expects to spend 97% more than its original estimated expenditures in 2017. OSBA also claims that none of the detail in Columbia’s Modified LTIIP explains why the Company’s costs are increasing at nearly three times the rate of Columbia’s infrastructure replacements. OSBA avers that Columbia has not met the burden of proof to show that these increased expenditures and accelerated pace of infrastructure improvement are “reasonable, cost-effective, and are designed to ensure and maintain efficient, safe, adequate, reliable and reasonable service to consumers” (OSBA Comments at 4). OSBA suggests that the Commission require Columbia to submit additional proof that the accelerated infrastructure replacements and expenditures are reasonable, cost-effective and prudent, and that absent such additional proof, that the Commission should deny the Petition. Columbia’s Reply In its June 28 Letter, Columbia submitted an explanation of the need for additional acceleration of infrastructure replacement, and for the rising expenditures associated with those replacements. The Company explains that the accelerated replacements are necessary in order to stay on track with its goal as stated from its original LTIIP – to replace all cast iron and bare steel pipelines in its system by 2029 – and therefore the accelerated schedule is reasonable and prudent to maintain safe and adequate service. Columbia’s June 28 Letter also addresses the cost drivers that are causing its level of expenditures to rise faster than its rate of infrastructure replacement acceleration. The Company attributes the rising costs primarily to four factors: The need to install steel replacement pipe instead of plastic The location of the construction in high traffic and urban areas Rising contractor costs Increased street restoration requirements by local governments
Columbia avers that it referenced replacement programs as one of the measures to reduce risk in its DIMP plan. Columbia’s expected infrastructure replacements for its Second LTIIP are summarized in Table 1, below. Table 1: Columbia’s Expected Infrastructure Replacements for Its Second LTIIP 2018 2019 2020 2021 2022 Total Main (ft) 690,000 690,000 730,000 745,000 750,000 3,605,000 Services (Average #) 9,500 9,500 9,500 9,500 9,500 47,500 Meters (Average #) 3,000 3,000 3,000 3,000 3,000 15,000 The planned main replacements in the Second LTIIP represent a 29% increase in the estimated replacements as compared to Columbia’s First LTIIP. Factoring in Columbia’s Modified LTIIP, as detailed above, the Company is still accelerating its main replacement by 21%. Columbia notes that unlike the Company’s main replacement projects, meter replacements are not planned out at the beginning of the calendar year. The number of meter replacements is driven by the conditions found at each service location. Columbia explains that while this makes it difficult to forecast the number of meters to be replaced in a given year, it avers the average replacements in Table 1, above, are reasonable estimates. Comments No comments were received regarding the schedule for planned repair and replacement of eligible property. Resolution
ACCELERATED REPLACEMENT AND MAINTAINING SAFE AND RELIABLE SERVICE Columbia’s Petition The Company’s proposed annual expenditures for the Second LTIIP are detailed in Table 2, below. This represents a 107% increase over Columbia’s First LTIIP. Table 2: Columbia’s Proposed Annual Expenditures for Its Second LTIIP Year LTIIP Expenditures 2018 $250,200,000 2019 $252,750,000 2020 $273,495,000 2021 $286,695,000 2022 $295,455,000 Total $1,358,595,000 Cost-effectiveness Columbia discusses how it employs a systematic approach, rather than a segmented one. The Company explains that replacing larger sections of the system in a systematic fashion is more efficient and cost-effective in the long run than replacing smaller segments of pipeline. Columbia avers that this approach not only reduces costs, but also reduces the inventory of bare steel and cast iron more rapidly, and reduces the amount of disruption to customers and the municipalities within its service territory. The Company explains that costs are also controlled through a competitive bidding process for its contractors. Additionally, Columbia notes that it is able to purchase larger quantities of construction materials through competitive bidding,