Before the Public Service Commission the BROOKLYN UNION GAS
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Before the Public Service Commission THE BROOKLYN UNION GAS COMPANY d/b/a NATIONAL GRID NY Direct Testimony Of Charles F. Willard Dated: April 2019 Testimony of Charles F. Willard Table of Contents I. Introduction and Qualifications .............................................................. 1 II. SIR Program Overview ............................................................................ 5 III. SIR Program Costs ................................................................................... 9 IV. SIR Cost Control Efforts ........................................................................ 25 V. Compliance with Rate Case Filing Requirements ............................... 26 Testimony of Charles F. Willard 1 I. Introduction and Qualifications 2 Q. Please state your name and business address. 3 A. My name is Charles F. Willard. My business address is 300 Erie 4 Boulevard West, Syracuse, New York 13202. 5 6 Q. By whom are you employed and in what capacity? 7 A. I am employed by National Grid USA Service Company, Inc., a subsidiary 8 of National Grid USA (“National Grid”), and currently hold the position of 9 Director, Environmental Management. My responsibilities include 10 overseeing the environmental and site investigation and remediation 11 (“SIR”) programs for National Grid’s operating companies, including The 12 Brooklyn Union Gas Company d/b/a National Grid NY (“KEDNY” or 13 “Company”) and KeySpan Gas East Corporation d/b/a National Grid 14 (“KEDLI”). 15 16 Q. Please describe your educational background and business experience. 17 A. I am a graduate of the State University of New York at Geneseo with a 18 Bachelor of Arts degree in Geology. In addition, I hold a Masters in 19 Engineering Geology with a concentration in Environmental Engineering 20 from Drexel University and a Masters in Business Administration from 21 LeMoyne University. Page 1 of 28 Testimony of Charles F. Willard 1 I have been with National Grid since 1996. Prior to my appointment as 2 Director, Environmental Management in 2014, I held the positions of Lead 3 Environmental Engineer, Manager of New York SIR, and Director of SIR. 4 Before joining National Grid, I held various management level positions in 5 the field of environmental engineering and worked on projects such as 6 environmental investigations, feasibility studies, remedial designs, and 7 construction at large Environmental Protection Agency (“EPA”) Superfund, 8 Resource Conservation and Recovery Act, and New York State Superfund 9 sites. 10 11 Q. Have you previously testified before the New York State Public Service 12 Commission (the “Commission”)? 13 A. Yes. I testified on behalf of KEDLI and KEDNY in Cases 16-G-0058 and 14 16-G-0059 (collectively, the “2016 KEDNY and KEDLI Rate Cases”), and 15 on behalf of Niagara Mohawk Power Corporation d/b/a National Grid in 16 Cases 17-E-0238 and 17-G-0239. 17 18 Q. What is the purpose of your testimony? 19 A. The purpose of my testimony is to support the SIR costs included in 20 KEDNY’s revenue requirement. Specifically, I will: 21 (i) provide an overview of KEDNY’s SIR program; Page 2 of 28 Testimony of Charles F. Willard 1 (ii) discuss the historic level of SIR costs incurred by KEDNY, 2 including those incurred during the twelve months ended December 3 31, 2018 (“Historic Test Year”), as well as the forecast costs for the 4 twelve months ending March 31, 2021 (“Rate Year”) and the twelve 5 months ending March 31, 2022 (“Data Year 1”), March 31, 2023 6 (“Data Year 2”), and March 31, 2024 (“Data Year 3”) (collectively, 7 the “Data Years”); 8 (iii) present KEDNY’s proposal for recovery of SIR costs in the Rate 9 Year and Data Years, including its proposal to address the 10 significant level of projected SIR costs at the Newtown Creek and 11 Gowanus Canal Superfund sites; and 12 (iv) discuss KEDNY’s cost control procedures. 13 14 I will also address KEDNY’s compliance with the rate case filing 15 requirements adopted by the Commission in its November 28, 2012 Order 16 in Case 11-M-0034 (“SIR Generic Order”). 17 18 Q. Do you sponsor any exhibits as part of your testimony? 19 A. Yes. Attached to my testimony are the following exhibits and appendix 20 that were prepared under my direction and supervision: 21 (i) Exhibit __ (CFW-1) provides details on work progress at KEDNY’s Page 3 of 28 Testimony of Charles F. Willard 1 manufactured gas plant (“MGP”) and Superfund sites; 2 (ii) Exhibit __ (CFW-2) is an example of a New York State Department 3 of Environmental Conservation (“DEC”) Order on Consent; 4 (iii) Exhibit __ (CFW-3) is the Unilateral Administrative Order for the 5 remedial design of the Gowanus Canal Superfund Site; 6 (iv) Exhibit __ (CFW-4) is the Administrative Settlement Agreement 7 and Order on Consent for the remedial investigation and feasibility 8 study of the Newtown Creek Superfund Site; 9 (v) Exhibit __ (CFW-5) provides examples of changes to DEC remedy 10 decisions following discussions with KEDNY; 11 (vi) Exhibit __ (CFW-6) is a copy of the DEC work schedules for fiscal 12 years 2018, 2019, and 2020; 13 (vii) Exhibit __ (CFW-7) sets forth KEDNY’s compliance with existing 14 timetables and DEC requirements; 15 (viii) Exhibit __ (CFW-8) provides KEDNY’s past SIR program spend on 16 an annual basis for 2016 and 2017; 17 (ix) Exhibit __ (CFW-9) sets forth KEDNY’s SIR program spend in the 18 Historic Test Year; 19 (x) Exhibit __ (CFW-10) sets forth KEDNY’s forecast SIR program 20 spend in the Rate Year and Data Years; and 21 (xi) Appendix 1 sets forth the Company’s cost control efforts. Page 4 of 28 Testimony of Charles F. Willard 1 II. SIR Program Overview 2 Q. Please provide a brief overview of KEDNY’s SIR program. 3 A. KEDNY’s SIR program includes activities in connection with the 4 management, investigation, and remediation of MGP and Superfund sites 5 that have been contaminated by the past release of substances from property 6 owned or formerly owned by KEDNY or its predecessors. KEDNY has 7 responsibility for 27 MGP and two federal Superfund sites associated with 8 waterways (Gowanus Canal and Newtown Creek) adjacent to former MGP 9 sites. Both Superfund sites are in the remedial planning process. Of the 10 27 MGP sites, seven sites are in site characterization or remedial 11 investigation, five sites are in remedial planning, one site is in remedial 12 action and nine sites are have been either remediated but are subject to 13 future monitoring and/or are subject to site management obligations. Five 14 sites have received a “No Further Action” determination following site 15 characterization and/or remediation, with four of the five no longer reported 16 to DEC. As I will discuss later in my testimony, remediation and 17 investigation activities at the Gowanus Canal and Newtown Creek 18 Superfund sites are projected to cause KEDNY to incur significant SIR 19 costs in the Rate Year, Data Years, and beyond. 20 21 Exhibit __ (CFW-1) describes the sites currently being managed by Page 5 of 28 Testimony of Charles F. Willard 1 KEDNY. The exhibit includes the background of each site, and details the 2 investigation and remediation activities that have taken place over the last 3 three years from January 2016 through the end of the Historic Test Year. 4 5 Q. What types of costs does KEDNY incur under its SIR program? 6 A. Costs under KEDNY’s SIR program include consultant and contractor 7 costs, remediation activities aimed at reducing the volume, toxicity, or 8 mobility of pre-existing contamination, and incremental external costs 9 (including insurance and legal costs) incurred to seek recovery from third 10 parties or to otherwise mitigate the Company’s SIR costs or liabilities. 11 12 Q. What roles do the DEC and other regulatory agencies play with regard 13 to the scope and timing of investigation and remediation work 14 conducted at MGP and Superfund sites? 15 A. The DEC and EPA control the scope and timing of work at MGP and 16 Superfund sites. The scope of KEDNY’s site investigations, work plans, 17 clean-up, and field work decisions are reviewed, approved, and/or expanded 18 by the DEC and/or the EPA pursuant to various orders. An example Order 19 on Consent for 23 of KEDNY’s MGP sites is provided in Exhibit __ (CFW- 20 2). The Unilateral Administrative Order for the remedial design of the 21 Gowanus Canal Superfund site and the Administrative Settlement Page 6 of 28 Testimony of Charles F. Willard 1 Agreement and Order on Consent for the remedial investigation and 2 feasibility study of the Newtown Creek Superfund site are provided in 3 Exhibit __ (CFW-3) and Exhibit __ (CFW-4), respectively. Although the 4 Company has limited control over the scope and timing of SIR activities, 5 KEDNY challenges the DEC and EPA when a more cost effective and 6 equally protective remedy is available and, as described later in my 7 testimony, manages costs in the areas it can control, such as contracting 8 procedures. Exhibit __ (CFW-5) provides examples of changes to DEC 9 remedy decisions and value engineering related modifications following 10 discussions with KEDNY that resulted in cost savings to customers. 11 12 Q. How is the schedule for work at MGP sites determined? 13 A. Prior to the beginning of each New York State fiscal year (April 1 through 14 March 31), KEDNY and the DEC meet to discuss the upcoming work 15 schedule. The DEC approves the work schedule for the upcoming fiscal 16 year only. As a result, the amount of spending in a given year is highly 17 dependent upon the DEC and other third parties, including private property 18 owners, permitting authorities, et cetera.