Certain elements of the public infrastructure, from natural gas pipelines to power plants and transmission lines, are operated by entities subject to regulation. The regulatory bodies governing these entities range from local and state to federal levels, and could include agencies such as public utility commissions or the Federal Energy Regulatory Commission (FERC). Regulated entities typically recover the cost of constructing, operating, and maintaining these infrastructure projects by including such costs as part of their rate base. In the regulated utility industry, for an owner to recover the cost of improving or maintaining a facility in a prudence hearing, the owner has to substantiate and prove that the costs incurred were reasonable and necessary. If it fails to do so, certain costs incurred may be disallowed and not recovered through the rate base.
With more than 30 years of assisting clients with disputes and issues in construction matters, Interface Consulting has experience and expertise in these unique projects including the design and construction of pipelines, power plants, electrical transmission facilities, and other types of energy infrastructure. In addition, we have evaluated and provided testimony on various prudence issues related to the construction of such facilities, including those at the FERC level. The range of our expertise in evaluating prudence issues includes the following:
- Project costs and schedules, including schedule delay analysis
- Contracting strategies
- Project and construction management practices
- Standards of care
- Construction work in progress (CWIP)
- Risk analysis and dispute avoidance
- Negotiating and drafting engineering, procurement, and construction contracts
- Construction claims and disputes
- Construction litigation and arbitration support
- Expert witness testimony
In regulatory hearings, the evaluation is usually focused on the determination of what a reasonable utility manager would have done based on the circumstances and information known, or that should have been known, at the time decisions were made. Interface Consulting provides a wide range of services required in prudence evaluations, including document reviews and analysis, written testimony, litigation support, and live testimony in court.