STATE OF ILLINOIS
ILLINOIS COMMERCE COMMISSION
Northern Illinois Gas Company ) d/b/a Nicor Gas Company ) ) Docket No. 18-1140 Application for permanent Certificate of ) Public Convenience and Necessity, under ) Section 8-406 of the Public Utilities Act, ) to construct, operate, and maintain gas ) distribution facilities and to transact the ) business of furnishing gas service to the ) public in LaSalle County, Illinois. )
Rebuttal Testimony of
GREGORY M. STIGLIC, P.E.
Director, Engineering Design
Northern Illinois Gas Company d/b/a Nicor Gas Company
October 25, 2018
Nicor Gas Ex. 4.0 TABLE OF CONTENTS Page
I. INTRODUCTION ...... 1 II. PURPOSE OF TESTIMONY ...... 1 III. ITEMIZED ATTACHMENTS ...... 2 IV. ENGINEERING RECOMMENDED INVESTMENT...... 2 V. CONCLUSION ...... 6
Docket No. 18-1140 i Nicor Gas Ex. 4.0 1 I. INTRODUCTION
2 Q. Will you please state your name and business address?
3 A. Gregory M. Stiglic, 1844 Ferry Road, Naperville, Illinois 60563.
4 Q. Are you the same Gregory M. Stiglic who provided direct testimony in this
5 proceeding?
6 A. Yes.
7 II. PURPOSE OF TESTIMONY
8 Q. What is the purpose of your rebuttal testimony?
9 A. I provide additional support for the Company’s request for a Certificate of Public
10 Convenience and Necessity (the “Certificate”) to construct, operate, and maintain
11 approximately 2.5 miles of new gas distribution main and related facilities, and to
12 transact the business of furnishing gas service to a facility (the “Mendota Facility”) to be
13 constructed by Archer Daniels Midland Company (“ADM”) in Mendota Township,
14 LaSalle County, Illinois. The main extension and related infrastructure required to
15 provide such service will be referred to collectively in my rebuttal testimony as “the
16 Mendota Facility main extension” or “project.”
17 In particular, in response to the direct testimony of Illinois Commerce
18 Commission (“ICC” or “Commission”) Staff (“Staff”) witness Brett Seagle, I provide
19 additional support for the Company’s proposal to install more 6” steel main in place of 4”
20 steel main for a portion of the Mendota Facility main extension.
Docket No. 18-1140 1 Nicor Gas Ex. 4.0 21 III. ITEMIZED ATTACHMENTS
22 Q. Are there any exhibits to your rebuttal testimony?
23 A. Yes. Attached to my rebuttal testimony are two exhibits:
24 • Nicor Gas Exhibit 4.1 – a copy of the zoning map available from the City of 25 Mendota’s website at http://www.mendota.il.us/zoning.html with an overlay of 26 the Mendota Facility main extension.
27 • Nicor Gas Exhibit 4.2 – a map showing the proximity of other potential customers 28 to the Mendota Facility main extension.
29 IV. ENGINEERING RECOMMENDED INVESTMENT
30 Q. What is Nicor Gas’ engineering recommended investment in facilities to serve the
31 Mendota Facility main extension?
32 A. Nicor Gas proposes to invest approximately $205,000 in additional facility improvements
33 to provide incremental capacity for future development near the Mendota Facility. It is
34 the recommendation of the Company’s Engineering department to substitute 10,800 feet
35 of 4” steel main with 6” steel main. The installation of some 6” steel main in place of 4”
36 steel main at the time of initial construction better positions the Company for future
37 growth and eliminates additional resources, costly, and disruptive construction that would
38 be needed to serve continued development.
39 Q. Mr. Seagle recommends that the Company provide justification for this additional
40 system investment in its rebuttal testimony. (Seagle Dir., Staff Ex. 1.0, 17:340-349).
41 Does the Company offer more information in support of the additional system
42 investment?
43 A. Yes. I will discuss several pieces of information that I believe support the Company’s
44 request for Commission approval of the additional system investment in the Mendota
Docket No. 18-1140 2 Nicor Gas Ex. 4.0 45 Facility main extension. First, I will address the Company’s approach to designing
46 distribution system investments. Second, I will address the capacity of the minimum
47 system investment as compared to the engineering recommended investment for the
48 Mendota Facility main extension. Third, I will address the cost of construction if Nicor
49 Gas were to install larger sized main for a portion of the Mendota Facility main extension
50 at a later point in time. Fourth, I will address the Company’s current understanding of
51 potential for growth in and near the Mendota Facility.
52 Q. How does the Company approach its distribution system investments?
53 A. Nicor Gas designs and builds its gas distribution system around core principles of safety,
54 reliability, and prudency. The Company takes a holistic approach to designing gas main
55 replacement and extension projects based on hydraulic principles and customer
56 requirements. The Company considers the needs of existing, proposed (here, ADM), and
57 potential future customers to ensure the overall design of the project is appropriate and
58 sound. Given the longevity of gas main infrastructure and the Company’s experience
59 with customer reliance upon natural gas when it is available, the Company also designs
60 the project to ensure that it will provide a sufficient supply of gas to customers over a
61 long-term horizon of 50 years or more.
62 In the case of the Mendota Facility main extension, Nicor Gas proposed to upsize
63 a portion of 4” steel main to 6” steel main to address a number of factors. The additional
64 capacity will allow Nicor Gas to serve potential future customers around U.S. Highway
65 34 (“US Hwy 34”) and in Meriden Township to the northeast of the Mendota Facility. In
66 addition, the 6” main will give the Company the ability to add more customer load in and
67 around the City of Mendota without negatively affecting the supply of gas to ADM.
Docket No. 18-1140 3 Nicor Gas Ex. 4.0 68 Q. Will you please explain the demand that ADM’s proposed gas usage will place on
69 the minimum system investment?
70 A. ADM’s proposed usage will utilize a majority of the capacity that would be provided if
71 Nicor Gas were to install the Mendota Facility main extension using only 4” main.
72 Q. What costs would Nicor Gas incur if it were to return to the Mendota Facility main
73 extension in five years and replace a portion of 4” main with 6” main?
74 A. Nicor Gas unquestionably would experience an increase in construction costs if it were to
75 install the Mendota Facility main extension using only 4” main and then come back and
76 replace 10,800 feet of 4” main with 6” main. As I noted above, Nicor Gas proposes here
77 to incur an additional $205,000 to construct these additional facility improvements now.
78 Nicor Gas expects the costs could range as high as $2,134,051 if the Company were to
79 remove and replace the same length of main in 2024. These costs would be in addition to
80 the original cost to install the 4” main ($983,599). The increase in costs reflects the
81 additional labor that would be required to remove the original main and replace it with
82 larger main, as well as the inflationary pressures associated with the future purchase of
83 the same materials. Given the reasonable expectation for future growth and the increased
84 costs of replacing main in the future, Nicor Gas believes that it is more efficient to install
85 a portion of upsized main at the time of the initial construction of the Mendota Facility
86 main extension.
87 Q. The Company’s response to Staff data request ENG 1.02, which is attached to
88 Mr. Seagle’s testimony, states that the Company is proposing to install a portion of
89 upsized main to “provide additional capacity should ADM expand or allow other
90 customers to add onto this line in the future.” (Staff Ex. 1.0, Attach. 1.4). What
Docket No. 18-1140 4 Nicor Gas Ex. 4.0 91 information does the Company currently have regarding the possibility of adding
92 other customers to the Mendota Facility main extension?
93 A. Nicor Gas reasonably expects that there will be customer growth, and the need for
94 corresponding capacity on this part of its system, within the foreseeable future.
95 In particular, Nicor Gas has identified farmland in Meriden Township to the
96 northeast of the Mendota Facility. This farmland is indicated on the map attached to my
97 testimony as Nicor Gas Exhibit 4.2. In Nicor Gas’ experience, this type of farmland will
98 have one or more crop dryers and/or other commercial facilities on site that will present a
99 substantial demand for natural gas service. A small crop dryer would be in the range of
100 3-7 MCFH in load and may require 10 to 15 psig in delivery pressure. A small rural
101 business can range from 1-10 MCFH in load and might require 2 to 5 psig in delivery
102 pressure.
103 In addition, Nicor Gas has reviewed the zoning map prepared by the City of
104 Mendota, which is available at http://www.mendota.il.us/zoning.html and attached to my
105 testimony as Nicor Gas Exhibit 4.1. The zoning map further supports Nicor Gas’
106 expectation that there will be future expansion and development near the Mendota
107 Facility. For example, there is Manufacturing District zoning (shown in pink on the map)
108 along portions of the Company’s proposed route, which will parallel US Hwy 34, as well
109 as directly across from the Mendota Facility to the north of US Hwy 34. In addition, the
110 Mendota Business Park, which is part of a Tax Increment Financing (“TIF”) district, is
111 found along the Company’s proposed route and presents a current mix of industrial and
112 agricultural use. Finally, there is an area of Business District zoning (shown in purple on
Docket No. 18-1140 5 Nicor Gas Ex. 4.0 113 the map) located along the Company’s proposed route and just west of the Illinois 39/US
114 Hwy 34 interchange.
115 The additional system investment that Nicor Gas proposes in this proceeding will
116 enable it to expeditiously and efficiently serve commercial customers that might
117 approach Nicor Gas for gas service, such as the farmland facilities or new commercial
118 development along US Hwy 34 that likely is to appear after ADM arrives in the area.
119 V. CONCLUSION
120 Q. Does this conclude your rebuttal testimony?
121 A. Yes.
Docket No. 18-1140 6 Nicor Gas Ex. 4.0