Nicor Gas Ex. 4.0 TABLE of CONTENTS Page
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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.