Schiff Hardin’s Construction Law Group has extensive experience providing regulatory strategy services to utilities for large capital construction investments. Our guidance in helping energy/utility clients establish a plan, monitor the project, and respond to regulators is especially valuable in states where recovering the costs of developing a new facility is ultimately in the hands of regulators. We have provided this strategic guidance to clients on a number of major projects.
Developing a Regulatory Plan
Multi-year capital construction projects are large financial risks for an owner, and even moreso when dealing with regulatory agencies and their review of project expenses. Our attorneys help owners take actions that increase the likelihood of recovering the full value of that investment.
Project documentation that preserves and memorializes the decision-making process is crucial to demonstrating prudent decision making and defending project costs. Working with the owner’s management team, we develop the necessary processes and procedures at the beginning of a project to manage and maintain contemporaneous project records and their content.
It is our experience that implementing such a system is the best regulatory investment owner can make and can put the owner in the most favorable position when responding to regulatory questions. The procedures and assistance offered by our construction attorneys have a proven track record in helping clients to recover high percentages of project costs from various regulatory agencies.
Mitigating Problems Before they Become Significant Regulatory Issues
Major construction projects can exceed the original budget and schedule. If left unmanaged, runaway construction costs and significant schedule delays become significant regulatory problem for owners. Cost and schedule overruns prompts questions from regulatory stakeholders and raise doubts about the owner’s management ability.
Our team of attorneys is there, on-site and in the trenches, assisting the owner to manage and mitigate such problems as they arise and in real time. Whether reforecasting the estimated cost to complete the project or performing schedule risk assessments, our assistance can help get a project back on track so the owner can confidently report the project status to regulatory stakeholders.
Actively engaging the Construction Law Group’s specialized project controls, we can identify cost overruns and/or schedule delays early and take steps to mitigate those problems, helping owners manage risk and prepare for later regulatory scrutiny.
Preparing for Regulatory Proceedings
Construction projects also pose unique challenges to the normal utility rate-making process. Our construction attorneys are uniquely suited to meet these challenges.
Issues that commonly arise in a construction project — change orders, unforeseen conditions, schedule/delay claims and others — are not familiar to state utility boards and their staff as they analyze the value of a utility’s rates. This unfamiliarity puts owners at risk when seeking to recover the costs associated with construction issues.
More importantly, traditional client-side players in regulatory proceedings are not always well equipped to defend complex construction concepts. Our construction team is not a replacement for traditional regulatory counsel but, rather, a perfect addition to the client’s team capable of providing expertise on the disputed construction issues. Whether providing independent expert testimony regarding construction prudence, drafting data request responses, preparing pre-filed witness testimony, or providing witness preparation, we help our clients defend construction issues in regulatory cases. Our attorneys also are extremely sensitive to privileged issues in the rate case setting, and understand the client’s business strategies are important interests to protect.