Asset Componentization Study for Natural Gas Distribution
Comprehensive asset componentization study for a natural gas distribution network spanning three states, identifying $45M+ in unrecorded components and establishing accurate depreciation schedules for rate case support.
The Challenge
A regional natural gas utility needed to establish component-level asset records for their distribution network to support an upcoming rate case. Their existing asset register tracked assets at a high level but lacked the detailed component breakdown required for accurate depreciation studies and regulatory filings.
Insufficient Component Detail
Asset register tracked distribution mains and stations as single units without breaking down individual components like valves, regulators, and meters.
Depreciation Inaccuracies
Lack of component-level data resulted in inaccurate depreciation calculations and potential under-recovery of capital investments.
Rate Case Requirements
Regulatory commission required detailed component-level asset data and depreciation studies to support rate increase request.
Our Solution
We conducted a comprehensive asset componentization study combining engineering analysis, field inspections, and depreciation expertise to establish accurate component-level records.
Engineering Analysis
Worked with utility engineers to analyze distribution system design standards and identify all component types within each asset category. Developed component hierarchies aligned with FERC and state regulatory requirements for natural gas utilities.
Field Inspections
Conducted statistical sampling of distribution facilities across all three states to verify component counts, types, and conditions. Captured detailed photographs and technical specifications for each component category identified in the engineering analysis.
Component Hierarchy Establishment
Established parent-child relationships between assets and components, assigned appropriate FERC account codes, and documented installation dates and costs. Created detailed component libraries for future asset additions and replacements.
Depreciation Studies
Developed component-specific depreciation rates based on engineering life studies and industry benchmarks. Calculated accurate depreciation expense and reserve balances for rate case filing and financial reporting purposes.
Results & Impact
The componentization study provided the detailed asset data needed for successful rate case filing and established a foundation for improved asset management.
Key Outcomes
Identified $45M+ in previously unrecorded distribution system components
Improved depreciation expense accuracy by 15% through component-level rates
Successfully supported rate case filing with detailed asset documentation
Established component libraries for standardized future asset additions
Created foundation for component-level maintenance planning and budgeting
Reduced regulatory audit risk through improved asset record accuracy
Need Asset Componentization Services?
Our team specializes in utility asset componentization studies for rate case support and improved asset management.