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Financial & Economic Analysis Projects

Following are descriptions of a selection of projects that demonstrate our capabilities in the area of Financial and Economic Analysis.

Click on a Project below:


Analysis of Rate & Regulatory Treatment of Proposed Generating Facilities
The Iowa Utilities Board retained McFadden Consulting to assist it in evaluating applications to construct or lease new generating facilities. Section 476.53 of the Iowa Code provides that if a regulated utility files an application to construct or lease new generating facilities in Iowa, the Board must establish, in advance, the regulatory and ratemaking treatment for such facilities in a contested proceeding. MidAmerican Energy Company has filed an application to construct a gas-fired combined cycle generating unit known as the Greater Des Moines Energy Center. Preliminary issues in MidAmerican's application include cost of capital, capital structure, depreciable life, jurisdictional allocation, AFUDC, CWIP, construction costs, excess capacity, and the impact of a rate settlement in a previous MidAmerican rate case. MidAmerican proposed an in service date of Summer 2003. Hearings are scheduled for the Spring 2002.

Feasibility of Constructing a Generating Unit to Replace Purchased Power
The City of Fort Morgan, Colorado retained McFadden Consulting to assess the feasibility of the City installing a gas-fired combustion turbine. Fort Morgan's Electric Department currently purchases all of its customers' power supplies from the Western Area Power Administration (WAPA) and the Municipal Energy Agency of Nebraska (MEAN). The City's contract with MEAN expires in the near future and the City wishes to explore the feasibility of constructing a gas-fired combustion turbine to replace the purchases from MEAN. McFadden Consulting completed the initial phase of the project utilizing DECISIONmaker, a proprietary strategic decision-making model developed by McFadden Consulting. The second phase is currently underway.

Turbine Feasibility Analysis
Project Development Ind. LLC (PDI), a subsidiary of Environmental Oil Processing Technology, Inc. retained McFadden Consulting to analyze the financial feasibility constructing and operating a turbine fueled by waste oil that has been converted to no. 2 diesel, and to provide expertise in pricing and structuring a power sales agreement. PDI had been considering acquiring a defunct refinery to convert waste oil to useful petroleum products when it was approached by a municipal utility about constructing a turbine on the site. McFadden Consulting assessed the financial feasibility utilizing DECISIONmaker, a proprietary strategic decision-making model developed by McFadden Consulting.

Acquisition of Gathering and Transmission Facilities and Development of Gathering and Transmission Rates
Mr. McFadden was retained by UMC Petroleum Corporation, now known as Ocean Energy to provide rate and regulatory assistance in its acquisition of certain gathering and transmission facilities located in Montana from Northern Natural Gas Company.  The facilities were purchased by Havre Pipeline Company, LLC, which is a joint venture with UMC and other producers in the Bearpaw area. Historically, the facilities were included in Northern’s integrated pipeline system and, therefore, subject to the jurisdiction of the Federal Energy Regulatory Commission.  The main scope of the project was to develop rates for both the gathering system and the transmission system that would be appropriate under either FERC or Montana Public Service Commission regulations.  The rates developed by Mr. McFadden were ultimately filed with and accepted by the Montana Commission.  Assistance was also provided in structuring the acquisition to insure the most favorable regulatory treatment for ratemaking purposes.  Mr. McFadden also assisted Havre in preparing their annual report to the Montana Commission for 1996, 1997, and 1998.  Most recently, he provided assistance in developing new rates that were filed in with the Montana Commission in the fall of 1998.  Mr. McFadden filed direct testimony in support of the company’s filing.  A hearing was scheduled for mid-June 1999.  However, the Company decided to withdraw its application.
Assist in Structuring of a Bid to Acquire a Natural Gas Gathering Company
We were retained by Colorado Interstate Gas Company, a major interstate natural gas pipeline company, to assist in structuring a bid to acquire a natural gas gathering and processing company. Assisted in developing a strategy that permitted the pipeline to structure its bid in a manner that exploited its position in the marketplace. Assistance was also provided in establishing a value for the company and conducting the due diligence associated with the bid.
Economic Impact of Utilizing Gas Versus Coal as Fuel for Generation
Acted as the project manager of an assignment to evaluate the economic and environmental impacts of utilizing gas as a fuel for electric generation. A specific portion of this assignment was analyzing the impact of utilizing gas instead of coal during the winter in three Denver area generating stations. Various factors were considered in assessing the economic impacts, including the cost of gas and its transportation to the plants, the differential in gas and coal price forecasts, capital costs associated with a switch to natural gas, SO2 allowance costs, operating and maintenance costs, and dispatch impacts.
Review of Ontario Gas Companies’ Proposed Expansion Feasibility Policies
McFadden Consulting was retained by Ontario Hydro’s Power Worker’s Union to review the proposed system expansion feasibility policies filed with the Ontario Energy Board by Consumers Gas Company Ltd., Union Gas Ltd., and Centra Gas Ontario, Inc. The project entailed an analysis of the companies’ extension policies, including an in-depth review of their economic feasibility tests and the treatment of the avoided cost of alternative fuels. As part of this analysis, the goals of an attachment policy, the perspectives of the various stakeholders, the impact of key variables, and the framework for considering quantifiable and non-quantifiable factors were reviewed.
Evaluation of Clean-Up of Manufactured Gas Plant Sites
Assisted in evaluating Atlanta Gas Light Company’s (AGL) clean-up efforts at several manufactured gas plant sites. The purpose of the financial and management review was to determine if AGL has managed its efforts in a reasonable and cost-effective manner, and to determine the financial and regulatory impacts of the costs associated with the clean up. Specific areas of responsibility included financial, regulatory, tax, and accounting impacts of AGL efforts.
Development of a Mains Extension Policy and Economic Test
We assisted BC Gas in a study to identify the benefits and costs of expanding its natural gas system in BC Gas' service territory, and to develop a possible mechanism for incorporating these benefits and costs into a mains extension test for the company. The study presented an overview of extension policies and identified the key variables that need to be considered in developing a mains extension test. It also grouped the benefits and costs into quantifiable and non-quantifiable considerations. Finally, the analysis also identified administrative considerations in developing a mains extension test. Testimony was presented in a hearing before the British Columbia Utilities Commission.
Development of Avoided Costs
Developed estimates of avoided costs for BC Gas Utility, Ltd. on facility-specific, customer class, and end-use bases. Two different approaches were used. For customer class and end-use avoided costs, incremental load shapes were developed and run through the company's in-house gas supply planning model. Facility-specific avoided costs were estimated using a "proxy unit" approach based on capital cost investments available from BC Gas' upstream capacity suppliers. The facility-level avoided costs were then segmented into demand and commodity components that were then applied to the incremented load curves. The avoided costs were used by BC Gas in developing its IRP.
Review of Electric Department Extension Policy
Mr. McFadden reviewed the City of Fort Morgan, Colorado extension policy for its electric department. Historically, the City had not exercised its authority to collect the cost of extending service to new customers or upgrading service to existing customers. Mr. McFadden was retained to review the extension policy and determine an appropriate construction allowance. He developed a construction allowance based on the gross embedded investment per customer for each customer class.

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