Capital Cost Estimation
18. The Company uses various approaches for estimating capital cost for different types of projects. The objective is to derive estimates that are closely aligned to costs that are reflective of the unique parameters of each project, and those cost differences are typically delineated by geographic area.
19. The following is a summary of various estimation techniques and the project types to which they are applied:
- For new subdivisions where Joint Utility Trenching ("JUT") is often used to construct natural gas infrastructure, unit rates prescribed in the underlying contracts are used for estimating capital cost for mains and services.
- For subdivisions where JUT is not an option, or for commercial and industrial connections, field estimates are used for capital costing.
- For residential infill services, capital cost is based on a regionally-specific estimate that relies on historical actual data of similar services installed. It can also be a specific field estimate where no historical data are available that is representative of the geographic area. In instances where known geographical/geological factors (e.g. rock, depth of main) have influenced capital costs, Enbridge Gas will utilize pricing for those factors to inform the estimate.
- For large volume connections (i.e., above 340 000 m3 annual consumption), field estimates are used to estimate mains and service cost.
20. If a main is oversized to meet future growth potential, it may be re-priced at the size required to meet customers' load requirements for feasibility calculations. The actual cost of the main must be shown on the Authorization for Expenditure ("AFE").