Case Study:

Oil Pipeline Peer Group Analysis

Confidential Client | 2019

On behalf of an oil pipeline customer, Atrium consultants developed an innovative methodology to mitigate the risk of declining rate base. We provided expert witness testimony before the state regulatory commission and the successful implementation of the new rates increased the pipeline’s operating margins.

CHALLENGE

A producer restructured leaving the oil pipeline system, with both intrastate and interstate routes, as a standalone financial entity. Operating expenses were increasing annually by double digits; transport volumes were flat; the system was nearly fully depreciated and producing negative operating margins. Third party consultants had opined that the pipeline could not justify an increase in rates.

EXPERTISE

Evaluated the operations and financial performance of the pipeline relative to an industry peer group and developed studies supporting revenue enhancement strategies and rate case filings before federal and state regulatory agencies. Implemented settlement strategies and managed the interstate settlement processes.

OUTCOME

Atrium delivered its benchmarking study and recommended the components of the study that should be prioritized and implemented as part of the client’s tariff alignment effort. The work product was successfully integrated into the client’s planning for the next phase of the project.

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