WGL filed a petition to Maryland’s Public Sercie Commission (PSC) to increase gas distribution base rates by $40 million. As part of this filing, WGL proposed to transfer $43 million from a capital tracker mechanism into base rates. The actual costs of the completed projects being proposed for transfer to rate base were consistently well above initial pre-construction estimates—on average 56 percent. OPC hired DHInfrastructure to assess the prudency of WGL’s investment activities by evaluating its project management procedures.
Our staff submitted direct and oral testimony on behalf of OPC on WGL's project management procedures and recommended denial of $4.3 in plant additions due to excess costs. We eventually advised OPC through settlement negotiations that resulted in tariff increase of just $27 million, 33 percent below the requested amount, and an agreement to develop improved project cost variance procedures.