S T A T E OF M I C H I G A N BEFORE THE MICHIGAN PUBLIC SERVICE COMMISSION * * * *

Transcription

1 S T A T E OF M I C H I G A N BEFORE THE MICHIGAN PUBLIC SERVICE COMMISSION * * * * In the matter of the application of Michigan Consolidated Gas Company ) for authority to increase its rates, amend ) Case No. U- its rate schedules and rules governing ) the distribution and supply of natural ) gas, and for miscellaneous accounting ) authority ) ) QUALIFICATIONS AND DIRECT TESTIMONY OF DAVID CHISLEA MICHIGAN PUBLIC SERVICE COMMISSION September, 0

2 QUALIFICATIONS OF DAVID CHISLEA PART I 0 0 Q. Please state your name, address and occupation. A. My name is David Chislea, and my temporary business address is 00 West Saginaw Highway, Lansing, Michigan. I am employed by the Michigan Public Service Commission (MPSC or Commission) as the Manager of Gas Operations in the Operations and Wholesale Markets Division. Q. Please outline your academic training. A. I graduated with a B.S. degree in Civil Engineering from Michigan Technological University in November. I have also completed courses with the Transportation Safety Institute beginning in. The classes that I have completed with the Transportation Safety Institute are: ) Pipeline Failure Investigation Techniques, ) Pipeline Safety Regulation Application and Compliance Procedures, ) Safety Evaluation of Pipeline Corrosion Control Systems I, ) Gas Pressure Regulation and Overpressure Protection, ) Joining of Pipeline Materials, ) Safety Evaluation of Gas Pipeline Systems, ) Safety Evaluation of Pipeline Corrosion Control Systems II, ) Corrosion Control of Pipeline Systems, ) Operator Qualification, 0) External Corrosion Direct Assessment, ) Internal Corrosion Direct Assessment, ) High Consequence Areas, ) Gas Integrity Management Protocol Seminar, ) Stress Corrosion Cracking Direct Assessment, ) Integrity Management Processes, ) Pipeline Reliability Assessment Seminar, ) Supervisory Control and Data Acquisition (SCADA) Systems, ) External Corrosion Direct Assessment, ) Fundamentals of Launching and Receiving Maintenance Pigs, 0) Investigating and Managing Internal Corrosion of Pipelines, ) Safety Evaluation of Inline Inspection

3 QUALIFICATIONS OF DAVID CHISLEA PART I 0 0 (ILI)/Pigging Programs. I also attended two Appalachian Underground Corrosion Short Courses. I attended the Basic Course in and the Intermediate Course in. Q. Please describe your professional background. A. I was employed as an intern from - at Dow Corning in Midland, Michigan, inspecting pressure vessels and piping systems for internal corrosion using ultrasonic equipment. The pressure vessel inspections also included inspections of the vessel integrity and related safety equipment. After graduating with my B.S. degree in, I was employed at Mears in Rosebush, Michigan in March and April of. I inspected pipeline systems for adequate cathodic protection using close interval surveys. I also assisted field technicians in the field collection of close interval survey data and reviewed/prepared the data for presentation to the customer. I started my employment with the MPSC as a Gas Safety Engineer in May. When I started, my responsibilities were reviewing pipeline operator s pipeline systems for compliance with the Michigan Gas Safety Standards (MGSS). This included: ) Design; ) Construction; ) Corrosion Control; ) Operations; ) Maintenance; and ) Incident Investigation. Inspections included: ) Reviewing Operations and Maintenance Procedures; ) Office audits of compliance documentation; ) Field compliance audits; and ) On-site incident investigations. My responsibilities have increased over time and included statewide responsibility to inspect all transmission pipeline operators for compliance with the Pipeline Integrity Management rules of the MGSS. These

4 QUALIFICATIONS OF DAVID CHISLEA PART I 0 integrity regulations were adopted in 00, and I started compliance audits in that same year. These regulations were the first major performance and risk-based gas safety regulations. Audits include inspection for compliance with the regulations and referenced industry standards. The compliance audits include ensuring that operators have developed a comprehensive threat assessment program for pipeline segments that are at high risk because of potential consequences and the likelihood of a failure. I accepted the position as Manager of the Gas Operations Section in February of 0 and currently hold this position. The Section has responsibility for the gas safety program, right-of-way reviews for proposed pipeline facilities, utility damage prevention, and gas well proration and production. Q. Have you previously presented testimony before the Michigan Public Service Commission or other regulatory body? A. Yes, I filed direct testimony in the Michigan Consolidated Gas Company (MichCon or the Company) gas rate Case No. U- and Consumers Energy Company s gas rate Case No. U-.

5 DIRECT TESTIMONY OF DAVID CHISLEA PART II 0 0 Q. What is the purpose of your direct testimony in this proceeding? A. The purpose of my direct testimony is to provide Staff s position on the programs MichCon is proposing to support with its Infrastructure Recovery Mechanism (IRM) and the regulatory requirements related to this program. Q. Are you sponsoring any exhibits in this proceeding? A. Yes. I am sponsoring the following three exhibits in addition to my direct testimony: () Exhibit S-, Schedule H. July, 0, Update of MichCon s 0 Meter Move Out and Main Renewal Programs. () Exhibit S-, Schedule H. MichCon s Annual Report for Calendar Year 0, Gas Distribution System (PHMSA F00.-). () Exhibit S-, Schedule H. Comparison of Corrosion Leaks Repaired per 00 Miles of Metallic Main. Q. Were these Exhibits prepared by you or under your direction? A. Exhibit No. S-, Schedule H and Exhibit No. S-, Schedule H were compiled by me and prepared by the Company and were obtained by Staff through required filings or meetings with the Company. Exhibit No. S-, Schedule H was prepared under my direction. Q. What programs is MichCon proposing to support with the IRM? A. The IRM will consist of the following programs: ) pipeline integrity program, ) meter move out (MMO), and ) main renewal program (MRP). The pipeline integrity program is specifically for transmission pipelines as defined by the Michigan Gas Safety Standards.

6 DIRECT TESTIMONY OF DAVID CHISLEA PART II 0 0 Q. What is a pipeline integrity program? A. A pipeline integrity program is the process of assessing the integrity of transmission pipelines in high consequence areas (HCA) using in-line-inspection (ILI), pressure testing, or direct assessment (DA). Assessments include both an initial assessment and continuing assessments at specified intervals of typically every seven years. Once assessments are completed, the utility must perform validation excavations and repairs as necessary. Q. Are there regulatory requirements for companies operating transmission pipelines to assess and repair pipelines in HCA s? A. Yes. Federal Pipeline Safety Regulations, CFR Part Subpart O, which is adopted by reference in the MGSS, defines HCA s, outlines the assessment methods that can be used, specifies the assessment intervals, and requires repairs to be completed. Q. Is the purpose of MichCon s proposed pipeline integrity program to meet the requirements of the MGSS? A. In general, yes. The work included in MichCon s pipeline integrity program is used to complete assessments and repairs mandated by the MGSS. MichCon has included three additional initiatives as part of its pipeline integrity program that will exceed the current requirements of the MGSS. The Company proposes to implement a Geographical Information System (GIS) to verify and organize pipeline records in order to comply with a mandate in the Federal Pipeline Safety, Regulatory Certainty and Job Creation Act of 0. The Company also proposes to assess pipelines with ILI that were previously inspected using DA or other

7 DIRECT TESTIMONY OF DAVID CHISLEA PART II 0 0 methods. The last additional initiative would be that if MichCon is required to pressure test pipelines based on anticipated changes to federal regulations, the Company could choose to reduce the pipelines assessed by ILI and use the IRM to support those pressure testing requirements. Q. Does Staff support MichCon s plan for 0 and 0 related to the pipeline integrity program, including the initiatives that will exceed the current requirements of the MGSS? A. Yes. The GIS is being built to review and organize records required by the Pipeline Safety, Regulatory Certainty and Job Creation Act of 0. Staff supports MichCon s assessment of pipelines using ILI versus other methods because it will allow the Company to assess complete pipelines instead of small HCA segments. These assessments will improve the integrity of MichCon s transmission system, leading to better system reliability and enhanced safety for the customers, landowners, and public. If additional pressure testing is required in new federal regulations, it is reasonable for MichCon to include the expenses associated with that testing in the pipeline integrity program. Q. Please explain MichCon s MMO. A. The MMO program is a long term plan to systematically remove existing inside meter sets to an outside location. The program was approved by this Commission on September, 0, in Case No. U-. Q. Does the need still exist for the MMO program to continue? A. Yes. MichCon is required to inspect and maintain the safety of the meter sets per the MGSS. MichCon has had difficulty doing this given the number of inside

8 DIRECT TESTIMONY OF DAVID CHISLEA PART II 0 0 meter sets and the issues associated with gaining access to complete this work. The MMO efforts have also eliminated gas theft when found occurring on MichCon s system; theft includes tampering with MichCon s facilities and creating safety issues and concerns. Q. Has MichCon replaced the number of meters specified in the order in Case No. U-? A. In 0 MichCon had difficulty completing the number of meter replacements specified in the order in Case No. U-. Q. Does Staff continue to support MichCon s MMO program as proposed by MichCon? A. Yes. MichCon has significantly increased the size of the work force dedicated to this project and is on target for 0 to meet the number of meter replacements specified in Case No. U-. In a routine operational updated meeting with Staff on August, 0, MichCon presented Exhibit S-, Schedule H, which depicts MichCon s 0 year-to-date progress through July to move meters outside. Q. Does Staff support the additional work that MichCon in doing in conjunction with the MMO program? A. Yes, both from the efficiency and safety perspectives. Completing cut and caps, service line renewals, and service or main repairs at the same time as the MMO work increases the productivity of the work force. This additional work is necessary to meet the requirements of the MGSS and for the Company to maintain the safety and reliability of the system.

9 DIRECT TESTIMONY OF DAVID CHISLEA PART II Q. What specific requirements of the MGSS is this work being done to comply with? A. Rule.(b) requires that [i]f a segment of pipeline is determined to be in unsatisfactory condition but no immediate hazard exists, the operator shall initiate a program to recondition or phase out the segment involved, or, if the segment cannot be reconditioned or phased out, reduce the maximum allowable operating pressure in accordance with. (a) and (b). Rule.0(b) requires that 0 0 [e]ach segment of pipeline that becomes unsafe must be replaced, repaired, or removed from service. The additional work to replace, repair, or remove both service lines and mains, which MichCon is completing as part of the MMO program, is being done to comply with these specific requirements. Q. Please explain MichCon s MRP. A. The MRP is long term plan to replace or remove existing mains that are underperforming. MichCon utilizes a risk model to prioritize which segments of main are annually replaced. This program was approved by this Commission on September, 0, in Case No. U-0. Q. Does the need still exist for MichCon s MRP to continue? A. Yes. MichCon s Annual Report for Calendar Year 0, Gas Distribution System (PHMSA F00.-) attached as Exhibit S-, Schedule H includes,0 miles of metallic structures that are unprotected, which represents % of MichCon s total distribution main system. These unprotected metallic distribution main types are higher risk and more prone to leaks and failures. It is not practical to reduce the operating pressure of a distribution system to alleviate the issues related to an unsatisfactory condition. Unprotected includes cast iron and cathodically unprotected steel mains.

10 DIRECT TESTIMONY OF DAVID CHISLEA PART II 0 0 When corrosion leaks per one-hundred miles of metallic (protected, unprotected, and cast iron) main are trended as shown on Exhibit S-, Schedule H, MichCon s corrosion leak rate exceeds the statewide rate. In 0 MichCon s system experienced corrosion leaks at a rate of. leaks per 00 miles of metallic main compared to all distribution systems statewide at a rate of. leaks per 00 miles. Q. Is MichCon meeting the requirements of the order in Case No. U-0? A. Yes. In the routine operational updated meeting with Staff on August, 0, MichCon presented Exhibit S-, Schedule H, which depicts MichCon s 0 year-to-date progress through July to replace or eliminate main. In 0 MichCon will exceed the requirements outlined in Case No. U-0, if the Company maintains the current schedule as outlined in this progress report. Q. Does Staff support the additional work that MichCon is doing in conjunction with the MRP? A. Yes. Similar to the MMO program both from the efficiency and safety perspectives, Staff supports MichCon s efforts. Completing service line renewals and meter move outs at the same time as the MRP work increases the productivity of the work force. Q. Are there any specific requirements of the MGSS that requires this work to be completed? A. In addition to the requirements of the MGSS outlined previously in my testimony, Rule.00(d) requires MichCon to [i]dentify and implement measures to address risks. Determine and implement measures designed to reduce the risks

11 DIRECT TESTIMONY OF DAVID CHISLEA PART II 0 0 from failure of its gas distribution pipeline. These measures must include an effective leak management program (unless all leaks are repaired when found). The MRP can be used to address the risks that MichCon is required to identify and implement measures to reduce those risks. Q. Did the Federal Pipeline Safety, Regulatory Certainty and Job Creation Act of 0 make any changes to the federal law specifically regarding main replacement programs? A. Yes. The act, in reference to the Unites States Department of Transportation (USDOT), states that [n]ot later than December, 0, and every years thereafter, the Secretary shall conduct a follow-up survey to measure the progress that owners and operators of pipeline facilities have made in adopting and implementing their plans for the safe management and replacement of cast iron gas pipelines. Because of many tragic and high profile pipeline incidents, USDOT Secretary Ray LaHood has been an advocate for replacement programs both before and after the Pipeline Safety, Regulatory Certainty, and Job Creation Act of 0 was passed. In a letter to all state governors dated March, 0, the Secretary stated, [w]e ask you to urge your staff to encourage companies and the State utility commission to accelerate pipeline repair, rehabilitation, and replacement programs for systems whose integrity cannot be positively confirmed. This is one of the best ways to help protect your citizens from accidents like those in Allentown, Marshall, and San Bruno. Letters with similar messages were written to state commissions and industry by Cynthia L. Quarterman, Administrator of the USDOT s Pipeline and Hazardous Materials 0

12 DIRECT TESTIMONY OF DAVID CHISLEA PART II 0 0 Safety Administration (PHMSA). While the Pipeline Safety, Regulatory Certainty, and Job Creation Act of 0 did not specifically impose any additional requirements on operators such as MichCon for main replacement programs, Staff strongly agrees with the recommendations set forth by the USDOT and PHMSA regarding main replacement programs. Q. Has PHMSA taken any action as a response to the changes to the Federal Pipeline Safety, Regulatory Certainty, and Job Creation Act of 0? A. Yes. On March, 0, PHMSA issued an Advisory Bulletin to owners and operators of natural gas cast iron distribution pipelines and state pipeline safety representatives. The Bulletin states, [r]ecent deadly explosions in Philadelphia and Allentown, Pennsylvania involving cast iron pipelines installed in and, respectively, gained national attention and highlight the need for continued safety improvements to aging gas pipeline systems. This bulletin is an update of two prior Alert Notices (ALN--0; October, and ALN--0; June, ) covering the continued use of cast iron pipe in natural gas distribution pipeline systems. This advisory bulletin reiterates two prior Alert Notices which remain relevant, urges owners and operators to conduct a comprehensive review of their cast iron distribution pipelines and replacement programs and accelerate pipeline repair, rehabilitation and replacement of high-risk pipelines, requests state agencies to consider enhancements to cast iron replacement plans and programs, and alerts owners and operators of the pipeline safety requirements for the investigation of failures. In PHMSA s recently issued 0-0 Strategic Plan, the importance of main replacement is reemphasized by stating, [w]ork

13 DIRECT TESTIMONY OF DAVID CHISLEA PART II 0 0 with State pipeline safety programs and pipeline operators to assure that the identification, repair, rehabilitation, requalification, or replacement of the highest risk pipelines are accelerated. Q. Have other states made progress in having gas utilities adopt replacement programs for high risk distribution main. A. Yes. PHMSA has twice solicited state regulatory programs with safety oversight of gas utilities to provide information about distribution replacement programs being undertaken. The responses to these requests have been posted on PHMSA s website. Agencies from forty states, the District of Columbia, and Puerto Rico have responded with most agencies identifying ongoing replacement programs. The size, scope, and reasons for the programs vary from state to state. The mechanisms used to undertake these replacement programs vary from voluntary, regulatory mandates, to rate based. Progress in completing these replacement programs also vary from state to state including states that have reported completely replacing certain material types to states that do not have programs for some material types. Q. Does Staff support MichCon s expansion of the MRP to eliminate or replace miles of main annually? A. Yes. Given the amount of higher risk metallic material in MichCon s system and MichCon s corrosion leak rate, this increase in the size of the program is justified. MichCon s commitment to a program of this size will help to improve the safety and reliability of the distribution system.

14 DIRECT TESTIMONY OF DAVID CHISLEA PART II 0 Q. What is Staff s recommendation with regard to MichCon s proposed Infrastructure Recovery Mechanism for the pipeline integrity program, MMO, and MRP? A. Staff recommends that the Commission support the programs that MichCon will fund with the capital expenditures with the IRM as summarized on Exhibit A-, Schedules L and L. Q. Does Staff have any further recommendations? A. Staff recommends that the Commission continues to require the Company to meet the reporting requirements established in the orders for Case Nos. U-0 and U-. The Staff also recommends that the Commission require the Company to file an annual report for every year the pipeline integrity program is in place by March st of the subsequent year outlining the work that was completed in the preceding year. The pipeline integrity report should include a list of the projects funded and the dollars spent on each of those projects. Q. Does that complete your direct filed testimony? A. Yes, it does.

15 S T A T E OF M I C H I G A N BEFORE THE MICHIGAN PUBLIC SERVICE COMMISSION * * * * In the matter of the application of Michigan Consolidated Gas Company ) for authority to increase its rates, amend ) Case No. U- its rate schedules and rules governing ) the distribution and supply of natural ) gas, and for miscellaneous accounting ) authority ) ) EXHIBITS OF DAVID CHISLEA MICHIGAN PUBLIC SERVICE COMMISSION September, 0

16 Case No: U- Witness: D.J. Chislea Exhibit: S- Schedule: H Page: of

17 Case No: U- Witness: D.J. Chislea Exhibit: S- Schedule: H Page: of

18 Case No: U- Witness: D.J. Chislea Exhibit: S- Schedule: H Page: of

19 Case No: U- Witness: D.J. Chislea Exhibit: S- Schedule: H Page: of

20 NOTICE: This report is required by CFR Part. Failure to report can result in a civil penalty not to exceed 00,000 for each violation for each day that such violation persists except that the maximum civil penalty shall not exceed $,000,000 as provided in USC 0. Case No: U- Witness: D.J. Chislea Exhibit: S- Schedule: H Page: of OMB NO: -0 EXPIRATION DATE: 0//0 Form Type: INITIAL U.S Department of Transportation Pipeline and Hazardous Materials Safety Administration ID: (DOT use only) 00- ANNUAL REPORT FOR CALENDAR YEAR 0 GAS DISTRIBUTION SYSTEM A federal agency may not conduct or sponsor, and a person is not required to respond to, nor shall a person be subject to a penalty for failure to comply with a collection of information subject to the requirements of the Paperwork Reduction Act unless that collection of information displays a current valid OMB Control Number. The OMB Control Number for this information collection is -0. Public reporting for this collection of information is estimated to be approximately hours per response, including the time for reviewing instructions, gathering the data needed, and completing and reviewing the collection of information. All responses to this collection of information are mandatory. Send comments regarding this burden estimate or any other aspect of this collection of information, including suggestions for reducing this burden to: Information Collection Clearance Officer, PHMSA, Office of Pipeline Safety (PHP-0) 00 New Jersey Avenue, SE, Washington, D.C. 00. PART A - OPERATOR INFORMATION. Name of Operator MICHIGAN CONSOLIDATED GAS CO (MICHCON). LOCATION OF OFFICE (WHERE ADDITIONAL INFORMATION MAY BE OBTAINED) a. Street Address 0 Allen Rd. b. City and County Melvindale,Wayne c. State MI d. Zip Code. OPERATOR'S DIGIT IDENTIFICATION NUMBER 0. HEADQUARTERS NAME & ADDRESS a. Street Address One Energy Plaza b. City and County Detroit,Wayne c. State MI d. Zip Code. STATE IN WHICH SYSTEM OPERATES MI PART B - SYSTEM DESCRIPTION.GENERAL UNPROTECTED STEEL CATHODICALLY PROTECTED BARE COATED BARE COATED PLASTIC CAST/ WROUGHT IRON DUCTILE IRON COPPER OTHER TOTAL MILES OF MAIN N0. OF SERVICES

21 .MILES OF MAINS IN SYSTEM AT END OF YEAR Case No: U- Witness: D.J. Chislea Exhibit: S- Schedule: H Page: of MATERIAL UNKNOWN " OR LESS OVER " THRU " OVER " THRU " OVER " THRU " OVER " TOTAL STEEL DUCTILE IRON COPPER CAST/WROUGHT IRON PLASTIC PVC PLASTIC PE PLASTIC ABS OTHER PLASTIC OTHER TOTAL NUMBER OF SERVICES IN SYSTEM AT END OF YEAR AVERAGE SERVICE LENGTH: MATERIAL UNKNOWN " OR LESS OVER " THRU " OVER " THRU " OVER " THRU " OVER " TOTAL STEEL DUCTILE IRON COPPER CAST/WROUGHT IRON PLASTIC PVC PLASTIC PE PLASTIC ABS OTHER PLASTIC OTHER TOTAL MILES OF MAIN AND NUMBER OF SERVICES BY DECADE OF INSTALLATION UNKNOWN PRE TOTAL MILES OF MAIN NUMBER OF SERVICES

22 Case No: U- Witness: D.J. Chislea Exhibit: S- Schedule: H Page: of PART C - TOTAL LEAKS AND HAZARDOUS LEAKS ELIMINATED/REPAIRED DURING THE YEAR CAUSE OF LEAK MAINS SERVICES TOTAL HAZARDOUS TOTAL HAZARDOUS CORROSION 0 NATURAL FORCES 0 EXCAVATION DAMAGE OTHER OUTSIDE FORCE DAMAGE 0 MATERIAL OR WELDS EQUIPMENT INCORRECT OPERATIONS 0 OTHER NUMBER OF KNOWN SYSTEM LEAKS AT END OF YEAR SCHEDULED FOR REPAIR : 0 PART D - EXCAVATION DAMAGE PART E-EXCESS FLOW VALUE(EFV) DATA NUMBER OF EXCAVATION DAMAGES: NUMBER OF EFV'S INSTALLED THIS CALENDER YEAR ON SINGLE FAMILY RESIDENTIAL SERVICES: 0 NUMBER OF EXCAVATION TICKETS : 00 PART F - LEAKS ON FEDERAL LAND TOTAL NUMBER OF LEAKS ON FEDERAL LAND REPAIRED OR SCHEDULED TO REPAIR: 0 ESTIMATED NUMBER OF EFV'S IN SYSTEM AT THE END OF YEAR: 0 PART G-PERCENT OF UNACCOUNTED FOR GAS UNACCOUUNTED FOR GAS AS A PERCENT OF TOTAL INPUT FOR THE MONTHS ENDING JUNE 0 OF THE REPORTING YEAR. INPUT FOR YEAR ENDING /0:.% PART H - ADDITIONAL INFORMATION PART I - PREPARER AND AUTHORIZED SIGNATURE Michael Laskowski,Senior Engineer (Preparer's Name and Title) () - (Area Code and Telephone Number) laskowskim@dteenergy.com (Preparer's address) () - (Area Code and Facsimile Number)

23 Comparison of Corrosion Leaks Repaired Per 00 Miles of Metallic Main Case No: U- Witness: D. J. Chislea Exhibit: S- Schedule: H Page: of Leaks Per 00 Miles of Main MichCon All Michigan Operators Michigan Operators excluding MichCon Consumers Energy Year Source: 00-0 Annual Distribution Reports. Form PHMSA F00.-

24 S T A T E OF M I C H I G A N BEFORE THE MICHIGAN PUBLIC SERVICE COMMISSION * * * * In the matter of the application of Michigan Consolidated Gas Company ) for authority to increase its rates, amend ) Case No. U- its rate schedules and rules governing ) the distribution and supply of natural ) gas, and for miscellaneous accounting ) authority ) ) QUALIFICATIONS AND DIRECT TESTIMONY OF CYNTHIA L. CREISHER MICHIGAN PUBLIC SERVICE COMMISSION September, 0

25 QUALIFICATIONS OF CYNTHIA L. CREISHER PART I 0 0 Q. Please state your name, address, and occupation. A. My name is Cynthia L. Creisher and my temporary business address is 00 West Saginaw Street, Lansing, Michigan. I am employed by the Michigan Public Service Commission (MPSC or Commission) as a Public Utilities Engineer in the Gas Operations Section of the Operations and Wholesale Markets Division. Q. Please briefly describe your educational background and work experience. A. I graduated from Kettering University, formerly GMI Engineering & Management Institute, in 00 with a Bachelor of Science degree in Mechanical Engineering. Prior to my employment at the MPSC, I was employed in the automotive manufacturing industry by Fasco DC Motors, beginning as a cooperative education student in and then as a Product Design Engineer upon earning my degree. I have been employed by the MPSC since February 00 as a Public Utilities Engineer. Since I began employment with the MPSC, I have attended the Annual Regulatory Studies Program sponsored by the National Association of Regulatory Utility Commissioners. I have also attended numerous seminars and facility tours related to the gas industry. My responsibilities include engineering duties related to the Commission s regulation of natural gas well production and proration; transmission of natural gas, crude oil and petroleum products by pipeline; underground natural gas storage; gas pipeline safety; and various other gas utility functions, including review of gas utilities customer attachment programs and complaints or inquiries related to those programs. Q. Have you previously filed testimony or assisted in the development of Staff s position or exhibits in cases before the Michigan Public Service Commission?

26 QUALIFICATIONS OF CYNTHIA L. CREISHER PART I A. I have not filed testimony before the Commission; however, I have participated in developing Staff s position or exhibits in the following cases: U-, Michigan Consolidated Gas Company s gas rate case U-0, Commission s Own Motion regarding operating wells under vacuum U-0, Toro Energy s waiver of compliance U-, Commission s Own Motion for Continental Resources to show cause U-0, MichCon s long-term main renewal plan U-, MichCon s long-term meter move out plan U-, Consumers Energy s gas rate case

27 DIRECT TESTIMONY OF CYNTHIA L. CREISHER PART II 0 0 Q. What is the purpose of your testimony in this proceeding? A. The purpose of my testimony is to provide Staff s position on Michigan Consolidated Gas Company s (MichCon or the Company) request to include new market attachments as a part of its capital expenditures for Other Capital Projects. Q. Are you sponsoring any exhibits in this proceeding? A. No, I am not. New Market Attachments Q. How does MichCon currently handle new market attachments? A. As described by Company Witness Todd Persells, new market attachments, which are the extension of MichCon s distribution system to provide gas service to new customers, are handled through Tariff Rule C, Customer Attachment Program. Q. What is the Customer Attachment Program? A. The Customer Attachment Program (CAP) is a program to expand gas distribution systems to provide service to customers not currently served by MichCon. CAP s purpose is to provide a method of attaching new customers to the utility system, to ensure that the cost of attaching new customers is funded by the new customer rather than subsidized by existing customers, and to provide a financing mechanism for those new customers. Q. How does the CAP ensure that the cost of the system expansion is covered by new customers? A. The customer is required to contribute to the cost of the project based on an evaluation of the incremental costs and revenues related to the project to determine the net present value of the cost of service over a 0-year period. If the

28 DIRECT TESTIMONY OF CYNTHIA L. CREISHER PART II 0 0 financial evaluation indicates there will be a revenue deficiency, the new customer is required to provide a contribution in aid of construction towards the project. The contribution ensures that the attachment of the new customer will not cause existing customers to subsidize the expansion of the system to serve these new customers. Q. Can the number of attachments made through the CAP be limited by capital constraints? A. Yes, Tariff Rule C. states, The Company reserves the right to delay or deny a request for service under this Rule, if fulfilling such a request could, in the Company s opinion, create conditions potentially adverse to the Company or its customers. Such conditions may include, but are not limited to, safety issues, system operating requirements or capital constraints. Q. Has MichCon indicated that the number of new customer attachments through the CAP is currently limited by capital constraints? A. No, Staff met with MichCon in March 0 and June 0 to discuss the status and updates regarding their CAP. MichCon has indicated that after several years of considerably low attachment rates, the Company would begin to actively market and pursue new customer attachments through its CAP. The Company has projected an increase in the number of attachments and has not indicated that the target attachments would be limited by capital constraints. Q. Will including capital expenditures for attaching new customers in this case impact the number of new customers who elect to connect to MichCon s system?

29 DIRECT TESTIMONY OF CYNTHIA L. CREISHER PART II 0 0 A. No, the greatest determinant impacting the number of new customers who elect to connect to MichCon s system is the amount of the customer contribution toward the CAP project. Since the customer contribution is not affected, it is Staff s position that there will not be an increase in the number of customers attached through the program directly related to the inclusion of the capital expenditures to attach these new customers in this case. Q. Does Staff support MichCon s proposal to include capital expenditures for new market attachments? A. No, Staff does not. Staff s recommendation is that the capital expenditures for new market attachments be excluded in this case. Because the number of new market attachments through the CAP are subject to the discretion of the customer and not entirely under MichCon s control, Staff s position is that the amount of capital projected in this case will be in excess if the Company does not successfully attach the targeted number of new customers projected. Q. What is Staff s adjustment for capital expenditures related to new customer attachments? A. Staff recommends removing the capital expenditures related to new market attachments in the amounts of $. million for 0 and $. million for 0 as detailed by the Company in Exhibit A-, Schedule B.. Q. Since Staff is recommending the removal of capital expenditures for new market attachments in this case, are any other adjustments that should be considered? A. Yes, Company witness Persells indicated that two additional adjustments would be required if the capital expenditures for new market attachments are excluded in

30 DIRECT TESTIMONY OF CYNTHIA L. CREISHER PART II 0 0 this case. First, an adjustment to the customer growth supported by Company witness Chapel on Exhibit A-, Schedule E would be necessary. Second, an adjustment to the projected test year rate base as supported by Company witness Rynearson on Exhibit A-, Schedule B. and other related exhibits would be necessary. Q. Does Staff support MichCon s request for adjustments to the customer growth if the capital expenditures for new market attachments are excluded in this case? A. Staff agrees that the new market attachment growth should be excluded from the revenue requirements in this case; however, Staff s number of customers and volume determinants do not reflect projected test period customers as proposed by Company witness Chapel. As supported by Staff witness Quilico, Staff s case reflects the 0 historical customer and sales levels and therefore does not include any customer growth due to new market attachments. Q. Does Staff support MichCon s request for adjustments to the projected test year rate base if the capital expenditures for new market attachments are excluded in this case? A. Yes, as tabulated in Staff witness Krause s Exhibit S-, Schedule B, Staff s total projected rate base includes two adjustments related to new market attachment capital expenditures. Staff witness Krause presents the two adjustments of $,,000 removed from Utility Plant in Service and $,0,000 removed from Construction Work in Progress in his testimony. Q. Does this conclude your testimony? A. Yes, it does.

31 STATE OF MICHIGAN BEFORE THE MICHIGAN PUBLIC SERVICE COMMISSION * * * * * STATE OF MICHIGAN ) County of Ingham ) Case No. U- PROOF OF SERVICE Angela Brunette, being duly sworn, deposes and says that on September, 0, A.D., she ed a copy of the attached MPSC Qualifications and Testimony to the persons as shown on the attached list. Angela Brunette Subscribed to before me this st day of September, 0 Lisa Felice Notary Public, Eaton County My Commission expires April, 0

32 SERVICE LIST for U- Michigan Consolidated Gas Co. Richard P. Middleton Michigan Consolidated Gas Company One Energy Plaza Detroit, MI EnCana Oil & Gas (USA) Inc. Albert Ernst Shaun Johnson Dykema Gossett PLLC Capitol View 0 Townsend St., Ste. 00 Lansing, MI aernst@dykema.com sjohnson@dykema.com MCAAA Don L. Keskey Public Law Resource Center PLLC 0 N. Capitol Ave. Lansing, MI -0 donkeskey@publiclawresourcecenter.com Attorney General John A. Janiszewski, Assistant Attorney General Environment, Natural Resources, and Agriculture Div. G. Mennen Williams Bldg., th Fl. W. Ottawa St.; P.O. Box 0 Lansing, MI 0 janiszewskij@michigan.gov Retail Energy Supply Association Eric J. Schneidewind Varnum Riddering Schmidt & Howlett The Victor Center #0 0 N. Washington Sq. Lansing, MI ejschneidewind@varnumlaw.com Timothy J. Lundgren Bridge Street Grand Rapids, MI 0 tjlundgren@varnumlaw.com ABATE Robert A.W. Strong Clark Hill PLC S. Old Woodward Ave. Ste. 00 Birmingham, MI 00 rstrong@clarkhill.com Administrative Law Judge MPSC Staff Mark D. Eyster Anne M. Uitvlugt Administrative Law Judge Amit T. Singh Michigan Public Service Commission Assistant Attorneys General Mercantile Way, Suite Public Service Division Lansing, MI Mercantile Way, Suite eysterm@michigan.gov Lansing, MI uitvlugta@michigan.gov singha@michigan.gov