McFadden Consulting Group, Inc.
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Management and Strategic Planning








Management & Strategic Analysis Projects

Following are descriptions of a selection of projects that demonstrate our capabilities in the area of Management and Strategic Services.

Click on a Project below:

 

Impact of Electric Industry Restructuring on the State of Kansas
McFadden Consulting, in partnership with Resource Data International, Inc., conducted an analysis on the impact electric industry restructuring might have on the various stakeholders in the state. The Kansas legislature approved House Bill No. 2600 that established a Task Force whose purpose was to analyze and report on issues related to the restructuring electric service in Kansas. The Task Force retained McFadden Consulting to assist it in its analysis. The project addressed the qualitative and quantitative impacts that might be experienced if retail wheeling were allowed in Kansas. Mr. McFadden was the project manager.
Retail Pricing for Russian Electric Power Sector
Acted as the project manager for the retail pricing portion of the privatization project for the electric power sector in Russia. The objective of this assignment, which was conducted on behalf of U.S. AID in concert with Ministry of Fuels and Energy of the Russian Government, and RAO ESS Rossii, the Russian privatized electric power sector joint-stock company, was to develop the framework for retail electric pricing which considers the county's social, political and economic needs and realities. This project was part of the overall privatization of the electric power sector of Russia, which is restructuring the entire industry to increase its economic efficiency by injecting elements of competition and diversity.
Analysis of Gas Industry Restructuring and Residential Transportation Services in Colorado
We conducted a study for the Colorado Legislative Council on the feasibility of allowing nondiscriminatory access to retail natural gas distribution services. The study, conducted in conjunction with Hagler Bailly Consulting, Inc., evaluated the impacts of permitting all gas utility customers, including residential customers, to purchase natural gas supplies from alternate suppliers.
Development of a Plan to Exit the Merchant Function for Dominion East Ohio Gas Company
Dominion East Ohio Gas Company retained McFadden Consulting to assist a collaborative group, which included the company, the Public Utilities Commission of Ohio, and the Ohio Consumers’ Counsel, in resolving several gas supply planning issues and developing a plan that would permit the Company to exit the merchant function.  The issues included developing a strategy for re-contracting with upstream pipeline companies for transportation and storage services that were being provided pursuant to contracts that were expiring.  McFadden Consulting assisted in developing a re-contracting strategy that considered Dominion East Ohio’s customer choice program in which more than 40% of its residential and small commercial customers received gas from alternate suppliers and the potential that the company may exit the merchant function.  Other issues included determining the company’s role as supplier of last resort, system operations and balancing requirements, and comparable capacity requirements for alternate suppliers in the customer choice environment and in the event the company exited the merchant function.
Public Service Company of New Hampshire Performance Review, Rate Case Analysis and Restructuring Proposal
McFadden Consulting, as part of a team led by The Liberty Consulting Group, conducted a financial and management audit of Public Service Company of New Hampshire on behalf of the Public Utilities Commission of New Hampshire.  A significant portion of this project focused on PSNH’s rate case.  The rate case was the first filed by PSNH since emerging from bankruptcy seven years earlier.  In addition, the rate case was the precursor to the unbundling of rates that was expected to occur resulting from the New Hampshire Legislatures passage of RSA 674-F which requires each electric utility to file a restructuring plan.
Competitive Market-Based Rates, Market Power Analysis, and Tariffs for an Independent Storage Project
Totem Gas Storage Company, LLC retained McFadden Consulting to assist it in obtaining a certificate of public convenience and necessity authorizing it to develop, construct, operate, and maintain underground natural gas storage facilities using the Totem Field located in Adams County, Colorado.  McFadden Consulting developed a unique, market-based rate structure, which was approved by the Commission.  The market-based rates were the first competitive rates approved by the Public Utilities Commission of Colorado for a natural gas company in the state.  Mr. McFadden developed Totem’s tariff that contained the company’s rates, terms and conditions for service and was instrumental in facilitating a settlement agreement with the only party opposing the CPCN.  As part of this engagement, McFadden Consulting conducted a Market Power Analysis that assessed the potential market power of the gas storage project.  Mr. McFadden testified at a hearing on these matters before the Commission.
Review of Transmission Tariff, Cost of Service, and Rate Design for Restructured California Power Markets
McFadden Consulting, in conjunction with MarketPower, Inc., was retained by Southern California Gas Company to review the transmission cost of service and rate design proposals of Southern California Edison Company, Pacific Gas and Electric Company, and San Diego Gas and Electric Company.  The proposals, filed with the Federal Energy Regulatory Commission and collectively known as the WEPEX filings, are part of the comprehensive restructuring of the electric utility industry in California.  The major issue is the proposal to charge one transmission access fee to all end-use customers for both regional and local transmission service.  The alternative promulgated by SoCalGas is to require generators to pay for utilization of the regional transmission system designed to import power into the state.
Identification and Assessment of Strategic Alternatives
McFadden Consulting assisted a consortium of several large cities in Colorado in analyzing strategic alternatives related to changes in the natural gas industry.  The consortium included the Cities of Arvada, Commerce City, Fort Collins, and Lakewood, Colorado, and was formed in response to concerns about the impacts natural gas utility restructuring may have on the cities’ citizens.  The purpose of the analysis was to investigate if there is a role for the cities to assist its citizens in the transition to a competitive market, and beyond.  Four major strategies were identified and thirteen different alternatives assessed.  The four major strategies ranged from relatively limited involvement to marketing gas supplies to establishing an organization to exclusively provide natural gas to its citizens to acquiring and operating the gas distribution system.  The thirteen alternatives were quantitatively assessed utilizing DECISIONmaker, a proprietary model developed by McFadden Consulting.  The results of the analysis were presented to each of the city councils.
Restructuring of Kansas Gas Service Company’s Long Term Gas Supply Contracts
McFadden Consulting assisted Kansas Gas Service Company, a division of ONEOK in evaluating several long-term gas supply contracts.  The contracts were entered into in connection with the settlement of a regulatory proceeding a number of years ago.  The company requested Kansas Corporation Commission authorization to assign the contracts to a gas marketing affiliate.  McFadden Consulting assisted the company in evaluating the qualitative and quantitative impacts the proposed assignment would have on its customers.  The quantitative evaluation used Decisionmaker, a strategic decision model developed by McFadden Consulting.  Mr. McFadden testified at a hearing before the Kansas Corporation Commission on this matter.
Capacity Transformation: The Future of the Natural Gas Pipeline Business
The Public Utilities Commission of Ohio retained McFadden Consulting to evaluate the gas supply planning and procurement functions of Columbia Gas of Ohio.  As part of the review, McFadden Consulting assessed a hedging program instituted by the company after the price volatility experienced during the 1995-96 and the 1996-97 heating seasons.  The company used a formula based approach that established trigger points, which permitted the company to lock in up to 50% of its winter time flowing gas requirements. Another issue was the impact the company’s customer choice program had on gas supply procurement, as well as its need for upstream transmission and storage capacity.  In addition, the role the company would fulfill if it remained in the merchant function was also reviewed. 
Development of Transmission Wheeling Rates and Tariffs Pursuant to FERC Order 888
Mr. McFadden provided strategic oversight and technical assistance for the development of a wheeling rate and the preparation of a transmission wheeling tariff filed with the Federal Energy Regulatory Commission on behalf of Intermountain Rural Electric Association, in conjunction with Applied Energy Concepts.  A cost of service model based upon the methodology for point-to-point transmission service as well as network transmission service was developed to analyze various scenarios.  In addition, terms and conditions for the two types of transmission service were also reviewed.  Rates were developed based upon Order 888 and cost of service calculations for the system.
Evaluation of Columbia Gas of Ohio’s Gas Planning & Procurement Functions, including Hedging and Customer Choice Programs
McFadden Consulting, in conjunction with MarketPower, Inc., was retained by Southern California Gas Company to review the transmission cost of service and rate design proposals of Southern California Edison Company, Pacific Gas and Electric Company, and San Diego Gas and Electric Company.  The proposals, filed with the Federal Energy Regulatory Commission and collectively known as the WEPEX filings, are part of the comprehensive restructuring of the electric utility industry in California.  The major issue is the proposal to charge one transmission access fee to all end-use customers for both regional and local transmission service.  The alternative promulgated by SoCalGas is to require generators to pay for utilization of the regional transmission system designed to import power into the state.
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.
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.
Evaluation of Impacts of Customer Choice Program on CG&E’s Gas Supply Planning & Procurement Functions
McFadden Consulting evaluated Cincinnati Gas & Electric Company’s gas planning and procurement practices and procedures. The purpose of the evaluation was to assess the company's effectiveness in gas supply procurement and planning to achieve an adequate and reliable supply of gas at minimum cost.  A key factor was the potential impacts of a recently-approved customer choice program on long and short term supply planning, gas and capacity procurement, storage utilization, and demand forecasting.
Market-Based Pricing Guidebook for the National Rural Electric Cooperative Association
McFadden Consulting, in conjunction with MarketPower, Inc., is currently preparing a pricing guidebook to assist utility managers in pricing products and services in a competitive marketplace. The Market-Based Pricing Guidebook is being developed for more than 3,000 electric utilities across the United States for the National Rural Electric Cooperative Association. It will provide practical approaches and methods as well as the decision analysis process for U.S. utilities to design and implement open market pricing.
Analysis of the Financial and Accounting Practices of MOSENERGO
Acted as project manager for an assignment on behalf of the US EPA to review and analyze the financial and accounting practices and procedures of MOSENERGO, the utility that provides electric power service and hot water heat in the City of Moscow, Russia and environs. This assignment was part of the process intended to introduce integrated resource planning to the electricity and heating sectors in Russia. As part of this project, we identified and analyzed the financial issues and concerns facing MOSENERGO as it began the privatization process. The issues identified included the need for education in financial management, the financing of significant capital expenditures, the slow receipt of payments by customers, and the impact on rates of a revaluation of assets.
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 Strategic Marketing Plan for a Competitive Gas Market
McFadden Consulting assisted a multifaceted marketing subsidiary of a major local distribution company in developing a strategic marketing plan in connection with its bid to provide natural gas service in a competitive environment. The Wyoming Public Service Commission established a pilot program that would allow natural gas suppliers to compete for individual customers in several municipalities in the state. Under the program each individual gas consumer could choose its own supplier. Assistance was provided in developing a strategic marketing plan that would position the company as the supplier of choice.

 

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