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12:24foreign
12:50ER
12:55hey Alex can you hear us yeah
12:59I could hear you
13:04nesting testing
13:08we can hear you
13:10okay great
13:14foreign
13:27foreign
14:41foreign
18:57hey Jason can you hear me
19:02yep I can hear you now Alex thanks
19:08and you can't hear me now right
19:17I could hear you then uh but it's much
19:20quieter
19:35pleasure
26:54hahaha
26:56we're here
27:00they don't actually care
27:13is there any differences
27:22uh whoever's joining by phone ending in
27:25549 uh we can hear you if you need to
27:28mute and unmute on a phone uh you can
27:30dial star six
27:43foreign
28:49good morning it's 9 A.M and today is
28:53Monday August 14th 2023. I'm Eric blank
28:57and this is the uh commission uh the
29:00technical conference and proceeding 23m
29:03show234g the Public Service Company of
29:06Colorado gas infrastructure plan
29:09in terms of order today I'd propose that
29:12we start with a company have them
29:13introduce their team and make a brief
29:15initial opening statement if so inclined
29:18after that I'd propose that I start with
29:21my questions since I only have uh maybe
29:24a couple of things that might last uh 10
29:27or 15 minutes I've done proposed turning
29:30it over to you commissioner plant and
29:32then we'd end with commissioner Gilman
29:34uh so that uh commissioner plant any
29:37initial comments and would that approach
29:40work for you
29:43oh you're muted somehow
29:48I'll take that that is a compelling yes
29:51commissioner Gilman any uh opening
29:54comments and would that work for you
29:56no I think that works uh thank you so
30:00with that
30:01um Mr Paquette Mr Berman Mr Mort's uh
30:05introductions brief initial statements
30:07uh I turn it over to you guys for uh
30:11hopefully brief uh brief start
30:16oh you're muted too
30:43okay chair and Commissioners can you
30:44hear me now yeah we can okay perfect
30:47thanks for bearing with us there for a
30:49second uh thanks for having us here
30:52today I'm Jason take I'm the regulatory
30:54Administration director for Excel Energy
30:56I'm joined here with several colleagues
30:59uh what we'll be introducing ourselves
31:01here in short order I just wanted to
31:04kick off our discussion here today with
31:06a few brief comments and I'll turn it
31:08over here to our our regulatory Vice
31:11President Steve Berman here in a moment
31:13but just to get us going you know again
31:15we're very happy to be here and and help
31:19facilitate this process answer any
31:20questions you all have as you know this
31:23is our first gift it's established from
31:26a a lengthy but robust rulemaking
31:28process over the past few years in which
31:31many of the interveners in this
31:32proceeding participated
31:34and we think that this the collective
31:37rulemaking process really puts us you
31:39know as a company and as a commission in
31:41a broader stakeholder community at the
31:42Forefront of the gas utility industry
31:46and we think that these gift rules
31:48created a manageable actionable and
31:51efficient process
31:53and That's essential for this skip as
31:55well as the success for future gift
31:57filings
31:59these rules were crafted specifically
32:09I lost you did you guys can you guys
32:11still hear him or is that me or no we
32:14lost you man
32:15the audio was coming from a phone chair
32:18and the phone appears to have dropped
32:20off so that's I think why we've lost him
32:26he also appears muted
32:32let's use my uh computer audio for the
32:34time
32:36yeah we can hear you now
32:39okay perfect thank you
32:41uh so as as we know these these specific
32:45gift rules sorry
32:47focused on larger individually planned
32:51projects for the company over a certain
32:53dollar threshold in our case that's
32:54three million dollars
32:56and we're planning here over a six-year
32:59Horizon
33:00I'm not detailing all of our gas capital
33:02investment but but those Investments
33:04That meet these
33:06these requirements
33:09we've we've now transitioned away from
33:11that rulemaking obviously and we're here
33:13today to discuss our specific gift
33:15filing
33:16we are still in the early days of this
33:18new regulatory structure and then this
33:20this initial filing was was meant to
33:23meet these rule requirements as much as
33:25possible albeit on a short time frame
33:28given that the gift rules became
33:30effective roughly at the same time that
33:31we filed in May of this year
33:33we know that continue refinement and
33:35evolution will be necessary as we grow
33:37into these new rules and processes and
33:41we'll learn and adapt as we go to to
33:44continually align our internal processes
33:46and planning to these new requirements
33:50also as you know future gifts will have
33:53the benefit of approved clean heat plans
33:55which we've just recently filed and is
33:57pending before the Commission in a
33:59separate proceeding
34:02while we detail the parameters used to
34:04guide the development of our GIF in our
34:06report just a quick overview might help
34:09our discussion here today
34:11this GIF represents a snapshot in time
34:14representing most of our work from our
34:17November 2022 five-year forecasts and
34:21budget Investments over the 2023 to 2027
34:24period although the gift covers
34:262023-2028.
34:29the planned projects have a defined
34:31scope of work and cost estimate that
34:33exceed three million dollars
34:35and thirdly
34:37the qualifying plan projects included in
34:40the gift all start construction within
34:42the plan period meaning that larger
34:44projects in 2022 were mostly excluded
34:47from reporting but we didn't contain we
34:50did provide a little bit of information
34:51on a few of those projects in the GIF
34:53itself
34:54there are a few examples where
34:56expenditures in 2022 that were small but
34:59but part of larger projects moving
35:02forward were included
35:04and likewise on the back end
35:07projects that had that started in in
35:102028 or Beyond we included all of that
35:12spinning
35:13as part of that Project Life
35:16by the snapshot
35:20the result was that we had we brought
35:22forward about 15 projects in our GIF
35:24representing between 80 and 90 million
35:27dollars in capital expenditures over the
35:292023 to 2028 period
35:32we conducted non-pipeline Alternatives
35:34analyzes or mpas on five of those
35:37capacity expansion projects as required
35:40by the rules
35:42and while this is a non-adjudicated
35:44filing here for our first gift filing
35:48we are therefore not seeking any
35:50explicit approvals of our gift or the
35:52associated projects that the company of
35:54course does welcome any direction from
35:56the commission regarding the processes
35:58we used in this skip guidance for future
36:01gifts for any other follow-up actions
36:03needed
36:04regarding give projects or associated
36:06mpas
36:08so with that thank you again for having
36:10us here for this discussion and I'll
36:12hand it over to my colleague Steve
36:14Berman
36:16Mr Berman
36:18good morning can you hear me we can
36:21sorry for the technology snafu this
36:24morning but we will try to keep it brief
36:27um before I hand it over to Mr Martz and
36:29I just wanted to address a couple of
36:31things
36:32um before doing that and say that first
36:35the company does appreciate the comments
36:37that came in late last week from the
36:40parties in this proceeding both the
36:42support and the criticisms and we look
36:44forward to going through this
36:46informational get to inform improvements
36:49for the next gif as we move forward and
36:51continue to iterate through this process
36:53to that end Mr Martz will discuss our
36:57integrated system planning organization
36:59in more detail
37:00and he can address uh better our
37:02evolving planning processes and what is
37:05and is not in this initial get
37:08um just as a reminder we filed this skip
37:11over two months ago or two months before
37:14the clean heat plan filing and so just
37:17wanted to kind of level set there in
37:19that given the timing this first go
37:21around the clean heat plan is is very
37:24complementary of the gift and and that
37:26many of the proposals in the clean heat
37:29plan were not developed at the time the
37:31gift was filed so in the future we would
37:33anticipate there to be more cohesion
37:35between the two but timing kind of
37:38creates this situation I think this
37:40first go-around
37:42um also just wanted to say that we plan
37:45to respond in detail to the party's
37:46comments
37:48um in the the course of the schedule
37:49this proceeding but we're still
37:51digesting those and we're not prepared
37:53to dive deep into them today uh just
37:56level setting there if there's any
37:57questions around some of the comments
37:59that came in we are happy to discuss
38:02what a path forward can look like and
38:04how we best ensure that everyone can
38:07continue to provide comments in the
38:08proceeding and inform the commission
38:12and lastly I just wanted to to recognize
38:14that the company threw it in that Zero
38:16vision I believe is aligned with the
38:18state's goals and the goals of many of
38:21the parties in this skip we are
38:22committed to reaching those goals
38:24however we also take very seriously Our
38:27obligation to safely and reliably serve
38:30our electric and gas customers and we
38:32recognize that decarbonization of the
38:34gas system is going to largely be
38:37dependent on customer participation and
38:39that creates both unique opportunities
38:41and challenges we look forward to
38:44working through those with the
38:45commission and all the parties and with
38:48that I'm going to turn it over to Mr
38:49Marks
38:52morning commissioner blank Commissioners
38:54planting Commissioners Gilman uh just a
38:57quick check of hopefully you all can
38:59hear me and apologies for the technical
39:01challenges we had previously yeah
39:04you're good we can hear you
39:07wonderful thank you very much
39:10um so to start my name is Steve Martz
39:13I'm the vice president of integrated
39:15planning which is a new organizational
39:16capacity that we've added to Excel
39:19Energy and I'll provide a little bit of
39:22information on that here in a second
39:23previously I've I've been in front of
39:25you all in various capacities over the
39:27years most recently I was the area vice
39:30president of gas engineering and prior
39:31to that I worked for a number of other
39:32Utilities in California
39:35um
39:36uh serving a number of of capacities and
39:39research development Market development
39:40and other areas I want to start with
39:42providing a brief overview of our ISP
39:44organization as well as gas operations
39:47would like to walk you all through our
39:49gas system and Investments at a high
39:50level and respond to some of the
39:52questions that have been posed and
39:53introduce our key speakers available to
39:55answer your questions
39:56so in regard to integrated system
39:58planning as we've noted in the GIF the
40:01company has created a new ISP
40:03organization which over time will
40:04holistically and we hope strategically
40:06develop long-term interrelated plans for
40:08electric and gas systems our hope is
40:11that these can seamlessly serve our
40:12customers and drive towards the
40:14decarbonization goals of the state
40:16in my role ISP is responsible for
40:18coordinating long-term electric and gas
40:20plans across all of our services service
40:22territories in order to stay ahead of a
40:25fast changing and increasingly complex
40:26environment that is driven by the
40:28accelerating clean energy transition
40:31with gas Ops ISP we provide all of our
40:35major system functions deliver natural
40:36gas from Upstream Interstate pipelines
40:38such as Colorado Interstate gas via the
40:41company's transmission and Distribution
40:43Systems to the customers meter and
40:45ensure Public Safety through compliance
40:47with state and federal safety
40:48regulations
40:50these functions include planning
40:51engineering design metering compliance
40:55responding to gas emergencies locating
40:58our underground gas facilities
40:59construction and maintenance on the
41:00system
41:01coordinating with our communities to
41:03relocate facilities when necessary for
41:05municipal projects
41:07of course providing new gas service when
41:08requested by our customers in
41:10satisfaction of Our obligation to serve
41:12and complying with all state and federal
41:14regulations and operating and
41:16maintaining gas peaking facilities just
41:17to name a few
41:19when you think about our gas system and
41:21our investments as you know we are the
41:22largest LDC in the state serving about
41:241.5 million customers and we provide gas
41:27transportation services to to many large
41:30users such as Colorado ldcs and power
41:33plants our system is diverse and complex
41:35spanning rural suburban Urban and
41:37mountainous environments
41:39through the gift we have endeavored to
41:41further facilitate the commission's
41:42understanding of our gas system and
41:44planning processes the large projects we
41:46are pursuing and Alternatives we have
41:48considered traditional gas
41:49infrastructure Investments
41:51the company's processes have evolved
41:53over Decades of annual planning cycles
41:55and as industry best practices and tools
41:57have improved
41:58now it's important to recognize that
42:00further evolution of LDC planning
42:01processes will not occur overnight
42:03however the plan provides significant
42:05transparency into these processes and
42:07takes initial strides in that direction
42:10as mentioned by Mr Berman and Mr Piquet
42:12we chose to use our November 2022
42:14forecast which covers the budget period
42:16of 2023 to 2027 as the foundation for
42:20our gift
42:21that forecast was the most recent
42:23approved budget for gas capital
42:25investment at the time that we need to
42:27start preparing to get
42:28importantly based on how our processes
42:31work today many factors can cause us to
42:33shift priorities as we constantly adapt
42:35to the needs of our customers in the
42:37system
42:38investment priorities can and do change
42:40and new and emerging projects can some
42:42plants those that are budgeted are
42:44stoked for a variety of reasons
42:46so in that sense we'd like to kind of
42:48mention what what is and was not
42:49included in the gift because the gift
42:51focuses on larger individual plan
42:53projects with a defined scope of work
42:54and a cost estimate greater than 3
42:57billion that starts in 2023 or later
42:59there are investments being made by the
43:01company in its guests which are not
43:03contained in the gift for example there
43:05are a number of large projects which
43:07started in 2022 or earlier which are not
43:09included in the gifts such as West Metro
43:11and a handful of psia projects
43:14larger individual projects that have
43:16emerged since the November 2022 budget
43:18such as the 7.7 million dollar maop EDC
43:23project mentioned the gift start in
43:252024.
43:26capacity constraints that are being
43:28evaluated but are not yet through our
43:31scoping process and have not been
43:32budgeted such as the mountain gas system
43:34are also not explicitly detailed on the
43:36GIF however we do offer
43:38initial conversation on these projects
43:41uh furthermore routine work in each
43:43budget category so day-to-day work which
43:46is driven by emergent needs is not
43:49discussed in the Gip and then discrete
43:50projects which are less than three
43:52million dollars are also not discussed
43:53in the give
43:55there have also been questions which
43:56have Arisen regarding the level of
43:57safety investment since the last PSA
43:59information period
44:01first I would like to note that the
44:02categories investment required by the
44:04give which are safety new business
44:06capacity expansion and mandatory
44:08relocations are not the same as how we
44:10have typically presented investment to
44:11the Commission in previous gas rate
44:13cases in those cases we have provided an
44:16investment in the following categories
44:17safety reliability new business and
44:19mandatory relocations
44:21the challenge is the reliability
44:23category which includes both asset
44:25health and capacity related projects
44:27asset Health included among among other
44:29things safety work no longer eligible
44:31for PSA Mr March I'm sorry to interrupt
44:33you Mr Mark I'm just going to ask you to
44:35slow down a little bit please
44:38sure
44:42uh so let me
44:44let me catch back up here
44:46um
44:48so asset Health included among other
44:50things safety work no longer eligible
44:52for PSI treatment
44:54and given the give definitions much of
44:56the asset Health work is now falling
44:58within the safety bucket of the gift
45:01but we realize that this is an exact
45:02science and we're endeavoring to work
45:04transparently with the commission to
45:05ensure that the needs are met
45:07our combined safety and asset Health
45:09investment remains at levels similar to
45:11that presented previously so there are
45:13no significant changes here
45:15much of the work remains programs and
45:18plans must be flexible enough to account
45:19for uncertainties and new developments
45:22as discrete plan safety projects are
45:24identified they are funded from the
45:25programmatic budgets and for these
45:27reasons there are no plan safety
45:28projects leading gift criteria Beyond
45:302024 in the report
45:32so those conclude my my remarks I would
45:35like to transition now and introduce our
45:37key speakers
45:38we have with us today Mr Hassan sirur
45:42who is our manager of gas planning
45:44we also have area vice president Ray
45:46Gardner
45:48we have Mark schodenheiter who's our
45:50commercial sorry consumer and Commercial
45:52Energy Efficiency marketing manager and
45:55finally we have Grace Jones who's our
45:57manager of non-pipeline Alternatives so
45:59if that that concludes the company's
46:00prepared remarks and we'll hand it back
46:03to the commission thank you
46:05uh no thanks uh thanks to you for uh
46:10um your responsiveness uh and uh greatly
46:14appreciate the uh background and Framing
46:16and uh willingness to work through
46:19um this process with us
46:21I'd also say I was uh really pleased
46:23that the company was able to find a
46:25couple of uh non-pipeline Alternatives
46:27uh to move forward
46:30uh you know for me I think that's real
46:32me movement so thanks for that I um also
46:36understand there was not a lot of time
46:37to get this filed after enactment of the
46:40rules so
46:41um just want to acknowledge the effort
46:43that went into this so lots of project
46:46uh progress but uh still lots of work
46:49ahead of us so uh thanks
46:53uh so with that can we pull up page 12
46:56of the Gip
46:58um this uh I think it's PDF page 15. uh
47:02this chart shows uh four categories of
47:05investment as well as a total
47:09um last night I pulled up the transcript
47:11from the hearing in the 2022 Public
47:13Service Company natural gas rate case
47:16uh where Mr Berman testified that 500
47:19million uh about 500 million per year of
47:23uh Capital would be injected into the
47:26gas system uh even into the uh 2030s
47:30and just for reference at stock at
47:32number 22
47:34also46g it's the hearing transcript on
47:37August 19th it's at Pages 144 to 147
47:41especially page 146 lines 9 to 20 uh
47:4621. so for the seven years shown in this
47:50table Mr Berman's uh gas rate case
47:53testimony would suggests total invested
47:56capital of well over three billion
47:59dollars but this table
48:02um that we have up now includes total
48:04Investments of less than a hundred
48:06million over the seven year period I
48:10guess because we're only looking at
48:11projects that are three million or more
48:14as such it seems to me that this plan
48:16only considers maybe three to four
48:18percent of the total likely investment
48:21so I guess my question is am I right
48:23about the rough orders of magnitudes of
48:25the investment considered in this plan
48:27versus total expected Capital spending
48:31and if so should we be seeking to find a
48:34way to look at a much larger percentage
48:36instead of just focusing on you know
48:40whatever it is three four five percent I
48:43don't know if that's you miss Mr Morts
48:45or
48:46um Mr Berman or Mr uh Paquette but uh
48:53yeah I understand your question uh
48:56chairman blank and I'll continue to uh
48:59um ask that we confirm that we have the
49:01audio sufficiently
49:03um
49:04coming to this for you all we we do I
49:07can hear you
49:09careful thank you so uh I understand
49:11your question chairman
49:14um you're correct so I think there's a
49:15couple kind of questions here you know
49:17the first is the table that's being
49:19referenced the gift report plan project
49:23um this is essentially the number of
49:25projects which pass the gift uh
49:28skip reporting requirements and so
49:30that's what we've extracted out of our
49:33budget and into
49:35um into the early parts of this of this
49:38initial gift report
49:41um I can't speak exactly to the rape
49:44case reference that you mentioned before
49:45we can
49:47Endeavor to pull that up so there's a
49:48specific reference so notwithstanding
49:50the availability that information uh I I
49:53can say I think you're you're logic you
49:56know is is essentially correct
50:00um I think that's very much a factor of
50:02the length of time that you you know you
50:04take this
50:05you know take the 500 million dollars
50:07let's say for a list of purposes
50:09how many years you take that out for so
50:12I can't speak specifically offhand to
50:14the three billion dollars but you are
50:16looking at the table two here correct uh
50:19correctly and so these are just what's
50:21over and above the reporting criteria uh
50:24for the gift I would say though that I'm
50:27not aware of a specific budget
50:29percentage requirement in the gift in
50:31terms of reporting and the company did
50:34um
50:35you know go above and beyond to
50:37specifically identify other projects
50:39kind of bring in the reporting criteria
50:41uh within the git as well
50:45yeah and I I again would acknowledge
50:49that you've complied with the rules and
50:53um I you know but it just seemed like
50:54when we were doing the rules we didn't
50:56really have a good sense of what the the
50:59three million dollar threshold would do
51:01but now looking at this it seems like we
51:05said it you know maybe way too high uh
51:10so I guess the uh you can you can pull
51:12this down I guess the question is uh uh
51:17you know again without like saying the
51:19company did anything wrong and fully
51:21appreciating that this is the the first
51:23uh Gap and two very short time frame you
51:27know to the extent reasonably practical
51:29practicable would you be willing to show
51:32both the total expected investment as
51:35well as a broader list of individual
51:38projects down the say the one million
51:40dollar level in each category I mean it
51:43just seems like it'd be nice to
51:46understand a fuller range of uh of the
51:50of the capital investment and Ms Ms
51:54Federico you can pull this down uh take
51:56this down yeah
51:58yeah I I certainly understand what
52:00you're thriving at chairman blank
52:03um I would just note that you know you
52:05can you consider
52:07the the broadness of the gas capital
52:09budget overall
52:12um a lot of that really is emergent
52:14safety work and uh other mandatory work
52:18which I would put in the buckets of
52:19relocation work and uh new business so
52:23there really is a lot of emergent
52:24projects that come out of that process I
52:26think this commission is very aware of
52:27that you know through our PSA writer
52:30that we had with with this Commission in
52:32the state for a number of years that
52:34said you know to your point you know I'd
52:36say that overall our planning processes
52:39are certainly evolving and as Mr Berman
52:41noted and Mr a you know the gift was
52:45kind of almost
52:46from an order of operations perspective
52:48you know it almost would have been ideal
52:50to have the clean heat plan uh first in
52:53that I expect that as we consider
52:55decarbonization across the gas business
52:57going forward I do think that our
52:59planning processes will evolve
53:01significantly and
53:04um over time I think that we'll expect
53:06you know if you consider table two that
53:08we were showing there a minute ago as an
53:11illustrative of you know what view of
53:13the budget the commission is evaluating
53:15I do think that that percentage will
53:16grow over time as our investment the
53:19system you know becomes more strategic
53:21considering both uh get requirements but
53:24also they claim key plans
53:26um yep that said git was intended to be
53:30actionable and it's the careful
53:32balancing of the requirements to report
53:33three million above to ensure that we're
53:35providing all the larger projects for
53:37reviews so I think it's also
53:39um a function of the fact that you know
53:41now that we're leading into the
53:43decarbonization component of the same
53:45heat rule
53:47um I do think this will evolve over time
53:49and and you know you'll see that that
53:51table essentially grows as we
53:52contemplate alternatives to making these
53:54Investments
53:56I appreciate that and if you could I
53:59mean
54:00like I say we're shooting in the dark
54:02trying to figure out what the right
54:04threshold is and to the extent you can
54:08help us in this process you know I don't
54:11I don't know if it's a million I think I
54:13saw somewhere that the W UTC in
54:16Washington sets at a 500 000. if I guess
54:21we're I'd say at least I'm really
54:23sympathetic to your administrative
54:25concerns but you know maybe we can
54:29somehow get that percentage up and and
54:32if if it's not a threshold issue if it's
54:35just there's not a lot of big projects
54:36even that would be useful so the more
54:39you can help educate the commission and
54:42the parties uh through this process you
54:45know without having us you know just try
54:48and guess what the right direction is
54:50what you know and retrospect looking at
54:52this I would just say we missed we set
54:54it too high
54:56sure I understand your your comments
54:59German blank and uh certainly something
55:00big companies open to discussing as well
55:03I appreciate it
55:06um I guess uh my second question is on
55:09page two I think it's PDF page five of
55:12the Gap in the First full paragraph the
55:15plan talks about four fun foundational
55:17planning considerations and I just want
55:20to quickly read the second one
55:23um and I'm I'm quoting now second just
55:25as the electric red has become cleaner
55:27by substituting electrons generated by
55:30wind and solar for those previously
55:32generated by fossil fuels the gas system
55:35can also become cleaner by substituting
55:37low and zero carbon Alternatives in
55:40place of fossil gas
55:42so I guess I just say on the electric
55:44side it seems to me that we didn't just
55:46substitute one electron for another but
55:49new wind solar and storage had the
55:52potential to meaningfully reduce
55:53capacity and energy needs and costs as
55:57such from a customer perspective as
56:00those uh technology scaled and
56:02performance improved it seemed like
56:04there was a real economic case that the
56:07initial investment could eventually pay
56:10off by reducing customer rates and bills
56:12which you know I would argue is already
56:15occurring so my question is on the
56:17natural gas side is there any Capital
56:20cost reduction benefit of a cleaner gas
56:22molecule similar to what we saw on the
56:26electric side
56:27I guess really I'm struggling with the
56:29analogy because Capital costs on the
56:31natural gas side don't seem amenable to
56:34reduction through cleaner molecules
56:38um so I guess would you disagree with
56:41that characterization and is there an
56:44economic case for a cleaner molecule
56:48um to eventually pay off like it did on
56:52the electric side or we just looking at
56:54higher levels of capital investment you
56:57know for an extended time you know while
57:00also paying a premium for a cleaner
57:03molecule
57:04guess what I'm saying is on the electric
57:06side we were willing to invest you know
57:08pay a premium for wind and solar because
57:11you could see it paying off in terms of
57:13reduced capital and energy costs but I
57:16just don't see how a cleaner molecule is
57:18ever going to pay off it's just you know
57:21paying a premium
57:22forever
57:24um so I just any thoughts is is that a a
57:28right way to look at this or would you
57:29challenge uh challenge that that that
57:32view
57:36sure
57:37um appreciate the question chairman
57:39Blake and I think that you know I'll
57:40just I would sum that up by saying I
57:42think you know working through that
57:44question is is kind of the Nexus of the
57:46energy you know Revolution that's going
57:48on I think you know we're one of the
57:50first Gas Utilities to contemplate
57:52exactly that interplay
57:53um but I do think that this will you
57:55know continue to evolve across the
57:56United States as this becomes you know
57:58top of consideration across you know
58:00multiple um
58:02safety carbonization policies
58:05um if I'm understanding your questions
58:06you know correctly I think they're
58:08trying to test for you know
58:11how does a long-term view of cleaner gas
58:14molecules play against you know customer
58:17rates and investment needs and kind of
58:19how that juxtaposition works you know
58:21with where the electric utility uh was
58:24you know maybe 10 years ago or maybe
58:25even 15 years ago or so right so I think
58:28you're kind of understanding kind of the
58:29base economics
58:32um first I would say and I you know
58:34appreciate that we've just recently
58:36filed this I guess a little a little
58:38under two weeks ago there's there is
58:40conversation and discussion on this
58:41exact Topic in our clean heat plan and
58:43we do offer a view of multiple Pathways
58:46that we can contemplate as a state
58:49um and so I won't get into that uh right
58:52here this morning just given that that
58:53is a you know litigated proceeding but
58:56there is a healthy discussion on that
58:58topic in in that uh in our clean heat
59:01plan that said I don't think it's quite
59:04as simple as comparing avoided Capital
59:07costs electric versus gas I think one
59:10thing to keep in mind is that on an
59:12energy density basis when you think
59:14about serving uh peak hour capacity
59:17requirements um for heating which is the
59:19predominant usage of the gas LDC system
59:22even with even with cleaner molecules
59:24the companies view is that gas service
59:28is still likely to be more economic for
59:30our customers than an electric system
59:32built out that said you know we
59:34recognize that that is not exactly
59:37conclusive at this point in time I think
59:39you'll see in our clean heat plan you
59:40know our view is generally that we need
59:42to utilize all the tools in our toolkit
59:45which can certainly include
59:46electrification but we we take the view
59:50that we need to leave room for
59:52um the use of cleaner molecules and what
59:55we're suggesting when you think about
59:57things like safety Investments and
59:58rehabilitations and things like that
1:00:00within our gas Capital budgets
1:00:02we want to ensure that you know we can
1:00:05continue to provide safe and reliable
1:00:07service and so there's this kind of
1:00:08challenge if you think about you know
1:00:09the propensity of electrification versus
1:00:12the need for system investment it's our
1:00:14view that the gas system is going to
1:00:17take it's going to have it's going to be
1:00:19long enduring and even with you know
1:00:21call it
1:00:23a subset of our customers which want to
1:00:25proactively Electrify which the company
1:00:28is very supportive of they're still
1:00:30going to need there will still be a need
1:00:32to operate in an integrated gas system
1:00:34and so we don't really take the view
1:00:37that's quite so linear as you know
1:00:39there's there's just one customer at the
1:00:41end of the street so to speak and then
1:00:42that any investment in the
1:00:43infrastructure Upstream of that is moot
1:00:47if that customer wants to Electrify
1:00:49since the system is completely
1:00:51integrated
1:00:52um you know we need to balance avoiding
1:00:56or mitigating risk across our system
1:00:57because we do contemplate that there
1:00:59will absolutely be customers on our
1:01:01system for many many decades to come
1:01:04that said I think another key attribute
1:01:06of you know thinking about you know the
1:01:08cleaner molecules is an option for
1:01:10decarbonization is the customer impact
1:01:12piece of it and one of the strengths
1:01:15that we view
1:01:16um of that as a strategy to pursuing
1:01:18from the decarbonization is is from a
1:01:20customer impact point of view the need
1:01:23to exchange or replace appliances is is
1:01:26not as great as with electrification and
1:01:28we think that that's a key strength to
1:01:31leverage when you contemplate
1:01:33electrification there are certainly
1:01:35customer out of pocket costs which which
1:01:37are warranted and so I think there's
1:01:38kind of a balance there between
1:01:39incremental Electric
1:01:42infrastructure costs customer out of
1:01:44pocket costs versus gas system
1:01:46investment costs and you know call it
1:01:49lack of customer out of pocket costs so
1:01:51again I would just reinforce you know
1:01:53the company's technology agnostics we're
1:01:56happy to support our customers who want
1:01:59to Electrify but uh in simplest terms
1:02:02our view is that we need to maintain the
1:02:04gas system and we do think that it you
1:02:07know long-term clean molecules will
1:02:08emerge as as a winning strategy for our
1:02:11customers
1:02:13I like to say I'm not trying to
1:02:16pre-judge other than totally take your
1:02:18point that we're sort of at the early
1:02:20stages of both paths and don't know
1:02:24what's going to ultimately prove out but
1:02:26uh as you seek cost recovery on you know
1:02:32initial Investments to prove out either
1:02:34path if you could just
1:02:36continue to show you know the long-term
1:02:39business plan or economic case for
1:02:42customers
1:02:44it's just uh there I think there's power
1:02:47in that analogy where we were willing to
1:02:49pay more for wind and solar to start
1:02:51with at relatively small volumes because
1:02:54there was
1:02:55a vision that it could eventually be
1:02:58cheaper
1:02:59as we trying to you know Implement
1:03:02something in the natural gas industry
1:03:04along similar lines just keep that
1:03:06customer you know and I'm sure you're
1:03:08looking at the cut at the company's
1:03:10business case but look at the customers
1:03:13economic case as as well and I I just
1:03:17thought there was real power in that
1:03:19analogy
1:03:21um so I don't know if you have any
1:03:23comments on that
1:03:26none other than just agreement with you
1:03:29chairman blank I think you're I think
1:03:30that's accurate I think we want to take
1:03:32up a practical approach to decarbonizing
1:03:35in our state and I think you know if I
1:03:36can offer an illustrative
1:03:38um you know I think a lot of this will
1:03:40end up being Market driven and again I
1:03:42would you know I'll
1:03:44stand by you know the company's
1:03:45commitment is to support our customers
1:03:47and and we're certainly not going to
1:03:49stand in the way of any any customer
1:03:50that wants to Electrify we're all behind
1:03:53that I think you'll find in the clean
1:03:54heat plan once you know for lack of a
1:03:57better term we spend more time with that
1:03:58together you know working with
1:03:59submission I I hope and think that
1:04:01you'll see that we're offering
1:04:04um a number of plans which are not
1:04:06exclusively gas only focused we take a
1:04:09very hard look to Lexington
1:04:12um through multiple dimensions in the
1:04:14clean heat plan and so I agree acetamine
1:04:16point I think we we take that view and
1:04:19we agree with you
1:04:21uh thanks for that I
1:04:30was that the uh company used a low
1:04:33customer growth forecast of point eight
1:04:36percent
1:04:37and I guess that didn't seem like uh
1:04:40much of a difference from the reference
1:04:42case and just wondering if you'd be open
1:04:45to sort of a I don't know what you want
1:04:47to call it a low low forecast with
1:04:49meaningfully slower customer growth
1:04:52perhaps because of the potential for
1:04:54beneficial electrification so
1:04:57just wondering if we could run a zero
1:04:59percent or a negative one percent future
1:05:01future customer growth forecast uh we
1:05:05asked for something like that in the gas
1:05:06Ray case and you know maybe it's in the
1:05:08clean heat plan
1:05:10um I haven't fully engaged that but any
1:05:14thoughts on that would you be open to
1:05:15looking at a low low forecast and just
1:05:19you know again to the extent reasonably
1:05:21uh practicable I'm not
1:05:24trying to suggest you know huge
1:05:27administrative burden but just just
1:05:29trying to broaden the thinking
1:05:32um you know as we move forward through
1:05:35this process is there any thoughts on
1:05:37that Mr Martz
1:05:40sure and and chairman blank I apologize
1:05:43at least for for me on my side you broke
1:05:45up at the early part of your question
1:05:46but I think I got the majority of it
1:05:48please correct me if I'm missing a part
1:05:50of your question
1:05:52um in regard to uh the growth rate
1:05:55sensitivities uh we're certainly open to
1:05:57that and we just know that you know
1:05:59there wasn't specific guidance in the
1:06:01gift other than you know development of
1:06:03the low high and the reference case
1:06:05um I personally can't attest to all
1:06:08facets of our forecasting process and in
1:06:10other words I'm not I'm not the expert
1:06:13um however you know my general
1:06:14understanding is that you know our our
1:06:17low reference in High cases are based on
1:06:19actual
1:06:21um you know customer you know basically
1:06:24backward looking
1:06:26um
1:06:27usage and and adoption figures so it's
1:06:30in other words it's grounded in in real
1:06:33life we do contemplate forward clicking
1:06:36policy in in our long-term forecast as
1:06:38well so we're endeavoring to take on
1:06:40that challenge I think
1:06:42um you know forecasting in and of itself
1:06:43is a very challenging uh practice and
1:06:46we're certainly not you know attempting
1:06:48to represent it as perfect but we are
1:06:50taking on the view of long-term policies
1:06:53in our forecasts
1:06:55um so you know if we wanted to work with
1:06:57this mission on different growth rates
1:06:59um uh we're certainly open to that uh if
1:07:02there's a view that you all have we can
1:07:04certainly evaluate that
1:07:06um I would also note that I think in
1:07:09that same section of our of our gas
1:07:11infrastructure plan on the next page one
1:07:14thing that we did offer as well is kind
1:07:16of a call a capital sensitivity to the
1:07:19growth rates and one point I would like
1:07:21to make is that there's certainly you
1:07:24know some project classifications and
1:07:27categories which are are uh correlated
1:07:31highlighted growth rates as an example
1:07:32obviously capacity expansion
1:07:35um you know it correlates to that you
1:07:37know almost 100 and it's simple
1:07:39illustrative we have an area of our
1:07:40system which you know is experiencing
1:07:42new development and we have
1:07:45um you know
1:07:47home builders and developers who are
1:07:49requesting natural gas service right
1:07:52that can certainly look like a higher
1:07:54growth rate part of our system and given
1:07:57our obligation to serve right that's
1:07:59going to tailor investment upwards um
1:08:01you know we have an obligation to serve
1:08:03those peak hour capacities and I think
1:08:04we've spent a lot of time with this
1:08:07Commission on how our planning processes
1:08:09work we're certainly happy to take
1:08:10questions on that this morning as well
1:08:12however
1:08:14what I wanted to get to is that there
1:08:16are other parts of our budget which are
1:08:18really not driven by throughput or by
1:08:20Peak capacity needs and I would say a
1:08:23lot of that really is in our safety our
1:08:25asset health and our liability projects
1:08:27you know where our federal obligations
1:08:30to meet him so requirements for you know
1:08:32safe pipeline operating practices
1:08:35in simplest terms the company is
1:08:37agnostic if the pipeline throughput you
1:08:40know is say 100 deck of terms and
1:08:42there's growth and it grows up to 150
1:08:44decade firms the obligation to mitigate
1:08:47risk on that pipeline or Remains the
1:08:49Same for us so that's not to say that
1:08:51we're not cognizant of and sensitive to
1:08:53customer rates we certainly are I'm just
1:08:57providing the delineation or our view of
1:08:59capacity of system system expansion
1:09:01versus you know Baseline safety and
1:09:03asset Health reliability Investments
1:09:06um so in conclusion though chairman
1:09:08blank we are certainly happy to to work
1:09:11with you all on additional sensitivities
1:09:14I appreciate that and again just uh uh
1:09:17you know we're moving we're trying to
1:09:20move forward in good faith uh uh I
1:09:24appreciate you fully complied with the
1:09:26rules I'm just struggling to you know
1:09:30get the questions that are getting
1:09:31raised uh addressed you know in a
1:09:35practicable uh administratively
1:09:38reasonable way
1:09:40um so if you would be willing to look at
1:09:42a you know a lower gas or you know
1:09:45forecast and maybe you just even if it's
1:09:49qualitative give us a sense of what that
1:09:53um
1:09:54you know what type or uh amount of uh
1:09:57Capital costs I could avoid that would
1:09:59be really helpful and uh maybe we'll
1:10:02meet on Wednesday or in the future to
1:10:05see if we can collectively give more
1:10:07guidance on that
1:10:09um I guess the only other thing I had
1:10:11was to just follow up on your example of
1:10:14the
1:10:15um obligation to serve and the new
1:10:17development you know I I I get it that
1:10:20we have an opportunity a collective we
1:10:22have where you have an obligation to
1:10:24serve
1:10:25um
1:10:25but uh just urge you to think about
1:10:30um how that's priced I don't know that
1:10:32you have an obligation to serve an
1:10:34average system costs if new development
1:10:36is imposing significant uh costs on the
1:10:40whole system
1:10:41you know there may be ways of reflecting
1:10:44that in the economics of that decision
1:10:46to use gas versus Electrify that um
1:10:50particularly personally interested in
1:10:53pursuing
1:10:55um you know you know at average cost
1:10:57everybody probably wants natural gas but
1:11:00if the true cost to the system of that
1:11:03incremental
1:11:05development was included you know maybe
1:11:07you land in a very different spot and
1:11:10that's probably beyond the scope of this
1:11:13particular conversation but just I just
1:11:16keep
1:11:18bringing that forward because I I
1:11:20understand the obligation to serve but
1:11:22it's not an obligation to serve at
1:11:24average cost we're not obligated to
1:11:26subsidize new development which I think
1:11:29may be a factor in a in a number of
1:11:32these situations and it's something that
1:11:34the legislature has asked us to look at
1:11:37so
1:11:38um I don't know any final thoughts on
1:11:41that Mr Martz before I turn it over to
1:11:43commissioner plant
1:11:46sure yeah thank you for the question uh
1:11:48chairman Blake you can certainly
1:11:49understand where you're coming from you
1:11:50know I think that's something we're
1:11:51looking hard at in review of our line
1:11:53extension policies I think that's kind
1:11:55of the main thing that you're driving at
1:11:56if if I can be so forward I would
1:11:58suggest there's also another dimension
1:12:00of that as well which is also looking at
1:12:04and working with customers to produce
1:12:06Peak capacity needs and my hope and my
1:12:09new capacity is that we can kind of you
1:12:11know call it further blend our electric
1:12:13and gas planning practices such that you
1:12:16know we don't have to take you know call
1:12:18it the Stark view of planning for the
1:12:20peak hour you know worst weather
1:12:22conditions our hope is that we can start
1:12:24to contemplate further Technology
1:12:25Solutions on the gas side that can avoid
1:12:28some of those Peaks because I think
1:12:30that's generally especially in the
1:12:31capacity expansion category of our
1:12:34budget that's that's the most
1:12:35commensurate of customer growth so
1:12:37that's kind of where my organization is
1:12:40really driving towards is sharing
1:12:42Lessons Learned and and driving for you
1:12:45know not just the economic piece of wine
1:12:47extensions and and system growth but
1:12:50also reducing peak hour capacity and
1:12:52would just note that specifically the
1:12:54companies investing in increased
1:12:56organizational capacity in this space
1:12:58specifically around non-pipeline
1:12:59alternatives
1:13:01um you know it's been an evolution I I
1:13:04want to say I think
1:13:05we're one of the first gas ldcs to have
1:13:08uh a non-pipeline alternative process
1:13:10which we proactively chose to Embark
1:13:13upon several years ago so we were one of
1:13:15the first to do that uh it's been in
1:13:17evolution since that I think we're
1:13:18learning with with each non-pipeline
1:13:20alternative as well and you know my
1:13:23personal goal through this is that we
1:13:25can start to apply you know the MTA
1:13:27framework
1:13:28um
1:13:29to better avoid you know gas capacity
1:13:33expansion projects uh while still
1:13:35serving our customers at the same time
1:13:36so I think there's multiple multiple
1:13:38Dimensions there uh we're happy to look
1:13:40at that with you all um through all
1:13:42those dimensions and certainly hear you
1:13:44on the line extension the economics
1:13:46piece
1:13:47well and just want to say it's uh music
1:13:49to my ears to to hear you not just limit
1:13:52it to line extension but uh add in the
1:13:56uh you know the the broader capacity uh
1:14:00Edition arguments it's not just putting
1:14:03a pipe to that customer it's like you
1:14:05know what does it mean uh for the rest
1:14:07of the system including you know broader
1:14:10increases in Peak day uh design demand
1:14:13so uh
1:14:15appreciate the the broader perspective
1:14:18and and look forward to uh continuing uh
1:14:21the dialogue
1:14:23um that commissioner plant uh uh
1:14:28anywhere you'd like to take it including
1:14:31uh bringing up commissioner Gilman if
1:14:34that's what you'd like well first is my
1:14:36my microphone's working okay now it is
1:14:39okay great thanks
1:14:41um and thank you very much uh Mr March
1:14:44it's uh I appreciate the uh
1:14:48the the challenges of the this first uh
1:14:51Gip and we're all kind of figuring out
1:14:52uh where the limitations are and where
1:14:55uh the opportunities are within it
1:14:58um and you mentioned uh briefly in your
1:15:01discussion with chairman blank the
1:15:03backward looking modeling for the the
1:15:05Gip and I'm wondering if historical
1:15:07modeling
1:15:09is considered by the company to be the
1:15:11most appropriate strategy recognizing
1:15:13that you know we've got
1:15:16dsmbe filing
1:15:19um we've got the Erp we've got the clean
1:15:21heat process
1:15:23um
1:15:24which is obviously changing the
1:15:27changing the the entire system going
1:15:30forward
1:15:32um did the company evaluate the benefits
1:15:36of of trying to project the impacts of
1:15:38those various different policies
1:15:40uh on the gas uh infrastructure system
1:15:44as opposed to looking at a historical
1:15:46modeling
1:15:49sure thank you for your question
1:15:51commissioner plant and I apologize if I
1:15:53misspoke
1:15:54um it certainly wasn't intended to
1:15:56represent a historical or backwards
1:15:58looking forecast only uh I would say
1:16:01that the best way I've describe it is a
1:16:03it's a blended forecast right so we rely
1:16:05on on actual uh customer both usage for
1:16:09a sales forecast as well as demand
1:16:12forecast based on
1:16:14you know meter meter growth as well
1:16:16however it's both a historic look back
1:16:19but we do contemplate specifically new
1:16:22policies and programs which are layered
1:16:24on top so you know beneficial
1:16:26expectation DSM Etc are all additions
1:16:29and and essentially Evolutions that
1:16:31we've added onto our forecast that we've
1:16:34presented in the give
1:16:37so we're looking at both okay thanks for
1:16:40that I'm having
1:16:43um some difficulty trying to understand
1:16:44that you've you've projected in the GIF
1:16:47um a growth
1:16:50um you know looking forward your period
1:16:53is I I understand 23 to 28 so that you
1:16:58know in terms of emissions standards we
1:17:01have a 25 uh four percent that we're
1:17:04targeting and then also uh uh 30 uh 22
1:17:08so you're not quite getting to the 22
1:17:10but you're getting pretty close when you
1:17:12get to 28. and what I'm trying to
1:17:15understand is how
1:17:18uh does a does growth in the give sort
1:17:23of square with these larger levels of
1:17:27emissions reductions that are
1:17:29contemplated by the statute
1:17:33sure so you know again would would
1:17:36emphasize that you know there's
1:17:38certainly a little bit of a timing
1:17:40challenge here right with
1:17:41the gifts uh going in Prior sorry before
1:17:44our clean heat plan I think a lot of
1:17:46that synthesis
1:17:48um occurs between both the gift and the
1:17:51clean heat plan and I think the the
1:17:52emissions reduction targets which you
1:17:54specifically mentioned
1:17:56um we address those
1:17:57um
1:17:58head on through our clean heat modeling
1:18:00that we've done
1:18:02um and and have presented or sorry filed
1:18:05in the last two weeks or here or so in
1:18:08terms of kind of forward-looking I think
1:18:09that's exactly our job is to start to
1:18:11synthesize more of
1:18:13policy driven beneficial electrification
1:18:16and and DSM into our forecast and so we
1:18:20do have an initial View at
1:18:23um you know how policy driven
1:18:25decarbonization is impacting our
1:18:27customer growth growth rates that is
1:18:29reflected in the table that we've
1:18:31provided in gift however I don't think
1:18:33that that's certainly a static View and
1:18:35I do think that that will will continue
1:18:37to evolve if the company works on that
1:18:39the other thing that I would
1:18:42um
1:18:43say is that a lot of the decarbonization
1:18:45efforts
1:18:47I think are going to be primarily
1:18:49focused on throughput rather than e
1:18:50capacity and when you think about our
1:18:53capacity expansion projects you know the
1:18:56vast majority of emissions are really
1:18:58coming from we'll call it day-to-day
1:19:00usage of the gas system that's the
1:19:01throughput piece whereas when we
1:19:03contemplate Peak capacity that's the
1:19:06system demand side of things which is
1:19:08you know the the shorter duration uh you
1:19:11know peak times on the system where we
1:19:14have to ensure that we have adequate
1:19:15infrastructure to to serve our customers
1:19:19so I think there's kind of a difference
1:19:20there between throughput and Peak
1:19:23capacity modeling we do contemplate and
1:19:26expect that
1:19:28you use the term beneficial expectation
1:19:30I would just say electrification more
1:19:32broadly as well as something he as well
1:19:34as as DSM we do expect that those all
1:19:39those policy measures will over time
1:19:41drive down gas through place
1:19:46I understand and does that decrease in
1:19:48gas throughput then
1:19:50is that reflected in
1:19:53um the level of Investments
1:19:55to the gas to the existing
1:19:58infrastructure
1:20:02well I think that's something that we've
1:20:03got to work on and and evolve you know
1:20:06that that I think when you look at the
1:20:09regulation requirements of a gas utility
1:20:12again kind of pressing on this the
1:20:14majority of our gas capital budget is
1:20:17not
1:20:18that doesn't correlate to throughput per
1:20:21se so if you think about like simsa and
1:20:23Dot safety regulations again going back
1:20:26to my illustrative
1:20:27the policy and the regulation is
1:20:30agnostic too if it's 50 decadence throw
1:20:32into the pipe or 100. so I think that's
1:20:34something that we'll have to contemplate
1:20:36and work with this Commission on is kind
1:20:38of
1:20:38bifurcating those further because you're
1:20:41asking the questions directly you know
1:20:43should we expect gas Capital to
1:20:46to reduce exactly commensurate with
1:20:49sales reductions and I would say that
1:20:51that's certainly one part of it and we
1:20:53do hope that that can be true I hear
1:20:55commissioner blanks loud and clear on
1:20:57the kind of customer economic side of
1:20:59things
1:21:00but I don't think it's as simple to
1:21:01broadly expect that you know safety
1:21:04safety related investment reliability
1:21:06investment NASA Health investment is
1:21:09completely alleviated by declining Gap
1:21:12throughput
1:21:13and and again throughput's the main
1:21:15driver for the emissions
1:21:17do you see overall a reduction in the
1:21:22number of uh customers or do you see
1:21:26um gas customers continuing to increase
1:21:30over time
1:21:31even in light of the various different
1:21:34electrification
1:21:36preference
1:21:40um some understand your question
1:21:42correctly commissioner plant and I
1:21:43apologize this is a little challenging
1:21:45to hear you're asking do we expect
1:21:48um meter growth to decline uh
1:21:52commensurate with policy yes
1:21:58I don't believe that we have that view
1:22:00fully developed yet I'm not prepared to
1:22:02speak on that this morning
1:22:04okay thank you
1:22:06um I was wondering in your in your
1:22:08evaluation of the cost analysis of the
1:22:11non-pipeline alternatives are you
1:22:13incorporating uh savings that are
1:22:16associated with the the federal
1:22:18incentives Ira specifically
1:22:23sure so in regard to our our mpas and in
1:22:27specifically the economic side of that
1:22:29you're asking are we you know capturing
1:22:31the impact of
1:22:32a federal Ira incentives correct yes
1:22:37sure so I'll ask my colleague either Mr
1:22:40schonheider or Miss Grace Jones to take
1:22:44that question on
1:22:48hello Miss Jones
1:22:51oh still still not coming through
1:22:58all right happy to do so art can you
1:22:59hear me okay now
1:23:02all right thank you
1:23:03um so in regards to the cost benefit
1:23:05analysis for the non-pipeline
1:23:07alternative portfolio we did not at this
1:23:09time include any incentives that would
1:23:12be offered through either state or
1:23:14federal
1:23:15regulations we focused primarily it was
1:23:18a utility cost test analysis focusing on
1:23:22the program costs associated with
1:23:24providing incentives to our customers in
1:23:26order to enhance or increase the amount
1:23:28of customer purchases
1:23:31so it makes it kind of difficult to
1:23:35to figure out how this is going to sort
1:23:38of apply in real life if if you know
1:23:41there's a a substantial investment on
1:23:44the part of the federal government
1:23:46um coming to customers but we're not
1:23:48considering that as a part of
1:23:51of uh you know overall adoption I mean
1:23:56how do how do we square that as a
1:23:58commission
1:24:01fair question absolutely and I do think
1:24:03that it's safe to say that any federal
1:24:06incentive or state level incentive will
1:24:08have a positive impact on the adoption
1:24:10level one would hope at least however
1:24:12those are those are still it's unclear
1:24:14as to how that will actually increase
1:24:17the amount of participation and there's
1:24:19a lot of requirements associated with
1:24:21those particularly if you are a end of
1:24:23life of equipment you might be eligible
1:24:25for this but it's unclear as to how it
1:24:27might participate with the customers if
1:24:30they are not at end of life of equipment
1:24:32they're choosing to convert over to
1:24:35electric service premature at the end of
1:24:36life
1:24:38and I guess I would ask Mark if there's
1:24:40anything else that you'd like to um
1:24:46thank you for for asking I think a
1:24:49couple other points and and to Grace's
1:24:51Point nobody knows exactly how it's
1:24:54going to play out
1:24:55um one point though is in the
1:24:58Ira legislation the tax credits as well
1:25:01as the upcoming rebates there's no
1:25:04requirement to fully Electrify and so
1:25:07much of the equipment that will likely
1:25:09be put in place will not actually affect
1:25:12the the peak gas demand now insulation
1:25:15yes but the heat pumps if they are not
1:25:18fully electrified so if they are a dual
1:25:20fuel system that won't actually help the
1:25:22gas constraint that we have
1:25:24uh the second piece is
1:25:27elaborate a little bit on what Grace was
1:25:29talking about on end of life versus a
1:25:33replacing a working piece of equipment
1:25:35um in these targeted demand areas in the
1:25:38areas where we need to reduce Peak
1:25:40capacity the penetration rate we need so
1:25:44the number of customers they need to be
1:25:48able to actually eliminate or defer the
1:25:52capital investment is higher than the
1:25:56amount of customers whose systems will
1:25:58be failing on their own and would be up
1:26:00for a replace on burnout and so the and
1:26:04the reason that's important is the
1:26:06amount of money that will motivate a
1:26:09customer to Electrify a system when the
1:26:12system has already failed so they have
1:26:14to make an investment already let's say
1:26:16they have to spend either 10 000 bucks
1:26:18on
1:26:19a new furnace or we could incentivize
1:26:23them to spend 20 000 on a heat pump
1:26:26that's a smaller incremental investment
1:26:28right and so if it's only a ten thousand
1:26:31dollar incremental investment the impact
1:26:33of IRA funds or frankly our program
1:26:36rebates is much greater but when we're
1:26:39talking about npas and specific capacity
1:26:43constrained areas we have to go past
1:26:45those customers that whose equipment is
1:26:47at end of life and we actually have to
1:26:49get customers with perfectly good
1:26:50working equipment to replace it and so
1:26:53it's that then it's that full twenty
1:26:55thousand dollar replacement just for the
1:26:57heating system and the the amount of the
1:26:59IRA funds whether it's the 30 tax credit
1:27:02or potentially rebates even coupled with
1:27:06company program rebates they have to be
1:27:08much larger to motivate that decision
1:27:19plan or release
1:27:21models a lot of different
1:27:23electrification Pathways and we
1:27:25certainly have the IRA impact squarely
1:27:28modeled in our electric station uh
1:27:31scenarios in the clean heat plan to
1:27:33Mark's point you know there's certainly
1:27:34other iterations of that that we can
1:27:36evaluate you know which would have gone
1:27:37to like deeper cuts into the customer
1:27:39out of pocket costs as a form of
1:27:42creating that incentive so I just wanted
1:27:43to note that there's another uh Place
1:27:46interesting heat plan where we have
1:27:47discussion on this
1:27:49great thank you for that and that you
1:27:52know sort of comes to the I understand
1:27:54that you know I mean we're only a year
1:27:55out from
1:27:57uh Ira implementation and we're you know
1:28:00um you know sort of trying to imagine
1:28:03what the impact of of these uh
1:28:07um incentives and programs are going to
1:28:09be
1:28:10having you know a range of maybe
1:28:13um
1:28:14modeled assumptions I think would be
1:28:17helpful if it's you know if it the
1:28:19impact is this percent or that percent
1:28:22um then we could see what what that
1:28:24actual impact would would be on the
1:28:26system but having having no impact isn't
1:28:30it it doesn't help too much because we
1:28:33know there will be some impact you might
1:28:35not know exactly what the percentage is
1:28:36but uh it would be good to have that
1:28:40um in on in line of the mbasa and Mr
1:28:44Martin I think you mentioned something
1:28:46about
1:28:47um you think a lot of this will be
1:28:48Market driven and I I wonder if the
1:28:51company considered
1:28:53um uh or has
1:28:56um put out inquiries into the market
1:28:59around competitive solidifications for
1:29:02the non-pipeline alternatives
1:29:07foreign
1:29:20different views of incentivized
1:29:22electrification I would just know that
1:29:24you know that's of extreme importance to
1:29:25the company not just because of the gas
1:29:27Capital impact but we also really have
1:29:29to start understanding the electric
1:29:30infrastructure impact as well
1:29:33um because you know at this point in
1:29:35time we're still evaluating fully what
1:29:37that would look like but I just wanted
1:29:38to note that that is another implication
1:29:40of electrification is considering you
1:29:42know our service requirements to those
1:29:44customers and what the investment needed
1:29:47in distribution transmission and
1:29:49generation assets would be in order to
1:29:50serve electric heating needs
1:29:54so moving on to your second comment and
1:29:57question
1:29:58um
1:30:03excuse me for a second here
1:30:05um
1:30:06can you repeat that
1:30:09uh yeah I was just asking about whether
1:30:12or not the company is spoken with the
1:30:15industry around uh competitive
1:30:17solicitations of of MPA
1:30:21Solutions
1:30:22whether that would be
1:30:25sure at this point in time we we haven't
1:30:27fully contemplated committed this
1:30:29solicitations
1:30:30um I would note though that we have
1:30:32specifically brought on a third party
1:30:34through competitive solicitation process
1:30:36to help us evolve and improve upon our
1:30:40MPA process as well as our our uh our
1:30:43modeling around npas but we haven't
1:30:46specifically gone out to Market that
1:30:48said we also haven't really seen
1:30:51um many solution providers you know
1:30:53specifically show up in the space of
1:30:55npas
1:30:56we recently did a competitive
1:30:59solicitation for nwas and we're still
1:31:02working through the
1:31:03results of that solicitation and and
1:31:06their conclusions
1:31:07more generally though as we work with an
1:31:09industry in various technology providers
1:31:11you know as an example we we work and
1:31:13partner with nrel Colorado School of
1:31:16Mines Boulder Colorado State University
1:31:19and others we certainly have done a lot
1:31:22of you know I'll call informal Market
1:31:24testing around MTA solutions that we can
1:31:27contemplate and potentially bring into
1:31:30our internal modeling so we have
1:31:32different ways that we're engaging with
1:31:34the market today
1:31:36thank you
1:31:39um and and it sounded from the from the
1:31:42gift that the company's not implemented
1:31:44yet any type of um Advanced monitoring
1:31:47technology he says it was contemplated
1:31:49by the statute recognizing that it's not
1:31:52a a well-defined uh term but uh that
1:31:58rather you kind of rely more on manual
1:32:00uh
1:32:02checking and in your in your monitoring
1:32:05is that something that you're looking at
1:32:07expanding in terms of
1:32:10um technological capacity for uh remote
1:32:13monitoring or one of the other Advanced
1:32:16monitoring sort of Technologies
1:32:19um
1:32:20in order to identify
1:32:22those places where it would be necessary
1:32:26sure appreciate the question
1:32:28commissioner plant and I apologize I I
1:32:30don't have that
1:32:32uh submitted a memory can you help me
1:32:35understand or Point me back to the
1:32:37specific uh reference you're referring
1:32:39to in terms of remote monitoring
1:32:42yeah there's a component um I'll try and
1:32:45find it here in the in the gif there is
1:32:47a component of the statute where it
1:32:50talks about uh reporting on Advanced
1:32:54monitoring Technologies and I believe
1:32:56that the company in their
1:32:58um yeah
1:32:59stated that there they didn't have any
1:33:02specific Advanced monitoring
1:33:04Technologies but rather relied on mobile
1:33:07monitoring
1:33:09um and and those kinds of things I think
1:33:12you referred to it as more traditional
1:33:15methods of monitoring and I'm wondering
1:33:18if there's any
1:33:20um contemplation of implementing
1:33:22Advanced monitoring technologies that
1:33:24would provide more remote uh monitoring
1:33:27uh in the future
1:33:30sure appreciate the specificity and
1:33:33things determined plant so with that um
1:33:38you know I think I'll I'll use the
1:33:39blanket term uh Advance
1:33:42um leak monitoring inspection and we do
1:33:45talk about that specifically in our
1:33:46think heat plan
1:33:48um uh in fact Mr Ray Gardner's provides
1:33:52direct testimony on an advanced leak
1:33:54detection and thinking we intend to
1:33:57discuss it with you on that docket
1:34:00okay so that'll be more uh described in
1:34:03the clean Heat
1:34:04uh client doctor correct
1:34:07thank you very much appreciate it I
1:34:08don't have any other questions
1:34:11thank you commissioner plant uh Mr
1:34:14Goodman
1:34:15hi good morning Mr Martz and team
1:34:20um just want to start out following up
1:34:22on something that chair was asking about
1:34:23in terms of kind of the the proportion
1:34:25of total capital investment over the
1:34:28next several years that we actually see
1:34:30represented in the Gip and I think the
1:34:33general consensus and the elephant in
1:34:35the room is that it's a very small
1:34:37percentage being being represented in
1:34:38the Gip and so I wanted a better kind of
1:34:41thuff out the reasoning because
1:34:43certainly you have probably an entire
1:34:45bucket of project that falls below three
1:34:47million dollars right which are
1:34:49invisible as far as the gift goes but
1:34:52then I I'm getting this since there's
1:34:54this entire other bucket of projects
1:34:56that will be over three million dollars
1:34:58most likely but just are not necessarily
1:35:01formulated Enough by the company or
1:35:04specific enough by the company at this
1:35:06point in time to be included in the gift
1:35:08can you help me understand like
1:35:09proportionally where the capital
1:35:12investment that is happening that's not
1:35:15represented in the gift Falls with
1:35:16regard to like the different reasoning
1:35:21sure so I think the last question you
1:35:25had the last question you had there was
1:35:27kind of the proportionality you know in
1:35:28other words I think you're kind of
1:35:29looking for like where's where's the
1:35:31need of the budget and yeah specifically
1:35:33I would say that that's primarily in our
1:35:35system safety and integrity projects uh
1:35:38I do believe we provided a discovery
1:35:40response um around that where we provide
1:35:42more information
1:35:44um but if you think about you know
1:35:45what's in that bucket that those are our
1:35:48large you know pro programs of work
1:35:51um to use a more casual term you know we
1:35:53would have previously referred to it a
1:35:55lot of our PSA work which has kind of
1:35:57been rolled over into our system safety
1:36:00um uh budget category and so those would
1:36:03be you know I think State programs that
1:36:06you're all familiar with so transmission
1:36:07Integrity management programs or
1:36:09distribution Integrity Management
1:36:10Programs
1:36:12um our routine you know
1:36:14leak repair
1:36:16um excuse me our leak repair routines
1:36:18and things like that so from a
1:36:20proportional sense that's where the
1:36:22majority of the budget resides and to
1:36:25your to your first question or two
1:36:27around you know how the budget process
1:36:29works I do believe we offer
1:36:31pretty healthy discussion on how
1:36:33specifically our budgeting process works
1:36:35I would note that
1:36:37you know get by kind of the nature in
1:36:39which it's developed you know certainly
1:36:41first it's a snapshot in time it's not
1:36:43meant to be you know a perfectly static
1:36:46budget
1:36:47um but in general to respond to your
1:36:49question you're you're correct so we we
1:36:52maintain routines and programs of work
1:36:54and we may have a conceptual view of
1:36:59products that that do come as an example
1:37:01as I believe the commission knows you
1:37:03know we do uh distribution Integrity
1:37:05Management program modeling right so we
1:37:07look for our riskiest assets and so
1:37:09we'll have a conceptual view of what
1:37:11those assets might be but from a formal
1:37:14budgeting process we don't necessarily
1:37:15have exactly every single project
1:37:17developed
1:37:19um you know with specific reporting with
1:37:21specific
1:37:22um
1:37:22you know estimates and timelines and
1:37:24schedules things like that
1:37:27yeah so just to clarify it's not
1:37:29necessarily entirely a problem with the
1:37:31three million dollar limit although that
1:37:33could be part of the issue here with why
1:37:35so much capital is not showing up but
1:37:37rather that the companies processes do
1:37:40not kind of move all projects forward
1:37:43quickly enough for you all to be
1:37:45confident enough to have a timeline and
1:37:47a budget for specific projects therefore
1:37:49they just show up as a zero
1:37:52they just don't know in the gap
1:37:57sure
1:37:58um so I'd say we agree with with that in
1:38:01part I'd say there's drivers for that
1:38:03though and a lot of that is one
1:38:06it takes a while for us to identify
1:38:08specific scope of work so kind of going
1:38:11back to my you know concept level
1:38:13analogy right where say we have a dimp
1:38:15model and we know that these were the
1:38:16top say three riskiest pipeline assets
1:38:19that we want to replace
1:38:20uh it takes quite a bit of work to
1:38:22develop that as a project and what I
1:38:24mean by that is you know what we might
1:38:25identify that that pipeline as the right
1:38:28one for us to replace we still have to
1:38:30work with you know municipalities in
1:38:32terms of permit timelines with the
1:38:34public in terms of
1:38:36um the acceptance of doing that
1:38:38remediation work and so we don't
1:38:40necessarily have this fully completed
1:38:42scope of work additionally we try to
1:38:44Endeavor to
1:38:46um
1:38:49feed our work in the most efficient way
1:38:51possible and so sometimes that means you
1:38:53know taking a more holistic look at the
1:38:55system
1:38:56um and concurrently pursuing you know
1:38:58multiple projects at the same time if
1:39:00there's you know a cost advantage to do
1:39:03so so there's a lot of emergencies like
1:39:05that
1:39:06um another example of how there are can
1:39:09be emergent drivers which don't allow us
1:39:11to resolutely identify the scope of a
1:39:13work excuse me scope of work
1:39:16um is we don't always necessarily have
1:39:18the exact mitigation method
1:39:21um in mind so again using the Integrity
1:39:23Management program as an example we
1:39:26might identify that there's uh you know
1:39:28say a pipeline asset built in 1960s
1:39:32they're a vintage and we'll identify
1:39:33that per our risk model it requires
1:39:36remediation however we're not
1:39:39necessarily at a point in a position to
1:39:41say okay we're just going to go replace
1:39:42the entirety that of that pipeline you
1:39:45know um as a capital project what we'll
1:39:48actually do is we'll go out there and
1:39:50perform field testing in the project and
1:39:51from that information you know being the
1:39:55best mitigation strategy which could be
1:39:57replacement but it could also be you
1:39:59know uh hybrid testing or other
1:40:01assessment methods so there's lots of
1:40:03different emergent drivers and methods
1:40:05that we use to land our Mass scope of
1:40:08work so I don't think it's as simple as
1:40:09just saying that
1:40:11there's just one routine and then
1:40:13whenever we feel like doing a project
1:40:15you know then it comes into scope
1:40:18okay so we wanted to contrast a little
1:40:20you you had said one of the main areas
1:40:22of investment is the psia or safety
1:40:25Integrity if we just go on TSA anymore
1:40:27or whatever
1:40:28um and and I just want to compare and
1:40:30contrast them of what we saw in
1:40:32preceding
1:40:3421a0071g which was the last psia related
1:40:38specific proceeding and in Mr lidigan's
1:40:42direct testimony and attachment Lal five
1:40:45which showed the pfia and post PSI
1:40:48estimated Capital expenses from 2019
1:40:51through to 2025.
1:40:53and I I sorry I didn't prep the anybody
1:40:57here to bring it up but I'll represent
1:40:59you that that table list expected psia
1:41:02and post psia Investments by program
1:41:04area from 2019 to 2025.
1:41:08um and it expressed some flexibility in
1:41:112025 which a little further in the
1:41:12future but not actually up through and
1:41:15including 2024 and it listed total
1:41:18Capital expenditures for safety
1:41:20Integrity related projects in 2023 as
1:41:24164.5 million dollars compared to 22.8
1:41:28million that we see in the Gap and in
1:41:312024 listed 164.5 million compared to
1:41:343.1 million dollars that we see in the
1:41:37GIF the estimate for 2025 was 126
1:41:40million dollars and we see zero dollars
1:41:42represented in the Gap
1:41:45um so and I'll know that was from a 2021
1:41:48case so presumably you know we're a year
1:41:50and a half more into planning now so
1:41:52were there not specific projects already
1:41:56identified I mean I kind of thought a
1:41:58lot of the the fems or routine was to
1:42:00know your assets identify the highest
1:42:02risks rank them and then make a plan to
1:42:04address the highest risk projects so I'm
1:42:07a little unclear as to how now we feel
1:42:10like we're in a situation or I'm feeling
1:42:11communication that we're in a situation
1:42:13where the company is is not clear on
1:42:15exactly what uh safety related projects
1:42:18will be conducted even this year next
1:42:20year and that you're following
1:42:24sure so uh I will apologize it's a
1:42:27little challenging not uh being able to
1:42:29reference the specific
1:42:31um
1:42:32PSA report that you mentioned I think
1:42:34you're kind of looking for a higher
1:42:35level kind of more directional uh Fields
1:42:38like in 2021 the company was
1:42:40communicating a higher level of
1:42:41certainty about what projects would or
1:42:43should be completed on specific
1:42:45timelines than they are now which feels
1:42:47confusing to me
1:42:49sure
1:42:51um so you know if we want to get into
1:42:53detailed questions on TSA Investments
1:42:55specifically uh Mr Ray Gardner is
1:42:58available if we wanted to talk about
1:42:59that I think directly you're asking
1:43:01around you know kind of some of the
1:43:03differences in the tables that you're
1:43:05comparing perhaps between the last PSA
1:43:07report and what you seem to get I think
1:43:09the table that you're looking at in
1:43:10terms of of reported projects right you
1:43:13mentioned the zero dollar levels
1:43:16um that table represents the projects
1:43:18over and above the reporting criteria of
1:43:21gifts
1:43:22um it's certainly something that we're
1:43:24looking to evolve and provide more
1:43:26transparency into those CSA projects but
1:43:28given you know kind of the short
1:43:30timeline that we had to developed to get
1:43:32it was frankly pretty challenging for us
1:43:34to take out and extract you know every
1:43:36programmatic project that we have on our
1:43:39radar per se and try to provide that in
1:43:42a straightforward manner
1:43:43um so you're so you're right in the
1:43:45sense that you know we certainly have a
1:43:47requirement and we do in fact model our
1:43:49assets to identify those projects but we
1:43:51don't for many of those routine and
1:43:53programmatic categories we don't
1:43:55necessarily have exactly you know this
1:43:58mitigation method by this quarter of
1:44:00this year per se so that presents a
1:44:01challenge for us to you know to put it
1:44:04into one specific budget category and
1:44:07and budget year so I think that's kind
1:44:09of the discrepancy that you're seeing if
1:44:11you will is kind of how the programmatic
1:44:13budgets work which is it's by by and
1:44:16large you know the primary constitution
1:44:18of the safety system safety budget
1:44:21um versus the the fact that a lot of
1:44:23that's programmatic and routine work
1:44:25that does not yet have discrete projects
1:44:27identified
1:44:29how far into advanced does the company
1:44:31generally identify discrete safety
1:44:33Integrity projects and their Solutions
1:44:37sure so I'll actually ask them Mr
1:44:39Gardner to Trend in here these are our
1:44:42resident expert on Integrity management
1:44:43programs
1:44:47all right I'm just checking sound and
1:44:49everybody hear me okay yep
1:44:52so
1:44:53the uh
1:44:56the short answer is it depends but it's
1:44:59uh very much depends on the program of
1:45:01work that we're talking about so I think
1:45:03what Mr Martz referred to a lot is kind
1:45:06of the contrast these two challenges
1:45:09here so one is that you have
1:45:12um functionally programs of work that
1:45:14are budgeted and then discrete come out
1:45:16of that and so you know if you have the
1:45:19situation of like a mandatory relocate
1:45:21that's um commonly can be less than a
1:45:24year that you know ahead of time if you
1:45:27have a damp replacement project those
1:45:30are very commonly smaller projects so
1:45:33less than three million dollars
1:45:34and those are generally
1:45:37um
1:45:38generally five years out but they're
1:45:41generally smaller projects is we strive
1:45:44for like five years out to have a
1:45:46perspective and I think that's what we
1:45:48saw in our psia filings where we would
1:45:51try and list out some of those projects
1:45:53that we'd be doing specifically for
1:45:54dense and like temp assessments to get
1:45:58in front of those but those are again
1:45:59generally very small you know lots of
1:46:01very small projects
1:46:03um
1:46:05meop Replacements were seeking to get
1:46:07further ahead but because of the newness
1:46:09of that program
1:46:11it delays it but on and out on on the
1:46:14whole looking at the answer to your
1:46:16question is typically more one to two
1:46:18years that we are aware of those
1:46:22okay
1:46:24um thanks
1:46:25Mr Mertz
1:46:27um as was brought up in some of your
1:46:28opening discussion in the fall of 2022
1:46:32leadership of the company identified the
1:46:34likelihood of a major gas uh system
1:46:36expansion in the mountain region
1:46:39targeted increasing capacity for
1:46:41potentially a wide area of the mountain
1:46:44region
1:46:45um this project gets gets a little bit
1:46:47of commentary in the gift but does not
1:46:49appear as a project in the gift and just
1:46:52wanted any additional information as to
1:46:54the budget timeline and uh scope of that
1:46:58project and when that need shows up so
1:47:02that we could better understand the
1:47:03context for that project
1:47:07appreciate the question
1:47:09um
1:47:10Mr Goldman so the mountain system you
1:47:13know certainly on our radar as a project
1:47:15area that we've been you know
1:47:17contemplating and evaluating through our
1:47:19long-term planning processes for some
1:47:21time to appreciate the commission
1:47:22sensitivity
1:47:24um to you know proactively thinking
1:47:26about this uh were that that
1:47:28specifically is you know we certainly
1:47:30um
1:47:31uh we certainly
1:47:33are forecasting that we we have uh
1:47:36capacity challenges with that system
1:47:37today and we do anticipate that those
1:47:40will continue on into the future but I'd
1:47:43say this is kind of the call the the
1:47:47um
1:47:48the Nexus of where we intend to bring
1:47:51forward-looking Solutions into our
1:47:53planning processes so it's kind of like
1:47:54our the place that we're really trying
1:47:56to evolve you know first and foremost
1:47:58given you know the the nature of that
1:48:00system uh specifically what we have
1:48:02endeavored to do and what we what we've
1:48:05already started doing is
1:48:06um launching a very large and robust
1:48:09non-pipeline alternative project with a
1:48:12third-party consultant
1:48:14um we've actually had conversations with
1:48:16Mission staff as well and where we're at
1:48:19precisely say is is we're working
1:48:21through a series of external and
1:48:23Community stakeholder meetings in order
1:48:26to
1:48:27um be able to you know one kind of
1:48:29conduct primary research on on what
1:48:31customers are interested in in terms of
1:48:33their energy solutions and and what what
1:48:36they're looking for out of their out of
1:48:38the utility provider but then secondly
1:48:40is to also I ideate and come up with new
1:48:43proposals or new things that the company
1:48:44may have not previously thought of in
1:48:47order to bring that into our planning
1:48:49processes I can't say at this point in
1:48:52time it will
1:48:53necessarily fully alleviate on the need
1:48:56for capital investment but it's it's
1:48:58essentially our primary goal is to work
1:49:01with our customers to try to find ways
1:49:03to avoid investment where possible so in
1:49:06summary to your to your question you
1:49:08know we do contemplate that we'll
1:49:10continue to have a capacity challenge
1:49:13um now and into the near future we're
1:49:16mitigating that by bringing in
1:49:18um temporary compressed and liquefied
1:49:20natural gas Solutions so it's not to say
1:49:22that we're not honoring Our obligation
1:49:24to serve uh safely and reliably that's
1:49:27how we're compensating for that but what
1:49:29we want to do is essentially utilize our
1:49:31MTA process before we just come to you
1:49:33all with with the gas capital investment
1:49:35so we can show more meaningful Evolution
1:49:38on the process where we can essentially
1:49:40in simplest pieces say you know here is
1:49:43the research and work that we've done
1:49:45evaluating the needs of our customers
1:49:46here's the different solutions that
1:49:48we've looked at inclusive of both you
1:49:51know call it normal gas system
1:49:52Investments but here's all so you know
1:49:54hybrid Solutions which contemplates both
1:49:56and here's you know full NPA Solutions
1:49:59and then from there use that to
1:50:01scope the project that we would
1:50:04anticipate performing which which may be
1:50:06pipeline projects but they could also be
1:50:08the electrification projects or other
1:50:09things and then be able to present that
1:50:11whole package to you all so our timing
1:50:14is is
1:50:15uh my team were here they'd laugh I
1:50:17would tell you I want this as soon as
1:50:19possible
1:50:20um but it takes some time to work
1:50:21through the mpa process but I I imagine
1:50:23that we'll be able to wrap this up
1:50:26um in the coming year or so as we
1:50:28complete the mpa process
1:50:31when you see capacity challenges like
1:50:34that coming in the future because I kind
1:50:35of heard you say two things there's an
1:50:37existing capacity need I heard you say
1:50:39but that the company's working
1:50:41proactively like I guess to me in the
1:50:43future if the company is working
1:50:45proactively and part of what the Gip is
1:50:46targeted to do is see those capacity
1:50:48needs coming further in advance and kind
1:50:51of actuating NPA process if that seems
1:50:54appropriate further in advance before we
1:50:56even see the need and need to mitigate
1:50:58with kind of local sources so does that
1:51:01sound like where you're trending towards
1:51:03or do you think this is kind of a model
1:51:05uh program that you're doing now
1:51:10sure or I would say that you know it's a
1:51:12system that we've evaluated for some
1:51:13time and again it's it's not to say that
1:51:16looking at Solutions I think it's just
1:51:17the nature of the solutions that we're
1:51:19looking at currently we're willing to
1:51:20utilize short-term Solutions
1:51:23um which is to say that we're still
1:51:25looking for and trying to nail down the
1:51:26exact long-term solution but I don't
1:51:28think it's accurate to say that this was
1:51:30a reactive look that's what what's
1:51:33occurring on the system if if
1:51:36you contemplate the exact drivers for
1:51:38this the first thing I'd say is that
1:51:39we've seen asymmetric growth in the
1:51:41mountain communities in comparison to
1:51:43our system overall so you know this
1:51:45becomes you know partly a forecasting
1:51:48challenge if we were to take simply a
1:51:50system-wide looks and compare that to
1:51:52the mountains that would certainly uh
1:51:54put us into a poor position in terms of
1:51:56service because we're seeing growth
1:51:58rates you know well in excess of one
1:52:00percent in some of the areas in the
1:52:02Mountain community so that's kind of the
1:52:03first driver is the extreme growth that
1:52:06we've that we've seen But like I said
1:52:08we're willing to contemplate short-term
1:52:10Solutions while we work through the NPA
1:52:12process because what we want to do is
1:52:14try to Define you know the precise right
1:52:17long-term solutions that you know
1:52:20satisfies both our need to operate our
1:52:22Gap system safely and reliably but also
1:52:24works in tandem with our decarbonization
1:52:25goals as a state then you know I think
1:52:28primarily and fundamentally meet our
1:52:30customers needs and if we were to only
1:52:33react to our customers needs the reality
1:52:35is that that we have Mountain
1:52:37communities demanding Gap service and
1:52:40you know a normal course of business
1:52:41approach would be to Simply add
1:52:44infrastructure to meet those two
1:52:45capacity needs and what we're
1:52:46endeavoring to do is is different and
1:52:49evolutionary from that in terms of doing
1:52:51the research working with them to
1:52:53identify those needs and then
1:52:54contemplate Solutions together versus
1:52:56just making the investment
1:52:59okay thanks um and that's probably a
1:53:01good transition into load forecasting I
1:53:04want to talk about load forecasting for
1:53:05a little so I know commissioner plant
1:53:07asked about this a little bit but the
1:53:09company is essentially established a
1:53:11reference growth forecast for
1:53:14um
1:53:140.91 to 0.98 per year
1:53:18um for the next few years through the
1:53:20through the gift process
1:53:23um and
1:53:25um
1:53:25no the the commission lead out in rule
1:53:284731 which is under the clean heat plan
1:53:31rule section but referenced it from the
1:53:33from the git forecasting section some
1:53:35different forecasting criteria that
1:53:37should be um considered or included in
1:53:40growth forecasts including things like
1:53:42local building codes the presence of
1:53:44local or federal incentives
1:53:47um like commissioner plant was going
1:53:48through to understand the impact that
1:53:50might have on the growth forecast
1:53:51understanding the timing this year is
1:53:54little off but we see like the normal
1:53:56Cadence to be
1:53:57um so you don't have a clean heat plan
1:53:58in yet but
1:54:00um tell me a little more what went into
1:54:02the 0.91 to 0.98 percent a year growth
1:54:05in residential and if the company made
1:54:07any attempts to consider the factors
1:54:09that the commission listed in rule 4731
1:54:15sure so
1:54:17um
1:54:18specifically you know I think you're
1:54:21asked about you know the the requirement
1:54:23to evaluate other policy factors
1:54:25relative to forecast sensitivities
1:54:28um
1:54:29in both I think you're asking are you
1:54:31asking my pinky or just skip just make
1:54:33sure well for the gift I mean
1:54:35understandably after we get through the
1:54:37clean heat we'll have a forecast that's
1:54:39more or less approved coming out of that
1:54:42and then you know in the way I
1:54:44understand the process will work it's
1:54:45it's a bit iterative where some
1:54:47adjustments will be made from them but
1:54:48we'll have something to work with so
1:54:49this one came first I get it um we
1:54:52haven't done on the poor casting in
1:54:54clean heat but nonetheless the
1:54:55requirements are spelled out there in
1:54:57terms of understanding what the
1:54:59commission was looking for for
1:55:00forecasting so just trying to understand
1:55:02if if the company at all
1:55:05um considered the forecasting
1:55:07requirements listed 47.31
1:55:11um to take into account those local and
1:55:13federal policy impacts on growth
1:55:18sure so I think you you nailed it uh
1:55:20commissioner Bowman and I think you know
1:55:22first and foremost for this is
1:55:23definitely a little bit of a timing
1:55:24challenge
1:55:26um you know in terms of our forecasting
1:55:27processes and you know kind of
1:55:29synthesize you know getting final rules
1:55:31versus updating our forecast process uh
1:55:34to Mentor it with those requirements so
1:55:36I'd say you know it's just an ongoing
1:55:37theme it's certainly something that will
1:55:39we're open to to working with this
1:55:42Commission on and talking through
1:55:44through with you all
1:55:45um and certainly a space that we want to
1:55:47evolve uh with you with you so just know
1:55:49that you know that's certainly always on
1:55:51the table for us as we contemplate that
1:55:52with you
1:55:54um specific to the skip filing I think
1:55:56your initial question is predicated on
1:55:57the reference case the reference case is
1:55:59primarily a function of customer growth
1:56:03which in turn is a function of
1:56:04population growth so uh I'm certainly
1:56:07not the expert on all things forecasting
1:56:09but at a high level my understanding is
1:56:11it's those two primary pieces and what
1:56:15we would like to do and Endeavor to do
1:56:16you know not just heat that's why I
1:56:18asked the clarifying questions since we
1:56:20do contents like that there but as we
1:56:22think about updates to uh to this Skip
1:56:25and then also future gift proceedings uh
1:56:27I do think that we'll come back to you
1:56:29all with more robust evaluations
1:56:32um you know more specifically bringing
1:56:35in you know different policies and
1:56:37Market
1:56:38um
1:56:39Market factors into those updated
1:56:41forecasts
1:56:43so is it fair to say that what what we
1:56:45sorry
1:56:49it's fair to say in the gift that what
1:56:51we're seeing is forecasted customer
1:56:54growth or population growth with
1:56:57historical per customer usage and then
1:57:01further the low and high bands used the
1:57:04last 10 years lowest ever seen highest
1:57:07ever seen but that that is a historical
1:57:10only look not taking into consideration
1:57:12current policy changes
1:57:16sure so
1:57:18um
1:57:19from understanding the question
1:57:20correctly and I'll just try to break it
1:57:22apart kind of simple pieces so if you
1:57:24could think about table seven on page 37
1:57:27of our gift right you're kind of looking
1:57:29at the overall you know residential
1:57:31small commercial and combined
1:57:33residential and small commercial real
1:57:34estate
1:57:35like I said that's primarily a function
1:57:37of uh
1:57:39um customer account which influences
1:57:42meter growth and so that that is kind of
1:57:44like the driver to call it the number of
1:57:46customers that we expect to add onto our
1:57:49system
1:57:49that said that's not exactly how
1:57:53thank you very much for bringing up the
1:57:54attachment
1:57:55um or bringing up the gift so that said
1:57:58that's not exactly how it necessarily
1:58:00Works um from the perspective of heat
1:58:03capacity and so that's not exclusively
1:58:06just a historical look back to find the
1:58:08most conservative
1:58:10um number possible and if I can I would
1:58:13refer you all to page 17 figure 3 which
1:58:18provides kind of a process flow diagram
1:58:20of of the planning process and so the
1:58:23way that I fit that it works is when we
1:58:25evaluate
1:58:27um Peak capacity usage numbers they're
1:58:30very much I'd say they're very
1:58:32contemporary we tend to look at our most
1:58:34recent winter data to evaluate Peak
1:58:37customer needs so to the degree that you
1:58:40know there is electrification and DSM
1:58:42measures occurring within our customer
1:58:44base those would be
1:58:46um reflecting or those would be
1:58:48reflected in the T capacity numbers that
1:58:51we pull out of our stata systems
1:58:53um and that's what we utilize in in
1:58:55tandem with the meter growth numbers to
1:58:58evaluate what's the additional load
1:59:00that's going to come onto the system so
1:59:02it's kind of two pieces one is the
1:59:04population and thus meter forecast piece
1:59:07which is kind of bucket one and then
1:59:09bucket two is the peak usage per
1:59:11customer and that's based on the most
1:59:13recent
1:59:14um system usage figures
1:59:16is the peak usage per customer available
1:59:18somewhere in the gif
1:59:22uh I don't believe so
1:59:24is it available
1:59:27I mean I guess if you're saying in order
1:59:30to understand what the company is
1:59:32planning for in key capacity needs we
1:59:34have to essentially combine or have full
1:59:36view of these two factors and it seems
1:59:38we only have one of the factors
1:59:40presented in the kit for us to improve
1:59:42our understanding
1:59:44sure I I think it's certainly something
1:59:46you know we're happy to work with you on
1:59:48um and and commission more broadly
1:59:50um Mr Gilman so it's certainly not
1:59:53anything that we're trying to uh prevent
1:59:56discussion with you all I mean there are
1:59:58certainly some customer specifics you'd
2:00:00have to contemplate
2:00:02um highly confidential you know
2:00:04treatment status for specifically the
2:00:05usage of some of our um gas LDC
2:00:08customers that we serve but as a
2:00:11generality it's certainly something that
2:00:12we're willing to discuss with you all
2:00:14okay that feels really helpful for my
2:00:17perspective also in having read all the
2:00:19comments so far I I think there's some
2:00:21confusion around this when we just see
2:00:23growth what does that mean what is that
2:00:25representing and I think if the if the
2:00:27company could be
2:00:30um more open with what other assumptions
2:00:32are going into this in terms of the
2:00:34actual increase in increase per customer
2:00:36on Peak that would fill in a lot of the
2:00:39blanks that people are trying to figure
2:00:41out as far as how your forecasting is
2:00:42working here and if that's you know the
2:00:45most appropriate methodology for today
2:00:49sure yeah completely understand uh your
2:00:51your commentary and line of reasoning
2:00:53commissioner Gilman again would suggest
2:00:55you know we offer a high level view of
2:00:57this in the git when you when you look
2:00:59at page 17 and the figure that's up
2:01:01figure three here
2:01:03um also recalled I I believe we had a
2:01:06discussion with you all a number of
2:01:07months ago specifically on our gas
2:01:09planning processes so we're certainly
2:01:12open to discussing that
2:01:13um you know what I can say it is our our
2:01:16methodology is very industry
2:01:18um consistent um when you think about
2:01:20our probabilistic risk and design day
2:01:22methodologies we do use a software OEM
2:01:27bnb's Synergy software which is used by
2:01:30the vast majority of Gas Utilities and
2:01:32the way that that software and our
2:01:35planning teams look at you know
2:01:37disaggregating load and evaluating heat
2:01:39capacity is very industry consistent so
2:01:43happy to work with you all on what that
2:01:45looks like and to provide the
2:01:47transparency that you're seeking
2:01:49okay
2:01:52um
2:01:53since the next skip will occur after the
2:01:56first litigated clean heat plan and
2:01:58we'll be in some sort of normal cycle we
2:02:00hope
2:02:01um does the company anticipate that
2:02:03forecasting may look significantly
2:02:05different in its next gift
2:02:09in terms of including some of the
2:02:10factors that I listed that are listed in
2:02:13um rule 4731
2:02:15yes I I believe so and I I certainly
2:02:19hope so I think again that's kind of the
2:02:20exact disposition of the organization
2:02:22that I have the privilege of leading is
2:02:24to make those evolutionary steps
2:02:27um you know my My Hope Is that we can
2:02:29certainly do it
2:02:30fast enough and dynamically enough
2:02:32um in contemplation with this commission
2:02:34but with all also our customers as well
2:02:37um so certainly yes I do think that you
2:02:39know on future proceedings supposed to
2:02:41get them clean heat you know we'll see
2:02:42evolutions on our processes
2:02:45okay thanks for that
2:02:47um
2:02:48one more question about kind of timing
2:02:50of projects and what shows up in the Gap
2:02:52and kind of power of fines so on page 28
2:02:55and if it's not page 20 of the PDF it's
2:02:58page 28 of the plan so I don't know it's
2:03:01somewhere around 28. uh in the
2:03:04PDF sorry
2:03:05um but the company State stated that
2:03:08hopefully I got the page right here it's
2:03:11some 28. um further the 2028 Mead to
2:03:14East Longmont reinforcement and Fort
2:03:16Lupton uh compressor station projects
2:03:19were excluded at the cost estimates and
2:03:21project Scopes are still being refined
2:03:24and the estimated in-service dates are
2:03:26outside of the gift period so I'll be
2:03:29honest and I'm so sorry if I we uh
2:03:32somewhere we can't find but guarantee
2:03:34that's a quote from the plan
2:03:36um thank you I was a little confused by
2:03:40some parts of this first there's a part
2:03:42here that indicates that it's the
2:03:44company's impression that if an
2:03:46in-service date Falls outside of the
2:03:48gift the costs that are incurred during
2:03:51the get periods wouldn't be reported and
2:03:54and I just want to clarify is that the
2:03:55company's assumption that in-service
2:03:58needs to be within the planning period
2:04:01or any expenditures
2:04:05sure it would be helpful if we can find
2:04:07the exact language
2:04:10I'm also looking to have a hard copy
2:04:12here commissioner Gilman I'm also
2:04:13looking for that
2:04:15I tried to be consistent about if I was
2:04:18writing the uh
2:04:19can you uh just give me a couple of
2:04:22words I can well I don't know Lupton
2:04:25Mead
2:04:32is it possible it's on page 43 of the
2:04:34gift report I don't know what that is in
2:04:36the PDF
2:04:38possible my reference would be pretty
2:04:41far off
2:04:46sorry
2:04:52that is possible
2:04:56oh let's go to page I got it I got it I
2:04:59got it 38. did I say 28
2:05:02ended in eight sorry 38 of the document
2:05:05yup yup yup
2:05:07sentence before the graph
2:05:09further the 2028
2:05:11made to East Longmont
2:05:14um so I was a little confused by by just
2:05:17potentially mentioning that it's in
2:05:18service after the date so it's yeah
2:05:20after the period so it's not included
2:05:23is that the company's impression or is
2:05:25the company intent to include any
2:05:27expenditures in the gift period
2:05:30in the gift sure I understand your
2:05:34question do you mind give me just a
2:05:35second no go ahead quick look at this
2:05:37yeah
2:05:43yeah I can I'm sympathetic to what
2:05:47you're stating I think I certainly see
2:05:49how that could be a little bit confusing
2:05:51uh I I would say as a as a draw
2:05:53statement it's not like
2:05:55we're on trying to take like a hard and
2:05:57fast position on that per se in the
2:05:59sense of if there's not exactly a
2:06:03capital Edition or in service state
2:06:04within that period we're completely
2:06:06ignoring it if you will from the world
2:06:08if you have what I would suggest and
2:06:10again apologize if the language is
2:06:12misleading or confusing if you go to
2:06:15page 43
2:06:16of the actual document
2:06:24sorry you said 43
2:06:284343
2:06:30so it's 46 of the pedia got it thanks
2:06:33yeah
2:06:36uh speed table 11.
2:06:40so
2:06:41again I mean I can certainly see how you
2:06:43know this can has the appearance of a
2:06:45little bit of inconsistency I think
2:06:47without being able to take more time to
2:06:49specifically
2:06:51um you know read through it and think
2:06:53through it I think the language that you
2:06:56identified probably just suggesting that
2:06:58those projects weren't in the capital
2:07:00sensitivity
2:07:01um that was prepared in figure seven but
2:07:04it's not necessarily our our
2:07:07we're not attempting to you know prevent
2:07:10these projects from discussion so if you
2:07:12look at table 11 we do offer
2:07:15um
2:07:15uh tabular view of of me to eat Longmont
2:07:19as well as the Fort Lupton Professor
2:07:20station so you can see how those
2:07:22expenditures start in 2028 so that's
2:07:24kind of the first piece is we do mention
2:07:26them and the second piece that we're
2:07:28saying is that we just have not yet
2:07:30completed all of our governance
2:07:32processes to you know state that these
2:07:35are projects that we're fully committed
2:07:36to at this point in time they're frankly
2:07:38very early on in our stagecape process
2:07:40and so we what that means is we
2:07:42anticipate that one there could be
2:07:45pretty drastic shifts in timing for
2:07:48those
2:07:49um as well as costs as well the projects
2:07:51are frankly pretty immature so what that
2:07:53means is we have a completed you know
2:07:55boots on the ground sighting or land
2:07:57work we haven't talked to our Mechanical
2:07:59Contractors
2:08:00um
2:08:01um about you know specific cost for
2:08:03construction and things like that so
2:08:04these are just essentially on the
2:08:06horizon
2:08:08um as as things that were contemplated
2:08:09and so the other kind of tactical piece
2:08:12if you will is they're also outside of
2:08:14our internal budgeting processes as well
2:08:16so we don't have like a natural place to
2:08:18like necessarily pick them up but I
2:08:20didn't want to just to note that they
2:08:22are in our gifts okay just wanted to
2:08:24confirm that the company is not
2:08:26insinuating that's something that's in
2:08:28service after the gift even if expenses
2:08:30occur before
2:08:31gets to be excluded and it doesn't sound
2:08:33like that's the point correct okay no
2:08:36it's it's certainly not that Stark and I
2:08:38also believe as we continue to evolve or
2:08:41process the processing we'll have the
2:08:43opportunity to bring in more projects
2:08:45like these where
2:08:46um you know they're pretty early stage
2:08:48they haven't yet received full you know
2:08:50stage gate governance but we're at a
2:08:52point where we're prepared to at least
2:08:53introduce them as a concept level
2:08:55project as we kind of work them through
2:08:57the process right so I think what you
2:08:58guys would see in a gift perspective is
2:09:01say in year six there's a project that's
2:09:02kind of coming in and as we work on them
2:09:05to find out projects you guys will kind
2:09:06of see that product moving up in the
2:09:07give timeline
2:09:09okay
2:09:11um talking more about kind of project
2:09:12budgeting and the timelines and the
2:09:14stage gate process
2:09:17um you know in looking at each of the
2:09:19detail that I think they're all listed
2:09:20as confidential so we don't need to
2:09:22bring them up but each of the detailed
2:09:24project attachments that were included
2:09:26with The Gap
2:09:28um most of them list the like the class
2:09:31or the gate that they're at as well as
2:09:34the construction kickoff which I take to
2:09:36mean like literally when construction
2:09:38starts and then the estimated and end
2:09:42date are you familiar with that kind of
2:09:44in each of the detailed project sheets
2:09:46on the cover page yeah I think you're
2:09:48referring to the pause I talked over you
2:09:50commissioners
2:09:52no they're just on the cover page on the
2:09:54left hand side uh right hand side
2:09:57for each project yeah I think you're
2:09:59referring to the project narrative that
2:10:01we have as a captions correct yeah yeah
2:10:04so
2:10:05um so in each cover page of the project
2:10:07it lists those details like what gate is
2:10:10that what stage is that what's the cost
2:10:12certainty band as well as like the
2:10:15construction timeline so a few of those
2:10:17confused me because some of them felt
2:10:20either imminent construction or already
2:10:22ongoing construction with a fairly early
2:10:25marked stage or gate
2:10:28um which I found a little confusing so
2:10:31um I'll just list them off you don't
2:10:33have to refer to each individually but
2:10:36you know I just found confusing so in
2:10:38the rebuild f808 listed it at gate two
2:10:42which is conceptual engineering even
2:10:44though construction kickoff was the
2:10:46month the plan was submitted
2:10:48um conceptual engineering as I
2:10:50understand it from the graphic provided
2:10:52is before detailed engineering which is
2:10:54then before construction so this
2:10:56occurred in at least four or five five
2:10:58separate projects where it's listed by
2:11:00the company out of very early stage in
2:11:03terms of development but the projects
2:11:06are either in construction the month
2:11:07this plan was submitted and construction
2:11:09the next month or in one case um with
2:11:13the Washington and 76th Avenue project
2:11:15it's listed at gate one
2:11:19um despite the project kickoff being
2:11:20four months prior to the plan submission
2:11:22so I was just a little confused by you
2:11:25know and and obviously this gives us
2:11:27much wider bands of potential capital
2:11:29expenditure for these projects because
2:11:31they're listed at such an early stage
2:11:33and I'm just conceptually having a
2:11:35little trouble understanding why we're
2:11:36at such an early planning stage with
2:11:38projects already in or imminently in
2:11:40construction
2:11:43sure so it would be helpful to probably
2:11:46go into specifics but I don't think I
2:11:49can comment in generalities on a wide
2:11:51range that you noted there before so
2:11:53what was the first one that you want to
2:11:55look at look at maybe we could use that
2:11:57as an example that time talks through
2:11:58your questions
2:11:59um Washington in 76 was the one that was
2:12:03honestly the most confused about because
2:12:05it was uh listed as gate one which is
2:12:07prepare for project kickoff which is a
2:12:09very early stage of development and it
2:12:12lists the construction kickoff as
2:12:14January 2023 which was four months
2:12:17before the plan was submitted
2:12:20sure all right thank you and I apologize
2:12:22I hope it doesn't feel too taxable just
2:12:24helps to kind of be able to look at no
2:12:26that's fine yeah I just noticed this was
2:12:29a repeated question that came up for me
2:12:31there were just several examples but
2:12:32trying to understand
2:12:34um you know understandably look this
2:12:36comes up in rate cases this comes up a
2:12:37lot of place in terms of the company
2:12:39it's kind of understanding of costs of
2:12:41projects and then they undertake them
2:12:43and the discipline to stick to the costs
2:12:45so sure
2:12:47so I think in part this might be a
2:12:50little bit of a call like a nomenclature
2:12:52Challenge and so specifically in like
2:12:55Washington 76 like date one's uh
2:12:57referring to is it's essentially call it
2:13:00the company
2:13:02um allocating you know dedicated
2:13:04resources to focus on and complete
2:13:07um execution of the project so in this
2:13:09case it's not you know call it it's not
2:13:13breaking ground per se
2:13:15um in terms of its current status so for
2:13:16us gate one is more like your your part
2:13:20way through the engineering and design
2:13:22maturity process so you've moved from
2:13:24concept to call it like your pre-feed or
2:13:27pre
2:13:28um engineering design moving into full
2:13:30engineering design and so that's
2:13:32probably the Delta that you're seeing
2:13:33there probably the more
2:13:36more accurate timeline to look at in
2:13:39terms of reconciling you know when the
2:13:40project is actually starting
2:13:41construction versus development is the
2:13:44construction completion
2:13:46um and I don't know for this project
2:13:48specifically offhand what the exact
2:13:50timeline was contemplated for this but
2:13:53it's kind of occurring between gate one
2:13:55and that construction completion uh the
2:13:58other thing I'd say is
2:14:00uh the timelines are certainly best
2:14:03their best efforts based on our internal
2:14:07staff's analysis and view of the project
2:14:09and the timelines there can definitely
2:14:12be shifts in projects as we you know
2:14:14work with our major mechanical vendors
2:14:16and we you know we provide them packages
2:14:17of work a lot of times you know we'll
2:14:20get feedback from our mechanical vendors
2:14:22you know suggesting better more cost
2:14:24efficient ways for to pursue execution
2:14:26and so you know there can certainly be
2:14:29shifts I just don't I don't want you to
2:14:31get the impression that you know June is
2:14:32necessarily a lost in law what we many
2:14:35times find is you know we'll they will
2:14:37hand this this project to uh you know
2:14:39one of our competitively bid uh Alliance
2:14:42company so company X they'll look at the
2:14:45project they'll say okay here's the
2:14:46permit condition here's the project
2:14:48here's the engineering design and then
2:14:50once we actually have you know
2:14:51mechanical resources
2:14:54um
2:14:55deployed on the project will find you
2:14:57know in terms of the actual execution
2:14:59there's different modifications to the
2:15:02schedule which are are required or
2:15:03contemplated so
2:15:05the June 2023 completion is is a very
2:15:08high level date it doesn't necessarily
2:15:10represent
2:15:11um our exact you know construction
2:15:13timeline
2:15:15um that said I think the other piece to
2:15:17your question is kind of you know okay
2:15:19if it's if you're preparing for project
2:15:21kickoff in Gate one in January and you
2:15:24have execution occurring and you know in
2:15:26May and June
2:15:27um what's the reasonableness of
2:15:29executing projects that are
2:15:31a maturing project that fast and we are
2:15:34able to move some of these projects if
2:15:36they're more straightforward we can move
2:15:37them relatively quickly
2:15:39um and so in that case I do believe that
2:15:41you know we went from concept level
2:15:43design to detail design
2:15:46um in a matter of months
2:15:48um and so I believe we had
2:15:50preparation for for execution you know
2:15:54um earlier on in 2023 so I think in
2:15:57January February we're able to progress
2:15:59that project to the point being able to
2:16:00kick off construction so I think I kind
2:16:03of hit on a number of different pieces
2:16:04of your question but let me know if you
2:16:07have any other follow-up on that one
2:16:09no I think I'm good for now
2:16:12um I have a couple of cost benefit
2:16:13analysis questions
2:16:16um the first is
2:16:19um the cost benefit analysis I believe
2:16:21just includes the capital expense so
2:16:24um it's my understanding that the
2:16:25company includes a negative salvage
2:16:27value which is the future cost of
2:16:29removing these assets at the end of the
2:16:31life and they begin collecting that from
2:16:34customers as soon as the project starts
2:16:36depreciating
2:16:37um so it's my understanding those costs
2:16:39would not be included in the cost
2:16:41benefit analysis can you confirm
2:16:47sure so I think your question kind of
2:16:49stands like it's two pieces so it's kind
2:16:51of how does Net salvage value work
2:16:53relative to our cost of service
2:16:55um versus how is it specifically showing
2:16:58up in in the NBA so can you help me
2:17:00commissioner Goldman is it are you kind
2:17:01of more focused on like how this impacts
2:17:03gas Capital
2:17:04additions overall from a customer
2:17:06service perspective or like the NPA
2:17:08framework specific to the NPA to the
2:17:11extent that there's an additional cost
2:17:13aside from the capital expense of the
2:17:16project which is the expense to remove
2:17:18it in the future which is being
2:17:20collected from customers from the point
2:17:22at which
2:17:24um this goes into rape Basin is
2:17:26depreciated is that extra expense of
2:17:29removing the assets leader included at
2:17:31all in the cost benefit analysis in
2:17:33terms of the costs of the project a
2:17:35pipeline project
2:17:38no I I don't believe that it is okay
2:17:42um
2:17:42let's see uh
2:17:46for NPA let's see I had a couple more
2:17:51so um clearly we're still litigating the
2:17:54company's Erp but I did have a couple
2:17:56questions about the greenhouse gas
2:17:58assumptions especially on the electric
2:18:00side being uh included in the mpa
2:18:03analysis
2:18:04um so I was curious especially since
2:18:06we're still litigating the Erp in phase
2:18:09two
2:18:10um what's the source of the values that
2:18:12the company is using for the carbon
2:18:13dioxide emissions uh rate so that's the
2:18:16emissions per kilowatt hour
2:18:19um that are shown on the inputs um
2:18:22within the cost benefit analysis I can
2:18:24give you a line if you want in the cost
2:18:27benefit analysis I know that's been
2:18:29marked as confidential as well but
2:18:31essentially there's a projection as to
2:18:33the um emissions rate on the electric
2:18:35that's replacing the gas usage
2:18:40sure so I'll ask Mr schoenheiter to
2:18:43weigh in here sure and maybe I'll just
2:18:45give you some context I went through the
2:18:47Erp it's a little hard because the Erp
2:18:50has bulk numbers largely not necessarily
2:18:53rates
2:18:54um and you know we we'll probably be
2:18:57adding load conceivably through 2030 on
2:19:00the Electric System but if I use the
2:19:02bulk numbers in the Erp I got to about a
2:19:0560 drop from this year through to 2030
2:19:08whereas the values that I see modeled in
2:19:11your cost benefit analysis only drop by
2:19:13about 30 from now through to 2030 so
2:19:16trying to understand the disparity that
2:19:18I'm seeing there
2:19:20yeah and I think we can follow up with
2:19:23more of a detailed sort of calculation
2:19:25but at a high level
2:19:27we started
2:19:29with the sort of historic uh emissions
2:19:33per ton and we progress that through the
2:19:36the high level goals of an 80 reduction
2:19:39by 2030
2:19:41um carrying On Through To Zero carbon in
2:19:432050 but I don't I like I said I can
2:19:46follow up a week involved with that sort
2:19:48of exact calculation and alignment with
2:19:50the Erp but I think they will continue
2:19:52to evolve as we move forward
2:19:55so you're saying you took a linear
2:19:57approach to 2050 to go to zero rather
2:20:00than account for what I would consider
2:20:02kind of the bump to get to 2030 in the
2:20:04first place that's no we we definitely
2:20:07accounted for the bump to get to 2030
2:20:09right the goal is I think 2030 was one
2:20:12point in that
2:20:13uh Evolution then 2050 is a further
2:20:16point so you should see a majority of
2:20:19the the reductions for 2030.
2:20:22okay I didn't think I was seeing that I
2:20:25guess what's the way to be clearer as to
2:20:27how the company calculated the like as I
2:20:30look at the rate the rate decrease is
2:20:32about 30 between now and 2030. that's
2:20:34not what I would have expected looking
2:20:35at the Erp
2:20:37it sounds like we should follow up with
2:20:39a little more details on the the actual
2:20:41calculation would be helpful okay that
2:20:44would be helpful thanks
2:20:46um
2:20:46of in the cost benefit analysis I was
2:20:49also wondering um there's a value that's
2:20:51included
2:20:53um for the cost of um
2:20:56electric distribution infrastructure
2:20:59investment needed to support some of the
2:21:02Alternatives and from what I saw that
2:21:05was just hard entered so is there any
2:21:07reference or way for us to understand
2:21:08what was included in that um
2:21:12electric distribution infrastructure
2:21:14upgrade cost and the cost benefit
2:21:16analysis
2:21:19yeah I can talk conceptually about the
2:21:21the process that was followed and then
2:21:23we can talk about sort of a way to
2:21:25communicate the specific details so for
2:21:28each NPA area that was evaluated we
2:21:32looked at the combination of measures
2:21:34that was recommended whether that's
2:21:36building shell Improvement gas Appliance
2:21:39efficiency improvements or electrical
2:21:41electrification
2:21:42and the magnitude of the full
2:21:45electrification was determined you know
2:21:49as part of that mix and then we looked
2:21:51at the uh exact distribution electric
2:21:55distribution system there that was
2:21:56present to understand
2:22:00the
2:22:01uh what would be needed for each
2:22:03specific areas in some areas may not
2:22:05need an electric distribution upgrade
2:22:07some areas May and I believe we included
2:22:11then in attachment B the the details of
2:22:15those electric distribution upgrades
2:22:16that would be needed that led to the the
2:22:20associated cost okay okay I saw a cross
2:22:22reference between the two
2:22:25um in the cost benefit analysis
2:22:27especially the detailed models for each
2:22:29solution
2:22:31um lines
2:22:3257 to 62. I think the company shows
2:22:36greenhouse gas emissions reductions in
2:22:39terms of you know part of the benefit
2:22:41stream to calculate but those stop in
2:22:442028 so they don't accumulate anymore
2:22:46and I was wondering why
2:22:50the the greenhouse gas benefits do not
2:22:52accumulate past 2028.
2:22:56okay if you have one to to look at that
2:22:59we could pull up that would be helpful
2:23:00because I
2:23:02was that on the confidential okay
2:23:05um
2:23:05my understanding is that for measures
2:23:09that we put in place that would have
2:23:11ongoing benefits such as a building
2:23:13shell upgrade that would reduce uh the
2:23:17Emissions on an ongoing basis both the
2:23:19throughput of natural gas as well as
2:23:22like electrification that would convert
2:23:24it over we should have continued the
2:23:28both the added electricity as well as
2:23:31the the offset from the the gas we
2:23:33should have continued those emissions
2:23:34through the life of the measure and so
2:23:37depending on the mix of the measure some
2:23:38will fall off earlier and put some work
2:23:41off later and the ones that went out for
2:23:43past 28 should have had an emissions
2:23:46benefit at least in the monetary
2:23:50calculations
2:23:52yeah and maybe I'll supplement that
2:23:53answer if that's okay Mark so um
2:23:55computer Gilman I was able to open on my
2:23:59because that you're looking at and I
2:24:02believe that there
2:24:03so the line items that you're looking at
2:24:05was the
2:24:07I'll use the line number
2:24:09does show just through 2020 and that's
2:24:11the annual impact that we'll see if
2:24:14the annual adoption rate however if you
2:24:17look at line 62 we do have the
2:24:20cumulative emissions classificated and
2:24:23what that is based off is that's going
2:24:25to be the intuitive emissions reduced
2:24:27through the entry measurement technology
2:24:29through the measured life and so you'll
2:24:31see that extended will be on the 21st
2:24:34so if you're looking I I popped open the
2:24:37uh Harmony HP reinforcement just as one
2:24:41example okay so I go to attic insulation
2:24:44tab hope I'm not saying anything
2:24:45confidential I think that's pretty
2:24:47pretty vanilla
2:24:49um go to line 58 which is the annual
2:24:53emissions reduction in CO2 pounds
2:24:57yes the line below is cumulative and
2:25:00continues on but there are no annual
2:25:02additions to greenhouse gas reductions
2:25:05after 2028.
2:25:09so why is that shouldn't it continue out
2:25:12for the life of the measure as Mr
2:25:13schoenheiter indicated
2:25:15the that first line you're talking about
2:25:18is those are the number of new customers
2:25:20that adopt that measure in a given year
2:25:22and so past the planning period of the
2:25:25mpa passed when we're incentivizing
2:25:27customers to do more you would not have
2:25:29additional customers adding gotcha okay
2:25:34okay so then you're showing the annual
2:25:38basically continues that whatever it was
2:25:40frozen in time from the point that the
2:25:43the program stopped adding additional
2:25:45people
2:25:47yeah if I could just give a hypothetical
2:25:49example let's say in 26 we we had 50
2:25:52customers and then in 27 we had a
2:25:55hundred new customers you would see 50
2:25:58online 26 100 online 27 but then in the
2:26:02cumulative you would see 50 from 26 and
2:26:05150 and 27 and then if we didn't do any
2:26:09more in 28 or 29 you would still have
2:26:11that 150 per year on the lower lines
2:26:13until the the end of the measure life
2:26:16okay thank you thank you that's very
2:26:18helpful
2:26:19um so wondering about the additional
2:26:22electric load that's anticipated or
2:26:24additional electric capacity needs that
2:26:27are anticipated by any NPA project does
2:26:31the company anticipate that additional
2:26:33electric capacity would um be coincident
2:26:36with existing system peak in both the
2:26:38summer and winter or are there is there
2:26:41any kind of diversification uh
2:26:43anticipated as to when those loads hit
2:26:45the system yeah there's there's
2:26:48absolutely diversification the the main
2:26:50uh driver for our and I'm talking about
2:26:53bulk system and I think in a lot of
2:26:55cases this is true at the distribution
2:26:57level but not at all
2:26:59um bulk system currently the the peak
2:27:01system need is heating driven so hot
2:27:04summer weekdays through the 6 p.m
2:27:06um and for many of these areas that is
2:27:09the same at the distribution level if we
2:27:12were to talk about like the mountain
2:27:13systems you might have a different
2:27:14answer there but for the system they're
2:27:16talking about but we also have an
2:27:18understanding of what there's sort of a
2:27:21it's a full system Peak but it's kind of
2:27:23a winner Peak right and on cold weather
2:27:25very cold weather there is an increase
2:27:27in usage
2:27:29so there's a lower demand that's sort of
2:27:31a localized Peak currently and so when
2:27:34we evaluated the NPA measures uh we
2:27:37looked at the impacts of those measures
2:27:38on both the summer and winter and
2:27:41distribution upgrades are only triggered
2:27:42if that
2:27:44the new post upgrade
2:27:47system which is usually it would be that
2:27:49winter so if you're electrified
2:27:51customers they add a significant amount
2:27:52of winter cold weather Peak if that was
2:27:55in excess of the system capacity so look
2:27:58at both summer and winter and if the
2:28:00winter trips it then we would have the
2:28:02upgrades
2:28:07okay
2:28:08um when I look at the cbas as well in
2:28:11terms of for each measure the impacts on
2:28:14the electric Peak
2:28:16um several of the measures I would say
2:28:17the vast majority of them have negative
2:28:19impacts on the summer system Peak but
2:28:22that doesn't appear to be included in in
2:28:25terms of given any value in the cost
2:28:28benefit analysis and my question is
2:28:29should that have value and why is it not
2:28:32included if we're limiting our summer
2:28:34system piece which is a valuable
2:28:36commodity
2:28:39yeah so I think there's uh
2:28:43a little bit of a complicated answer and
2:28:45happy to sort of talk through it if we
2:28:47want to uh probably can
2:28:50so
2:28:51there there's really three different
2:28:53levels of impact on the electric side
2:28:56there's generation distribution and
2:28:58train well generation transmission and
2:29:00distribution right and that currently we
2:29:03have a bulk system uh we treat
2:29:05generation transmission related to bulk
2:29:07system level and distribution within the
2:29:11npas we tried to take a much more
2:29:12nuanced approach of looking at it at the
2:29:16specific system that we're talking about
2:29:17so when you were asking earlier about
2:29:20the some measures have a benefit of
2:29:24reduction in KW in summer
2:29:27um those could be things like insulation
2:29:29which for premises that already have
2:29:31cooling you'll see a reduction in the
2:29:34summer Peak but you may see a a
2:29:37similarly you can see a reduction in the
2:29:39winter gas usage there are other
2:29:41measures like a heat pump if you're
2:29:43putting in a heat pump some of those
2:29:44premises aren't cooled in summer
2:29:46currently and so there would be an
2:29:47increase in in demand on summer from
2:29:51installing a heat pump because it's it's
2:29:54likely that customers will also use that
2:29:56heat pumping some people
2:29:58um
2:29:59so at a very high level we tried to
2:30:02accommodate all of that and accurately
2:30:04represent you know where if you have on
2:30:07the distribution system
2:30:09an increase in demand that trips and
2:30:12upgrade then you need that upgrade
2:30:14whether you're only using in the winter
2:30:16or using in summer so you would not have
2:30:18a corresponding benefit from A reduced
2:30:21summer Peak because that particular
2:30:22distribution system would now shift from
2:30:25Summer Peak to Winter peaking
2:30:28so it doesn't really matter when during
2:30:29the year you need the upgrade if you
2:30:31need the upgrade you need it sort of
2:30:36that helped
2:30:39yeah I have 50 more questions but back
2:30:42to the gym I appreciate it
2:30:47um so uh well I just want to thank
2:30:51uh the company for uh engaging uh this
2:30:55dialogue with us uh really uh helpful
2:30:58productive uh discussion so
2:31:01um thanks for that and I guess uh to my
2:31:04colleagues uh what do you think about uh
2:31:06putting this on the agenda Wednesday and
2:31:09you know maybe
2:31:11um discussing it among ourselves whether
2:31:13it's the demand forecasts the capital
2:31:16budgets cost Effectiveness uh
2:31:20um any any thoughts on that before we uh
2:31:23before we break now
2:31:28I mean I don't I I know we have a we
2:31:31have a big agenda for Wednesday so I'll
2:31:33leave it to you to the side but kind of
2:31:36time constraints that might
2:31:39impact
2:31:41uh commissioner Gomen
2:31:43yeah I mean I guess what would be the
2:31:45intended outcome or
2:31:48um objective would we be issuing
2:31:51follow-up questions or yeah
2:31:55yeah I could get to the 50. I didn't ask
2:31:58oh wow now you're making me nervous
2:32:03uh uh all right well uh uh Mr Moore
2:32:10it's uh anything uh Final on behalf of
2:32:13the company
2:32:16no final comments uh chairman blank just
2:32:19wanted to send our gratitude for taking
2:32:21the time with us this morning hopefully
2:32:23you know you'll see our commitment to
2:32:24transparency uh with you all we're happy
2:32:27to work through through this process and
2:32:29certainly you know we're open to your
2:32:32feedback and and plan to work with you
2:32:34all to evolve uh biscuit filing and
2:32:36future proceedings as well so thank you
2:32:38again
2:32:39uh thank you guys uh Mr Berman did you
2:32:41have something yes nope just Echo what
2:32:44Mr Martin said he said well
2:32:46uh commissioner plant any final thoughts
2:32:52commissioner Gomen any final thoughts
2:32:55yeah thanks for engaging with us today
2:32:56thanks to all the stakeholders who are
2:32:58submitting comments you know our first
2:33:00time through so most of us don't know
2:33:02what we don't know yet but we're uh
2:33:04rapidly expanding our understanding and
2:33:07questions
2:33:08um to make sure that we have a a good uh
2:33:11a good plan and process here in order to
2:33:14ensure that we are saving repairs money
2:33:16wherever possible as we look through the
2:33:18system in the future
2:33:21uh just Echo that uh thanks to all
2:33:25thanks to to my colleagues uh thanks to
2:33:28the company thanks uh to the parties and
2:33:30uh look forward to uh continuing uh the
2:33:33dialogue uh with that we're adjourned
2:33:36thanks all

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