (Data Gathering Task)
Analyses or Studies
Prepare Direct, Pre-filed Testimony
Other Direct Costs
Total Not To Exceed (through filing)
Respond to Discovery
Assist in the Interrogation of Testimony
Prepare Rebuttal Testimony
Attend Hearings
Respond to In-Hearing Record Requests
Assist in Drafting of Legal Brief
Other Direct Costs
Total Cost Estimates (post-filing)
Grand Total
Include all labor and other direct cost assumptions for all proposed work elements. Costs through preparation of the filing are not to exceed cost estimates and will not be reimbursed for costs over the estimates, unless prior written
approval from Unitil has been obtained. Post-filing activities may be bid on a time and materials basis. Include separate spreadsheets that itemize the number of hours and hourly rate of each consultant expected to assist on the
project, and other direct cost assumptions for all proposed work elements. A narrative description of the work covered
by each task (e.g. for meetings, price assumes a certain number of meetings) will assist Unitil in evaluating the bids. The response must also include applicable labor rates and clearly identify any markups that will be applied under the Scope of Proposed Work.
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FITCHBURG GAS AND ELECTRIC LIGHT COMPANY d/b/a UNITIL
PROPOSAL FOR GAS AND ELECTRIC RATE CASE STUDIES
Fitchburg Gas and Electric Light Company d/b/a Unitil Request for Proposal
Lead/Lag Study Attachment 1 b
PROJECT PRICE SHEET FOR SCOPE OF PROPOSED WORK (1)
PROPOSED WORK ELEMENTS
Project Planning and Administration
Gas Division Electric Gas Division Electric
O&M Division Purchased Division
Lead/Lag O&M Gas Purchased
Study Lead/Lag Lead/Lag Power and
Study Study Transmission Lead/Lag
Study
Total Costs
Research (Data Gathering Task)
Analyses or Studies
Prepare Direct, Pre-filed Testimony
Other Direct Costs
Total Not To Exceed (through filing)
Respond to Discovery
Assist in the Interrogation of Testimony
Prepare Rebuttal Testimony
Attend Hearings
Respond to In-Hearing Record Requests
Assist in Drafting of Legal Brief
Other Direct Costs
Total Cost Estimates (post-filing)
Grand Total
Include all labor and other direct cost assumptions for all proposed work elements. Costs through preparation of the filing
are not to exceed cost estimates and will not be reimbursed for costs over the estimates, unless prior written approval from Unitil has been obtained. Post-filing activities may be bid on a time and materials basis. Include separate spreadsheets that itemize the number of hours and hourly rate of each consultant expected to assist on the project, and other direct cost
assumptions for all proposed work elements. A narrative description of the work covered by each task (e.g. for meetings, price assumes a certain number of meetings) will assist Unitil in evaluating the bids. The response must also include
applicable labor rates and clearly identify any markups that will be applied under the Scope of Proposed Work.
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FITCHBURG GAS AND ELECTRIC LIGHT COMPANY d/b/a UNITIL
PROPOSAL FOR GAS AND ELECTRIC RATE CASE STUDIES
Fitchburg Gas and Electric Light Company d/b/a Unitil Request for Proposal
Depreciation Study Attachment 3
PROJECT PRICE SHEET FOR SCOPE OF PROPOSED WORK (1)
PROPOSED WORK ELEMENTS Gas Electric
Division Division Total Costs
Project Planning and Administration
Research (Data Gathering Task)
Analyses or Studies
Prepare Direct, Pre-filed Testimony
Other Direct Costs
Total Not To Exceed (through filing)
Respond to Discovery
Assist in the Interrogation of Testimony
Prepare Rebuttal Testimony
Attend Hearings
Respond to In-Hearing Record Requests
Assist in Drafting of Legal Brief
Other Direct Costs
Total Cost Estimates (post-filing)
Grand Total
Include all labor and other direct cost assumptions for all proposed work elements. Costs through preparation of the filing are not to exceed cost estimates and will not be reimbursed for costs over the estimates, unless prior written approval from Unitil has been obtained. Post-filing activities may be bid on a time and materials basis. Include separate spreadsheets that itemize the number of hours and hourly rate of each consultant expected to assist on the project, and other direct cost assumptions for all proposed work elements. A narrative description of the work covered
by each task (e.g. for meetings, price assumes a certain number of meetings) will assist Unitil in evaluating the bids. The response must also include applicable labor rates and clearly identify any markups that will be applied under the Scope of Proposed Work.
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FITCHBURG GAS AND ELECTRIC LIGHT COMPANY d/b/a UNITIL
PROPOSAL FOR GAS AND ELECTRIC RATE CASE STUDIES
Attachment 2
Detailed Cost Estimate
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FITCHBURG GAS AND ELECTRIC LIGHT COMPANY d/b/a UNITIL
PROPOSAL FOR GAS AND ELECTRIC RATE CASE STUDIES
Detailed Cost Estimate- Gas Division
Billing Rate, $/hr
GAS RATE FILING 1 Class COSS Data Gathering - Gas 2 Prepare Data Requests 3 Address/Resolve Questions 4 Subsequent Data Requests 5 Transcribe/Reformat Data 6 Subtotal Data Gathering Efforts 7 Travel Expense 8 Subtotal for Accounting
9 Subtotal for Marginal
10 11 De velop Allocators - Gas 12 Develop Weather Normalization Adjustments 13 Develop Design Day Estimates 14 Analyze Corporate Allocations 15 Proportional Responsibility 16 Supply Cost Allocation 17 Meter Allocator 18 Services Allocator 19 Customer Premises 20 Meter Reading 21 Customer Accounting 22 Bad Debt 23 Other Direct Assignments 24 Subtotal Allocators Efforts 25 Travel Expense 26 Total for Allocators Efforts (Accounting)
27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49
Prepare Accounting Study - Gas Establish Working Columns Review Detailed Revenue Requirements Establish Functions To Study Replicate Tax Calculation Revise Model Structure Develop Internal Allocators Develop Functionalization Prepare Print Macros Enter Allocators Prepare (W.H. & Cons. Burner) Cost Analysis Review Internally Revise Previous Testimony Prepare and Label Exhibits Final Revisions to Testimony & Exhibits Finalize and Review Externally Document and Archive
Subtotal Accounting Study Task Travel Expense Data Gathering Subtotal Develop Allocators Subtotal
Total ACS Price to Filing
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PROPOSAL FOR GAS AND ELECTRIC RATE CASE STUDIES
D.P.U. 15-80 Exhibit UnitiI-DLC-5 Page 125 of 311 Redacted
50 51 52 53 54 55 56 57 58 59 60 61 62 63 64
65 66 67 68 69 70 71 72 73 74 75 76
77 78 79 80 81 82
83
Billing Rate, $/hr
Prepare Marginal Cost Study - Gas Migrate Date from Previous Model Incorporate Design Day Demand Data Develop Carrying Charge Rates External Review Revise Previous Testimony Prepare and Label Exhibits Final Revisions to Testimony & Exhibits Final Revisions Document and Archive
Subtotal Marginal Cost Tasks Travel Expense Data Gathering Subtotal
Total MCS Price to File
Design Rate - Gas Verify Billing Units Assemble Bill Frequencies Create Booked to Billed Adjustment Establish Revenue Targets Design Rates Revise Previous Testimony Prepare and Label Exhibits
Subtotal Rate Design Tasks Travel Expense
Total Rate Design Task
Costs to File - Gas Total Accounting Total Marginal Total Rate Design
Total Costs to File - Gas
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FITCHBURG GAS AND ELECTRIC LIGHT COMPANY d/b/a UNITIL
PROPOSAL FOR GAS AND ELECTRIC RATE CASE STUDIES
84 85 86 87 88 89 9O 91 92 93 94 95
96 97 98 99
100 101 102 103 104 105 106 107 108 109 110 111 112
Billing Rate, $/hr
Depreciation Study - Gas Issue Data Request Update Database Run Curve Fitting Routines Select Curves Draft Report Prepare Schedules Prepare Direct Testimony
Subtotal Depreciation Study Travel Expense
Total Costs to File - Depreciation
Lead-Lag Study - Gas Prepare Data Input Templates Develop Billing Lags Develop Collection Lags Compute Purchased Supply Lags Develop Labor Lags Develop Pension and Benefit Expense Compute Tax and Regulatory Lags Compute Other O&M Lags Draft Testimony- Report Prepare Schedules Document and Archive
Subtotal for Lead-Lag Study Travel Expense
Total Lead-Lag Study
*James Aikman to review and provide comments.
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FITCHBURG GAS AND ELECTRIC LIGHT COMPANY d/b/a UNITIL
PROPOSAL FOR GAS AND ELECTRIC RATE CASE STUDIES
Detailed Cost Estimate- Electric Division
1
2
3
4
5 6 7 8 9
i0 II 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 38 39 40 41 42 43 44 45 46 47 48
ELECTRIC RATE FILING
Class COSS Data Gathering- Electric
Prepare Data Requests
Address/Resolve Questions
Subsequent Data Requests
Transcribe/Reformat Data
Subtotal Data Gathering Efforts
Travel Expense
Subtotal for Accounting
Subtotal for Marginal
Develop Allocators - Electric
Incorporate Load Research Data
Analyze Corporate Allocations
Proportional Responsibility
Meter Allocator
Services Allocator
Customer Premises
Meter Reading
Customer Accounting
Bad Debt
Other Direct Assignments
Subtotal Allocators Efforts
Travel Expense
Subtotal for Accounting
Subtotal for Marginal
Prepare Accounting Study - Electric
Establish Working Columns
Review Detailed Revenue Requirements
Establish Functions To Study
Replicate Tax Calculation
Revise Model Structure
Develop Internal Allocators
Develop Functionalization
Prepare Print Macros
Enter Allocators
Prepare Water Heater Cost Analysis
Review Internally
Revise Previous Testimony
Prepare and Label Exhibits
Final Revisions to Testimony & Exhibits
Finalize and Review Externally
Document and Archive
Subtotal Accounting Study Task
Travel Expense
Data Gathering Subtotal
Develop Allocators Subtotal
Total ACS Price to Filing
Billing Rate, $/hr
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FITCHBURG GAS AND ELECTRIC LIGHT COMPANY d/b/a UNITIL
PROPOSAL FOR GAS AND ELECTRIC RATE CASE STUDIES
49 5O 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75 76 77 78 79 80 81 82 83
Prepare Marginal Cost Study- Electric
Migrate Date from Previous Model
Incorporate Load Research Data
Develop Carrying Charge Rates
Revise Previous Testimony
Prepare and Label Exhibits
Final Revisions to Testimony & Exhibits
Final Revisions
Document and Archive
Subtotal Marginal Cost Tasks
Travel Expense
Data Gathering Subtotal
Develop Allocators Subtotal
Total MCS Price to File
Design Rate - Electric
Verify Billing Units
Assemble Bill Frequencies
Review Existing Blocking
Establish Revenue Targets
Street Lighting Analysis (Customer Owned)
Design Rates
Revise Previous Testimony
Prepare and Label Exhibits
Subtotal Rate Design Tasks
Travel Expense
Total Rate Design Task
Costs to File - Electric
Total Accounting
Total Marginal
Total Rate Design
Total Costs to File - Electric
Billing Rate, $/hr
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FITCHBURG GAS AND ELECTRIC LIGHT COMPANY d/b/a UNITIL
PROPOSAL FOR GAS AND ELECTRIC RATE CASE STUDIES
84
85 Depreciation Study- Electric
86 Issue Data Request
87 Update Database
88 Run Curve Fitting Routines
89 Select Curves
90 Draft Report*
91 Prepare Schedules
92 Prepare Direct Testimony
93 Subtotal Depreciation Study
94 Travel Expense
95 Total Costs to File - Depreciation
96
97
98 Lead-Lag Study - Electric
99 Prepare Data Input Templates
100 Develop Billing Lags
101 Develop Collection Lags
102 Compute Purchased Supply Lags
103 Develop Labor Lags
104 Develop Pension and Benefit Expense
105 Compute Tax and Regulatory Lags
106 Compute Other O&M Lags
107 Draft Testimony - Report
108 Prepare Schedules
109 Document and Archive
110 Subtotal for Lead-Lag Study
111 Travel Expense
112 Total Lead-Lag Study
*James Aikman to review and provide comments.
Billing Rate, $/hr
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FITCHBURG GAS AND ELECTRIC LIGHT COMPANY d/b/a UNITIL
PROPOSAL FOR GAS AND ELECTRIC RATE CASE STUDIES
Attachment 3
Staffing of Tasks and Witnesses and
Resumes of
¯ Paul M. Normand ¯ Michael J. Morganti ¯ Marcy E. Stefan ¯ Debbie L. Gajewski
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FITCHBURG GAS AND ELECTRIC LIGHT COMPANY d/b/a UNITIL
PROPOSAL FOR GAS AND ELECTRIC RATE CASE STUDIES
Resumes Attached
Consultam/Location Subject Witness
Paul M. Normand Reading, PA
Accounting and Marginal Cost Rate Design Depreciation Study Lead-Lag Studies
Yes
Yes Yes Yes
Michael J. Morganti Reading, PA
Lead-Lag Studies Cost of Service Studies Revenue Requirements
No
No No
Marcy E. Stefan Reading, PA
Marginal Study Update Depreciation Study
No
Debbie L. Gajewski Reading, PA
Cost of Service Studies Rate Design
No
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FITCHBURG GAS AND ELECTRIC LIGHT COMPANY d/b/a UNITIL
PROPOSAL FOR GAS AND ELECTRIC RATE CASE STUDIES
PAUL M. NORMAND Principal
Experience in the electric, gas, and water industry includes project managemem of various cost analyses, engineering system planning and design functions, and detailed electric power loss analyses. Also, experienced in the analysis and preparation of economic and plant data, revenue requiremems and presemation before state and federal regulatory agencies. Presemed expert testimony on behalf of utilities in over 30 applications before regulatory commissions.
EXPERIENCE:
1984 - Presem MANAGEMENT APPLICATIONS CONSULTING, INC. Principal consultant providing consulting services to industry in planning, pricing, and regulation. Extensive experience in analyzing power systems for power loss studies and regulatory issues.
Assist in gathering and updating property accouming data for depreciation studies.
Review and analyze life analyses relating to simulated plant balances and actuarial data.
Perform property inspections to aid in service life estimation and salvage and removal cost estimations.
1983 - 1984 P. M. NORMAND ASSOCIATES Independem consultant providing services to the utility industry in cost analyses, regulatory services and expert testimony.
1976 - 1983 GILBERT/COMMONWEALTH, Reading, Pa. Director, Rate Regulatory Services - Administrative and fiscal responsibility for rate and regulatory services nationally for electric, gas, and water utilities. Additional responsibilities included all marketing, research and development efforts, and contract negotiations for all studies performed by the Regulatory Service Department. Provided consulting service to utilities in project management, personnel staffing, and future development efforts.
Manager, Austin, Texas Office- Responsibility for the overall administrative and business aspects for the department in the Southwest.
Senior Management Consultant - Responsibilities included project managemem of various electric and gas cost-of-service studies.
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FITCHBURG GAS AND ELECTRIC LIGHT COMPANY d/b/a UNITIL
PROPOSAL FOR GAS AND ELECTRIC RATE CASE STUDIES
1975 - 1976
1971 - 1974
1966 - 1970
PAUL M. NORMAND /Page 2
(Continued)
Consulting Engineer- Prepared class and time-differemiated cost-of- service studies, revenue requirements exhibits, and expert testimony for formal rate proceedings before regulatory agencies. Performed forecasted ten-year cost-of- service studies by customer classes. Analyzed and prepared transmission (wheeling) rates based on cost-of-service.
Engineer- Derived system demand and energy loss factors and customer load characteristics required for cost-of-service results and related rate schedules.
WESTINGHOUSE ELECTRIC CORPORATION, Pittsburgh, PA Responsible for the procurement of electrical/electronic control equipment and power cables for the nuclear reactor control system. Assisted in the development of procedures for the seismic testing of various electronic equipment related to reactor control.
NEW ENGLAND ELECTRIC SYSTEM, Westborough, Massachusetts Experience from various system assignments in conjunction with formal education. Assigned to the Transmission and Distribution Department with responsibilities in several voltage conversion efforts and system planning. Development of network modeling techniques, load flow, and fault study analyses for the system planning department.
U.S. NAVY Aviation electronic technician with responsibilities for maintenance and trouble-shooting of electronic communication equipment.
EDUCATION:
B.S.E.E., Electrical Engineering, Northeastern University, 1975 M.S.E.E., Electrical Power Systems, Northeastern University, 1975
Graduate Studies - MBA Program, Lehigh University and Albright College, 1977 to 1980
SOCIETIES:
Institute of Electrical and Electronic Engineers Society of Depreciation Professionals
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FITCHBURG GAS AND ELECTRIC LIGHT COMPANY d/b/a UNITIL
PROPOSAL FOR GAS AND ELECTRIC RATE CASE STUDIES
PAUL M. NORMAND /Page 3 (Cominued)
APPEARANCES AS EXPERT WITNESS: Federal Energy Regulatory Commission Arkansas Public Service Commission Delaware Public Service Commission Indiana Utility Regulatory Commission Illinois Commerce Commission Kansas Corporation Commission Kentucky Public Service Commission Louisiana Public Service Commission Maine Public Utilities Commission Maryland Public Service Commission Massachusetts Department of Public Utilities Missouri Public Service Commission New Hampshire Public Utilities Commission New Jersey Board of Public Utilities New York Public Service Commission North Carolina Utilities Commission Ohio Public Utilities Commission Pennsylvania Public Utility Commission Rhode Island Public Utilities Commission Texas Public Utilities Commission
PAPERS AND PRESENTATIONS: "Probability of Dispatch Costing Method for Electric Utility Cost-of-Service Analysis."
Co-authored with P. S. Hurley, presented to Edison Electric Institute Rate Research
Committee May 4, 1982.
"Costing Strategies under Changing Marketing Goals and Long Term Investment
Growth." Presented to Missouri Valley Electric Association (MVEA), Kansas
City, MO, November 13, 1991.
DEPRECIATION STUDIES PARTICIPATION: Central Maine Power Chesapeake Utilities Corporation Coming Natural Gas Corporation Dairyland Power Cooperative Dayton Power & Light Company EnergyNorth Natural Gas Fitchburg Gas and Electric Light Company Great River Energy Green Mountain Power KeySpan Energy Delivery- New York KeySpan Gas East Corporation/LILCO Midwest Energy Inc. Minnkota Power Cooperative
National Grid- Boston, Essex and Colonial Gas Companies
New England Gas Co./Fall River
Northern Utilities- Maine and New Hampshire Divisions
Public Service of New Mexico-
Southern New Mexico Division
St. Lawrence Gas Company, Inc. Texas-New Mexico Power Company-
Texas Division & General Office Vectren Corporation
Vermont Gas Systems, Inc.
Unitil Energy Systems, Inc.
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FITCHBURG GAS AND ELECTRIC LIGHT COMPANY d/b/a UNITIL
PROPOSAL FOR GAS AND ELECTRIC RATE CASE STUDIES
MICHAEL J. MORGANTI Principal
Experience in cost of service, class demand, rate design, working capital, depreciation, accounting, and administrative consulting services for gas and electric utilities. Specializing in the preparation and presentation of computerized jurisdictional and class cost allocation studies before regulatory authorities. Expertise in developmem of gas adjustment clauses, lead-lag studies, unaccounted for and gas losses, benchmarking and accounting matters.
EXPERIENCE:
1984
to
Present
MANAGEMENT APPLICATIONS CONSULTING, INC.
Principal consultant providing services to the utility industry in cost analysis, gas adjustmem clauses, gas purchasing plans, rate design, lead-lag studies, tax analysis, depreciation, and expert testimony.
Provided technical consulting services in the preparation and analysis of average and time differemiated cost allocation and revenue requirement studies. Assisted utilities in establishing appropriate rate levels based on cost of service analysis. Prepared pro forma adjustments to revenue requiremems including: tax analyses for state and federal rate filings, inflation adjustments, cash working capital and weather normalization adjustments using econometric techniques. Responsible for the gathering and processing of engineering and accounting data necessary to complete these studies.
Provided consulting services in the development of lead-lag studies for gas and electric utilities. Participated in the development of spreadsheet-based lead-lag computer models used in rate filings.
Developed system and customer load characteristics required for gas and electric cost of service analyses. Developed class cost of gas adjustment clauses based on market-based allocation of gas supplies. Developed gas purchasing plans to help utilities manage price risk associated with the natural gas market. Prepared and presented testimony and exhibits for rate and regulatory proceedings in both state and federal jurisdictions. Developed procedures for analyzing unaccounted for and gas losses.
Developed a microcomputer regulatory information system used to meet the filing requirements for rate increases. Software encompasses accouming data, load data and a comprehensive cost of service study.
1973 - 1984 GILBERT/COMMONwEALTH Senior Managemem Consultant responsible for the developmem of cost of service, rate design, federal and state tax, customer load characteristics, and sales analyses for electric and gas utilities.
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FITCHBURG GAS AND ELECTRIC LIGHT COMPANY d/b/a UNITIL
PROPOSAL FOR GAS AND ELECTRIC RATE CASE STUDIES
1971 - 1973 and
1968 - 1969
MICHAEL J. MORGANTI / Page 2 (Cominued)
Provided consulting services in the areas of depreciation, salvage analyses, reserve requirements, customer cost indices, and development of depreciation accrual rates. Participated in the development and reporting of data in connection with property invemories and valuation.
Engaged in the establishment of records management and documem storage retrieval systems for major utilities. Activities included the implememation of a microfilming operation for nuclear power plants.
ARTHUR ANDERSEN & COMPANY, Philadelphia, Pennsylvania Staff Accountant- Engaged in the auditing of financial statements and review of accounting procedures requiring a knowledge of established accounting procedures, supervision of personnel, preparation of financial reports, review of management, and review of accounting efficiencies of client systems.
1969 - 1971 U.S. ARMY- QUARTERMASTER First Lieutenant- Responsible for operation and accountability of an area P.X. in
South Vietnam and Fort Irwin, California.
EDUCATION:
B.S., Accounting, Widener College, 1968 Additional Courses: IBM Systems Courses
APPEARANCES AS EXPERT WITNESS:
Federal Energy Regulatory Commission City of Norwich Utility Commission Massachusetts Departmem of Public Utilities Philadelphia Gas Commission New Hampshire Public Utilities Commission
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FITCHBURG GAS AND ELECTRIC LIGHT COMPANY d/b/a UNITIL
PROPOSAL FOR GAS AND ELECTRIC RATE CASE STUDIES
MARCY E. STEFAN Consultant
Over 30 years experience in book depreciation accrual rate studies, cost of service, load research and valuation studies for numerous electric and gas utilities. Has been involved in more than 125 depreciation studies for electric and gas utilities.
EMPLOYMENT HISTORY:
MANAGEMENT APPLICATIONS CONSULTING, INC., 2001-Present Reading, Pennsylvania
Management Resources Imernational, 1985-2001 Reading, Pennsylvania
Consultant
Gilbert/Commonwealth, Management Consulting Division, 1978-83 Reading, Pennsylvania Technical Assistant, Depreciation Services Department
Singer Equipment Company, Inc., 1975-78 Reading, Pennsylvania Supervisor, Accounts Payable
EXPERIENCE:
Rate Studies
Accounting Cost of Service. Assist in cost allocation studies for electric and gas utilities. Compile, process, and analyze data and allocation factors.
Marginal Cost of Service. Prepare and analyze detailed historical and budget information for use in marginal analyses. Prepare functional regression analyses and develop econometric models with various dependent variables to derive marginal cost results. Prepare economic fixed charge analyses for use in marginal studies along with final revenue proofs.
Load Research. Assist in load research studies for electric utilities. Extensive data preparation
and calculations.
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FITCHBURG GAS AND ELECTRIC LIGHT COMPANY d/b/a UNITIL
PROPOSAL FOR GAS AND ELECTRIC RATE CASE STUDIES
MARCY E. STEFAN / Page 2 (Continued)
Depreciation Studies
Property Data. Prepare, edit and update property accounting data for depreciation study databases.
Depreciation Reserves. Produce theoretical reserve calculations and comparisons to book reserves.
Average Service Life Estimates. Conduct life analyses involving forecasting, simulated plant
record, and actuarial data for numerous utilities.
Accrual Rate Schedules. Prepare and develop accrual rates, reserve comparisons, accrual rate comparison and summary schedules.
Cost of RemovaL Prepare calculation of cost of removal component included in depreciation accrual rates.
Valuation Studies
Forecasting. Extensive work with various published trend indexes to develop custom trend indexes for gas and electric utilities. Responsible for maintenance of cost trend index files.
EDUCATION:
B.S., Accounting, Albright College, 2001 Associate Degree, Business, Pennsylvania State University, 1975
SOCIETIES:
Society of Depreciation Professionals
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FITCHBURG GAS AND ELECTRIC LIGHT COMPANY d/b/a UNITIL
PROPOSAL FOR GAS AND ELECTRIC RATE CASE STUDIES
DEBBIE L. GAJEWSKI Managing Consultant
Extensive consulting experience in the electric, gas, and water industries includes demand analysis, cost-
of-service, rate design, econometric forecasting, and rate information systems. Utility industry
knowledge is coupled with experience in accounting processes, system analysis, and software capabilities.
Provided expert testimony before regulatory agencies. Developed schedules and exhibits for rate filings
before regulatory agencies.
EXPERIENCE:
2008 to
Present MANAGEMENT APPLICATIONS CONSULTING, INC. Managing Consultant- provide rate and regulatory services to the utility industry as
described below.
KISSINGER ASSOCIATES, INC. 2007-2008 Director of Sales, EDI - Manage and train sales staff and resellers to achieve sales
objectives and targets via Webinars, technical conferences, and presentations. Work with
Marketing to implement all marketing plans and promotional activities as well as
participate in creation of marketing materials. Identify market needs and feed market
requirements to Product Development and Marketing. Prepare sales projections and
budgets.
1993-2007 MANAGEMENT APPLICATIONS CONSULTING, INC. Principal- Provided rate and regulatory services to the utility industry. Prepared and
analyzed embedded class cost of service studies and marginal cost studies for electric,
gas, and water utilities. Designed and evaluated utility rates and tariffs. Responsible for gathering and processing engineering, operating, and accounting data necessary for these
studies. Prepared and submitted expert testimony concerning class cost of service
analyses and allocation methodologies.
1985-1993 Management Consultam- Performed econometric forecast modeling for natural gas
distribution utilities which included collecting, compiling, reconciling, and analyzing
data elements as well as model development, testing, and integration of multiple models
into system sales forecast.
Developed allocation factors to be used in cost-of-service studies from bill frequency
information, load research, system engineering data, and other sources.
Developed software for microcomputers using numerous database and spreadsheet
languages. Developed Visual Basic programs for running class cost of service models.
Developed training materials and resources, including user manuals, software
documentation, and presentation materials. Conducted numerous training sessions to
educate utility personnel in the application and use of cost-of-service models.
Performed financial, accounting, and administrative functions including preparation of
financial statements, processing of monthly billing, tax reporting, preparing receivable
reports, and administration of accounts payable.
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FITCHBURG GAS AND ELECTRIC LIGHT COMPANY d/b/a UNITIL
PROPOSAL FOR GAS AND ELECTRIC RATE CASE STUDIES
DEBBIE L. GAJEWSKI / Page 2
(Continued)
1984 - 1985 GAI-TRONICS CORPORATION Regional Sales Coordinator- Responsible for coordinating sales efforts between regional
factory representatives and inside sales. Worked with electrical engineers and plant
engineers in designing equipment to meet special applications. Trained factory
representatives in regional offices on the features, benefits, and advantages of several
product lines. Direct customer sales contact with major accounts within regional
territory. Maintained constant lead follow-up and established many new accounts.
1982 - 1984 GILBERT ASSOCIATES, INC. Management Consultant, Cost and Load Analysis Department- Participated in the
preparation and analysis of computerized average embedded and marginal time-
differentiated cost studies for electric, gas, and water utilities. Responsible for the
gathering and processing of engineering, financial, and accounting data necessary to
complete these studies.
Assisted in the development of allocation factors to be used in cost-of-service studies from bill frequency information, load research and system engineering characteristics.
1978 - 1982 Technical Assistant, Cost and Load Analysis Department- Assisted Consultants in the preparation of average embedded and time-differentiated cost studies. Assisted in the development, implementation, and documentation of load research software for gas and electric companies involving Fortran programming and system analysis. Program included meter tape translations, load data analyses, reports generating, and load profile graphics for stratified class data.
1976 - 1977 GAI-TRONICS CORPORATION Experience included the use of time sharing and remote job entry terminals. Work also
included clerical and secretarial responsibilities. Processed, coordinated, and expedited
work orders within the sales and system engineering, purchasing, and production
departments for major clients.
EDUCATION:
B.S., Business Administration, Albright College, 1993
M.B.A. classes, Ashford University, 2009
Additional Courses:
Sandler Training Solutions- Corporate Sales Training Course, 2007
Programming Languages, Computer Hardware and Software Capabilities
EXPERT WITNESS/TESTIMONY:
Massachusetts Department of Public Utilities Public Service Commission of Maryland Railroad Commission of Texas
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FITCHBURG GAS AND ELECTRIC LIGHT COMPANY d/b/a UNITIL
PROPOSAL FOR GAS AND ELECTRIC RATE CASE STUDIES
Attachment 4
Schedule
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FITCHBURG GAS AND ELECTRIC LIGHT COMPANY d/b/a UNITIL
PROPOSAL FOR GAS AND ELECTRIC RATE CASE STUDIES
FGE Gas and Electric Rate Case Schedule Detailed Work Plan
6 Descrip tion
Week Ending
Week Number
1 Project Commencement 2 3 Class COSS Data Gathering - Electric & Gas 4 Prepare Data Requests 5 Address/Resolve Questions 6 Subsequent Data Requests 7 Transcribe/Reformat Data 8 9 Develop Allocators- Electric & Gas 10 Incorporate Load Research Data 11 Analyze Corporate Allocations 12 Proportional Responsibility 13 Meter Allocator 14 Services Allocator 15 Customer Premises 16 Meter Reading 17 Customer Accounting 18 Bad Debt 19 Other Direct Assignments 20 21 Prepare Accounting Study- Electric & Gas 22 Establish Working Columns 23 Review Detailed Revenue Requirements 24 Establish Functions To Study 25 Replicate Tax Calculation 26 Revise Model Structure 27 Develop Internal Allocators 28 Develop Functionalization 29 Prepare Print Macros 30 Enter Allocators 31 Water Heating and Cons. Burner Analysis 32 Review Internally 33 Revise Previous Testimony 34 Prepare and Label Exhibits 35 Final Revisions to Testimony & Exhibits 36 Finalize and Review Externally 37 Document and Archive 38 39 Prepare Marginal Cost Study- Electric & Gas 40 Migrate data from Previous Model 41 Incorporate Load Research Data 42 Develop Carrying Charge Rates 43 Revise Previous Testimony 44 Prepare and Label Exhibits 45 Final Revisions to Testimony & Exhibits 46 Final Revisions 47 Document and Archive 48
X X X
X X X
X X
X
X X
X X X X X
X X X X X X X x
x x x
x x
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FITCHBURG GAS AND ELECTRIC LIGHT COMPANY d/b/a UNITIL
PROPOSAL FOR GAS AND ELECTRIC RATE CASE STUDIES
Week Ending
Week Number
49 Design Rate-Electric & Gas 50 Verify Billing Units 51 Assemble Bill Frequencies 52 Review Existing Blocking 53 Establish Revenue Targets 54 Street Lighting Analysis 55 LED Rate 56 Design Rates 57 Revise Previous Testimony 58 Prepare and Label Exhibits 59 60 Depreciation Studies - Electric & Gas 61 Issue Data Request 62 Update Database 63 Run Curve Fitting Routines 64 Select Curves 65 Draft Report 66 Finalize 67 68 Lead Lag Studies - Electric & Gas 69 Prepare Data Input Templates 70 Develop Billing Lags 71 Develop Collection Lags 72 Compute Purchased Supply Lags 73 Develop Labor Lags 74 Develop Pension and Benefit Expense 75 Compute Tax and Regulatory Lags 76 Compute Other O&M Lags 77 Draft Testimony- Report 78 Prepare Schedules 79 Document and Archive
v.v.v.v.v.v.v. ........................... _~ ........................... _~ ........................... _~ ............................
v.v.v.v.v.v.v. ........................... _~ ........................... _~ ........................... _~ ............................
v.v.v.v.v.v.v. ........................... _~ ........................... _~ ........................... _~ ............................
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FITCHBURG GAS AND ELECTRIC LIGHT COMPANY d/b/a UNITIL
PROPOSAL FOR GAS AND ELECTRIC RATE CASE STUDIES
Attachment 5
Billing Rates
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FITCHBURG GAS AND ELECTRIC LIGHT COMPANY d/b/a UNITIL
PROPOSAL FOR GAS AND ELECTRIC RATE CASE STUDIES
MANAGEMENT APPLICATIONS CONSULTING, INC.
BILLING RATES
CLASSIFICATION HOURLY
BILLING RATE
Managing Consultant
Senior Consultant
Consultant
Analyst
Junior Analyst
Technical Assistant
Word Processing
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FITCHBURG GAS AND ELECTRIC LIGHT COMPANY d/b/a UNITIL
PROPOSAL FOR GAS AND ELECTRIC RATE CASE STUDIES
Attachment 6
Billing Terms and Conditions
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FITCHBURG GAS AND ELECTRIC LIGHT COMPANY d/b/a UNITIL
PROPOSAL FOR GAS AND ELECTRIC RATE CASE STUDIES
MANAGEMENT APPLICATIONS CONSULTING, INC. BILLING TERMS AND CONDITIONS
Professional Services:
Charges for professional services will be a t the standard hourly rates as shown on the atta ched schedule. Time charges will be rn ade only while actually at work on the assignment and for the travel time during normal working hours, where applicable.
Out-of-Pocket Expenses:
In addition to the cost of professional services , travel, and living expe nses while engaged on a project away from the horn e office, such as commercial travel fares, rn eals, lodging, telephone and rented autom obiles, will be billed at cost. Use of a personal car to rn ake a trip in your interest will be billed a t the currently a llowed IRS rate. Outside s ervices or e xtraordinary expenses, when specifically authorized and incurred on your behalf, will be billed at cost. Other expenses such as telephone, reproduction, postage, freight, and data pro cessing will be provided at no additional cost.
Method of Billing:
Billings will be render ed m omhly for the pre ceding m onth’s servic es performed and expense incurred on your behalf. Invoices will be due and payable ten days after receipt. Our assignment may be interrupted or term inated at any tim e without further liabi lity other than for the charges and expenses incurred up to the date of such interruption or termination.
Software Rights"
Any software developed in the cour se of this assignment will be consid ered confidential trade secrets and will b ecome the prope rty of MAC. If requ ested, a copy o f this sof tware will be provided to you for your exclusive use in conducting your own business. This software is not to be copied, except for archival purp oses, nor is it to be distributed to any third party without the expressed written consent of MAC. MAC retain s the sole rights to reproduce, copy, distribute, and license this software.
Confidentiality:
In the course of the assignm ent, MAC rn ay be pr ovided confidential, propr ietary and/or secret materials of the client that are not known publicly. MAC will maintain all confidences and shall restrict such information to its personnel with a need to know. MAC will not copy or record any confidential information except as reasonably n ecessary for the perform ance of its assignm ent. MAC will not rem ove any such information from client’s premises unless specifically provided by the client. MAC will dispose of any and all confidential materials in any rn anner as may be directed by client.
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March 20, 2015
Ms. Karen M. Asbury
Director, Regulatory Services
Unitil Service Corporation
6 Liberty Lane West
Hampton, NH 03842-1720
Dear Ms. Asbury:
On behalf of Sussex Economic Advisors, LLC ("Sussex") and Alliance Consulting Group
("Alliance"), I would like to thank you for the opportunity to respond to Fitchburg Gas and
Electric Light Company’s Request for Proposals dated March 10, 2015 (the "RFP"). As
requested, we have delivered a PDF version, via email, to Mr. Joseph Conneely.
As noted in our response, I would be the Responsible Officer and Project Manager in addition to
being the primary contact for Sussex throughout this engagement. To that end, my contact
information is provided, below.
Robert Hevert, Managing Partner
Sussex Economic Advisors, LLC
161 Worcester Road, Suite 503 Framingham, MA 01701
Office: 508-202-7923
Mobile: 508-241-1175
Facsimile: 508-202-7156
Email: bhevert@~sussex~advisOrSoCOm
We greatly appreciate this opportunity to introduce you to our firm, and to describe the
approach, capabilities and resources that we would bring to this engagement. I hope that you
will not hesitate to call with any questions that you may have regarding our proposal.
With kind regards,
Robert B. Hevert
Managing Partner
Cc: Mr. Joseph Conneely
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