TESTIMONY OF EVAN M. CRAHEN IN BEHALF OF NATIONAL FUEL GAS DISTRIBUTION CORPORATION. PENNSYLVANIA PUBLIC UTILITY COMMISSION v.

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1 PGC Statement No. TESTIMONY OF EVAN M. IN BEHALF OF NATIONAL FUEL GAS DISTRIBUTION CORPORATION PENNSYLVANIA PUBLIC UTILITY COMMISSION v. NATIONAL FUEL GAS DISTRIBUTION CORPORATION (PURCHASED GAS COSTS - PA.C.S. SECTION 0(f)), DOCKET NO. R-1-1

2 PGC R Q. A. Q. A. Q. 1 A. Please state your name and business address. My name is Evan M. Crahen and my business address is Main Street, Williamsville, New York 11. By whom are you employed and in what capacity? I am employed by National Fuel Gas Distribution Corporation ("Distribution" or the "Company") as a Regulatory Analyst II in the Rates and Regulatory Affairs Department. Please state briefly your educationar and,professional experience. I graduated from Canisius College, in December 0, with a Bachelor of Science degree in Economics 1 and Finance. In January 0, I began my employment 1 at a Fortune 00 financial institution as an 1 Accountant/Financial Analyst. In December 0, I graduated from Canisius College with a Master of Business Administration degree. In January 0, I was employed by Distribution in the Management Associate rotational training 1 program. While in the program, I spent three months in the Human Resources Department, a year in the 1

3 PGC R-1-1 Investor Relations Department, eight months in the Corporate Communications Department, and five months in the Purchasing and Accounts Payable Department. In May, I was promoted to Regulatory Analyst in the Rates and Regulatory Affairs Department, upon the successful completion of the rotational training program. In March 1, I was promoted to Q. Regulatory Analyst II, my current position. Have you previously testified before the Pennsylvania Public Utility Commission ("Commission")? 1 A. Yes. I have testified before this Commission on Q. 1 behalf of. Distribution in its Purchased Gas Cost ("PGC") proceeding under Pa. C.S. Section 0(f) in Docket Nos. R-1-1 and R-1-. Have you previously testified before any other regulatory commissions? 1 A. Yes. In addition to the testimony I have presented 1 1 Q. to this Commission, I have presented testimony before the New York State Public Service Commission in Docket No. 1-G-0. What is the subject of your testimony?

4 PGC R-1-1 A. I am testifying with regard to PGC Exhibit Nos. 1, Q. A. Q. A. Q. A. 1 1, 1, -A and. Were these exhibits prepared by you or under your supervision and direction? Yes, they were. Is the content of these exhibits true and correct to the best of your knowledge, information and belief? Yes, it is. Please explain PGC Exhibit No. 1. PGC Exhibit No. 1 is a schedule showing, for the most recent five years (i.e., November - October 1 through November 1 - October 1), consecutive three-day peak throug~put data (retail sales and end-user transportation service), by customer class (residential, commercial, industrial, and public authority) for Distribution's 1 Pennsylvania Division. It also shows the high, low 1 and average temperature for each of the consecutive 1 three days. February -, 1 is the most recent consecutive three-day peak. February, 1 is 1 the most recent peak day within the three day peak specified in PGC Exhibit No. 1.

5 PGC R-1-1 Q. A. Please explain PGC Exhibit No. 1. PGC Exhibit No. 1 calculates Distribution's projected design peak day requirements for the twelve months ending July 1, 1. the projected peak day requirement. Page shows Data based on degree days is provided because this level of degree days was used for peak day planning purposes as explained in Exhibit. Pages through 1 establish the base case peak day. For the heat 1 1 sensitive classes (both retail sales and transportation service) (i.e., residential, commercial, and public authority), Distribution utilizes a method of extracting a base load volume and computing a daily heating volume for heating 1 degree days. The daily base load volume is added to the daily heating volume to determine the base case peak day sales. Gas usage of customers in the industrial classes, Small Volume Industrial Service ("SVIS"), Intermediate Volume Industrial Service ("IVIS"), Large Volume Industrial Service ("LVIS"), Large Industrial Service ("LIS"), and Daily Metered Large Manufacturing Transportation Service

6 PGC R-1-1 ("DMLMTS"), is computed based on an operating schedule. For the SVIS and IVIS classes, Distribution utilizes an operating schedule of 1 working days in a month to calculate peak day sales. For the LVIS, LIS and DMLMTS classes, Distribution utilizes customer operating schedules, as shown on Pages and 1, to calculate peak day sales. Pages 1 1 Q. 1 A through 1 show the residential variables, pages 1 through show the commercial variables, and pages through show the public authority variables used in the econometric models. Page provides the extreme degree days for the most recent 0 year:s. Please explain PGC Exhibit No. 1. PGC Exhibit No. 1 reflects Distribution's gas requirements in order to provide reliable and uninterrupted service to its priority one customers (residential and firm critical commercial and public authority essential human needs customers) during peak periods. These requirements are calculated on 1 Q. both historic and projected bases. Please explain PGC Exhibit No. -A.

7 PGC R-1-1 A. PGC Exhibit No. -A, page, provides Distribution's estimate of the 1 design peak day requirements based on heating degree days. The term "design peak day" refers to the practice that is standard in the natural gas industry under which pipeline capacity planning, storage capacity planning, and natural gas supply planning are based on customers' requirements on the coldest winter day reasonably expected to be experienced. An 1 1 explanation of the design peak day requirements of Distribution, including the requirements of transportation service customers, is provided in PGC Exhibit No. 1. Page of PGC.Exhibit No. -A shows the derivation of the Monthly Metered 1 1 Transportation ("MMT") requirement. imbalance capacity 1 Q. 1 1 A. 1 Why was heating degree days used in the calculation of design peak day requirements? After a review of the coldest days experienced during each winter over the past years, as well as a review of what design peak days other local distribution companies ("LDCs") prepare for,

8 PGC R-1-1 Distribution determined that the most appropriate level of degree days for peak day planning in its service territory was heating degree days. Distribution's 00 0(f) proceeding, the Commission concluded that this was a reasonable level of heating degree days to use for system planning purposes. In Q. 1 A. "Upon our careful review of the recommendation of the ALJ and the position of the Parties, we find that the ALJ's recommendation of approval of NFGD's proposal to use heating degree days for purposes of both planning the necessary levels of pipeline and storage capacity on interstate pipeline companies and for allocating costs of capacity among classes of customers is reasonable." (Opinion and Order, R-, Adopted: August 1, 00, pg. 1.) Please describe the calculation of unaccounted-forgas. Pursuant to the annual reporting requirement of Section.1 of the Commission's Regulations established in Docket No. 1-1-, in general, the calculation of unaccounted-for-gas ("UFG") is the difference between the gas supplies delivered to Distribution and the amount of gas delivered to its customers, adjusted for company use

9 PGC R-1-1 and other allowed variables. PGC Exhibit No., pages and, are formatted in a manner similar to the UFG report filed with the Commission on September 0, 1. The only difference between the Q. A. 1 two sources of information is a timing lag in the availability of information. The September 0, 1 UFG report filing utilizes projected information, whereas the information contained in PGC Exhibit No. is based on actual information. Please explain PGC Exhibit No.. PGC Exhibit No. shows historical levels of UFG. The Company considers multiples of twelve-month perids ending in August to be the proper periods in 1 which to measure UFG. Twelve-month periods ending in August represent periods in which receipts and deliveries are least affected by weather, thus providing the most representative UFG information. Page shows the Company's actual, historical level of UFG for the sixty months ended August 1,, 1, 1 and 1. Pages and provide the monthly UFG levels for September - August 1. The Gas Received Total (Column ) includes Gas

10 PGC R-1-1 Received from Production Facilities (Column 1), Gas Received From Interstate Pipelines (Column ), and Gas Received From Other Sources (Column ). The Gas Delivered Total (Column ) includes Gas Delivered to Customers (Column ) and Gas Delivered to Interstate Pipeline (Column ). The Adjustments Total (Column ) includes Located & Repaired Breaks in Mains/Services (Column ) and Distribution Company Use (Column ). Distribution UFG (Column ) is calculated as follows: Gas Received Total (Column ) less Gas Delivered Total (Column ) less 1 Adjustments Total (Column ). The twelve-month 1 1 Q. 1 A percent of UFG shown in Colu~n equals Column divided by Column, for twelve-months. How has the Company addressed unaccounted-for-gas? It is important to note that the actual volume of gas that is physically "unaccounted-for" is not substantial. Most unaccounted-for-gas is the difference between gas metered going into the system and gas metered at customer premises. Both the 1 meters measuring gas going into the system and at customer premises have error tolerances. The

11 PGC R-1-1 Company continually strives to improve measurement of UFG. For example, temperature compensated meters have been installed during meter change outs. Temperature compensated meters record gas usage more accurately than non-temperature compensated meters. Most UFG remedies provide only for better "accounting" of the differential between receipts and deliveries. This type of activity, although "reducing" UFG, does not change the amount of gas being brought into the sy~tem. Leak repair is a UFG 1 element that actually reduces gas purchases without changing gas deliveries. Leak repair physically reduces UFG. Consequently, field priorities require. 1 the repair of all higher volume leaks regardless of 1 leak safety classification. Finally, UFG due to Q. 1 A. leakage has been added as a factor with significant weighting in the Company's pipeline replacement evaluation program ("PREP"). What is the current retainage rate charged to transportation customers? As indicated in the Company's tariff, to compensate for line losses, the volume of gas delivered into

12 PGC R-1-1 the Company's distribution system for daily and monthly metered transportation service shall be determined to be equal to. percent (or 0.1 percent) of the amount indicated by a meter at the point of delivery into the Company's distribution system. The retainage rate of 0.1 percent includes Q. A. 1 1 Q. 1 A. 0. percent for unaccounted for gas and 0.0 percent for Company use. Is the Company proposing any changes to the retainage rate in this proceeding? No, the Company is proposing to keep the currently effective retainage rate of 0.1 percent in place fqr all customer classes. Does this conclude your direct testimony? Yes, at this time.

13 Verification I, Evan M. Crahen, Regulatory Analyst II, of the Rates and Regulatory Affairs Department of National Fuel Gas Distribution Corporation state that the facts set forth in the foregoing Purchased Gas Cost Filing under Section 0(f) of the Public Utility Code and Pa. Code. and. Docketed at R-1-1 including Statement No., Direct Testimony of Evan M. Crahen Exhibit Nos. 1, 1, 1, -A and are true and correct to the best of my knowledge, information and belief, and that I expect to be able to prove the same at a hearing held in this matter. This statement is made subject to the penalties of 1 Pa. C.S. 0 relating to unsworn falsifications to authorities. Evan M. Crahen This 1st day of January, 1

BEFORE THE PENNSYLVANIA PUBLIC UTILITY COMMISSION PETITION OF PECO ENERGY COMPANY FOR APPROVAL OF ITS SMART METER UNIVERSAL DEPLOYMENT PLAN

PECO ENERGY COMPANY STATEMENT NO. 2 BEFORE THE PENNSYLVANIA PUBLIC UTILITY COMMISSION PETITION OF PECO ENERGY COMPANY FOR APPROVAL OF ITS SMART METER UNIVERSAL DEPLOYMENT PLAN DOCKET NO. M-2009-2123944