The Brattle Group has expertise in ratemaking and regulatory policy issues at both federal and state/provincial levels. Our experience includes all aspects of traditional cost of service analysis as well as incentive regulation, negotiated rates, and market-based rates. We understand the practical details of regulatory accounting and issues surrounding adequate investor returns, appropriate price signals, proper rate design, and the need for economic efficiency. We provide economic analysis of regulatory issues in industry restructuring, access, prudence, and stranded cost recovery.
We have prepared and evaluated cost of service studies and testified in natural gas and oil pipeline proceedings regarding rate base derivation, appropriate operations and maintenance expense levels (including parent company overhead cost allocations), allowed return, test-year billing determinants, and the appropriate treatment of discounts. We have also analyzed cost allocation procedures, including allocation between non-jurisdictional and jurisdictional activities. Our work often involves testifying as to the appropriate rate design methodology. In oil pipeline proceedings, we also have testified regarding the threshold test for determining changed circumstances of the economic basis underlying a pipeline’s rates as specified by the 1992 Energy Policy Act.
In the context of settlement negotiations, The Brattle Group has modeled the transportation rates of several gas pipelines and large local distribution companies including British Gas, El Paso Natural Gas, Gaz Métro, Iroquois Gas Transmission, Southern California Gas Company, and Tennessee Gas Pipeline. We use these rate models to evaluate the sensitivity of rates to alternative rate designs or alternative cost of service assumptions. We have examined the rate effects of alternative depreciation schedules, zone pricing proposals, and capacity turn-back scenarios.
The Brattle Group has provided expert testimony before the FERC regarding oil and natural gas pipelines’ market-based rates applications. This testimony has analyzed the market power held by petroleum and natural gas pipelines seeking market-based rates. In addition to calculating traditional market share indices, the substitutability of potential competitive alternatives to the pipeline was examined, as well as examination of issues related to a reasonable proxy for a competitive price for the product(s) at issue in the proceedings.
Complex business and legal matters require intellectually honest and analytically rigorous solutions that are thoughtfully developed and clearly communicated. We apply economic and finance principles with uncompromising quality to achieve clarity in the face of complexity. Independent analysis, responsive execution, and compelling presentation. That’s Brattle. That’s the Power of Economics.