STATE OF VERMONT
PUBLIC SERVICE BOARD
Joint Petition of Verizon New England Inc.
d/b/a Verizon Vermont, Certain Affiliates
Thereof and FairPoint Communications, Inc.
For approval of asset transfer, acquisition of
Control by merger and associated transactions
)
)
)
)
)
Docket No. 7270
Confidential
SURREBUTTAL TESTIMONY OF
JOEL F. JEANSON
ON BEHALF OF
THE DEPARTMENT OF PUBLIC SERVICE
August 10, 2007
Summary: The purpose of Mr. Jeanson’s testimony is to respond to certain financial issues
attendant to the proposed transaction.
1
A. IDENTIFICATION AND QUALIFICATION OF WITNESS
2
Q.
What is your name and business address?
3
A.
My name is Joel F. Jeanson, and my business address is 549 River Bluff Circle,
4
Oconomowoc, WI 53066.
5
6
Q.
By whom are you employed?
7
A.
I am a Manager in the Utilities Consulting Practice of the Huron Consulting Group
8
(Huron).
9
10
Q.
Mr. Jeanson, on whose behalf are you testifying in this proceeding?
11
A.
My testimony is presented on behalf of The State of Vermont Department of Public
12
Service (DPS).
13
14
Q.
Please provide your background and experience.
15
A.
I have worked in management and as a consultant in the public utilities industry for over
16
25 years.
As a consultant, I have performed numerous financial and management
17
reviews of electric, gas and telecommunications utilities for regulators throughout the
18
United States.
19
Accountants and the Wisconsin Institute of Certified Public Accountants.
20
Director and shareholder of the Barrington-Wellesley Group, Inc. (BWG), a management
21
consulting firm which was acquired by Huron Consulting Group on April, 1 2007. I
22
joined BWG in 2001. From 1983 to 2001, I held various financial management and
23
internal audit positions in a utility headquartered in Indiana. From 1979 to 1983 I was an
24
auditor with Arthur Andersen & Co.
I am a member of both the American Institute of Certified Public
I was a
I have a B.S. in Business (with distinction),
Surrebuttal Testimony of Joel F. Jeanson (on behalf of Vermont Department of Public Service).
August 10, 2007
Page 1
1
majoring in accounting, from Indiana University. I am a licensed CPA in the state of
2
Wisconsin. ATTACHMENT DPS-JFJ-1 contains a copy of my Curriculum Vitae.
3
B. PURPOSE OF SURREBUTTAL TESTIMONY
4
Q.
Mr. Jeanson, what is the purpose of your Surrebuttal Testimony?
5
A.
My surrebuttal testimony provides the Vermont Public Service Board (Board) with a
6
response to portions of the rebuttal testimony of FairPoint Communications, Inc.
7
(FairPoint). Specifically, my testimony addresses points raised in the FairPoint rebuttal
8
testimony related to the sensitivity of the financial results of the proposed acquisition of
9
Verizon’s Vermont properties by FairPoint to certain risks attendant to the proposed
10
transaction.
11
C. SUMMARY OF TESTIMONY
12
Q.
Please provide a summary of your Surrebuttal Testimony.
13
A.
My surrebuttal testimony responds to statements made in the rebuttal testimony of
14
FairPoint witnesses Mr. Michael J. Balhoff and Mr. William E. King. Mr. Balhoff states
15
that his “original table did not include testing growth greater than 1% annually above the
16
company’s projections (highlight in the original)……The reason was that I believe it is
17
unlikely that such a scenario will unfold.”1 He goes on to state that “(m)y conviction is
18
that the company is more likely to outperform its model than underperform.”2
19
states “I believe there is a reasonable opportunity for FairPoint to outperform the
20
projections, providing additional “cushion” for the overall plan and serving as the basis
21
for my assertion that the NNE Projections might be conservative.”3 In my opinion, these
1
2
3
Mr. King
Prefiled Rebuttal Testimony of FairPoint Communications, Inc. witness Michael J. Balhoff, page 25.
Prefiled Rebuttal Testimony of FairPoint Communications, Inc. witness Michael J. Balhoff, page 27.
Prefiled Rebuttal Testimony of FairPoint Communications, Inc. witness William E. King, page 24.
Surrebuttal Testimony of Joel F. Jeanson (on behalf of Vermont Department of Public Service).
August 10, 2007
Page 2
1
beliefs do not provide the Board with sufficient evidence that FairPoint has the financial
2
capacity to withstand risks associated with the transaction.
3
Huron and the DPS developed seven scenarios to test the sensitivity of FairPoint’s
4
financial capacity to changes in costs and revenues. These scenarios included increases in
5
operating expenses, increases in capital expenditures, increases in interest rates, and
6
reductions in revenues. We developed a base case using the financial model provided by
7
FairPoint
8
(CONFIDENTIAL), and then modeled these scenarios to determine the impact on debt
9
service coverage ratios, cash flows and borrowings against this base case. The results of
10
these sensitivity analyses are provided as Exhibit DPS-JFJ-2, which is attached to this
11
testimony and are discussed in more detail below.
12
The results of the sensitivity analysis indicate that FairPoint has financial capacity to
13
absorb certain levels of cost increases, both on-going and one-time, conversion-related
14
increases, and revenue decreases.
15
dividends paid to common shareholders will be required to stay in compliance with debt
16
coverage ratios required by FairPoint’s debt covenants.
17
expect that at some time during the forecast period that FairPoint will have to reduce
18
dividend payments for one or more years in order to remain in compliance with its debt
19
coverage ratios.
20
In two scenarios, FairPoint does not appear to have the ability to satisfy the debt coverage
21
ratios even when eliminating the cash dividend paid to shareholders. These scenarios are:
22
1) both operating expenditures and capital expenditures increase by $50 million per year
23
in each year of the forecast period, and 2) the “perfect storm” scenario in which capital
on
May 21,
2007,
as
Attachment
A.DPS:FP.1-197
Supplemental
Some scenarios indicate that a reduction in cash
Surrebuttal Testimony of Joel F. Jeanson (on behalf of Vermont Department of Public Service).
August 10, 2007
I believe it is reasonable to
Page 3
1
and operating expenditures increase, interest rates increase, and revenues decrease. I do
2
not believe that either of these two scenarios is likely.
3
4
Q.
Have risk factors associated with this transaction been identified?
5
A.
Yes, FairPoint identified numerous risk factors associated with this transaction. These
6
risk factors are most recently described in the Form S-4/A filed by FairPoint with the
7
Securities and Exchange Commission (SEC) on July 10, 2007. The risk factors described
8
in this SEC filing include:
9

The integration of FairPoint’s and Spinco’s businesses may not be successful.
10

If the assets transferred to Spinco by Verizon are insufficient to operate the combined
11
company’s business, it could adversely affect the combined company’s business,
12
financial condition, and results of operations.
13

FairPoint’s or the combined company’s spending in excess of the budgeted amounts
14
on infrastructure and network systems integration and planning related to the merger
15
could adversely affect FairPoint’s or the combined company’s business, financial
16
condition and results of operation.
17

FairPoint and Spinco provide services to customers over access lines, and if the
18
combined company loses access lines, its business, financial condition and results of
19
operations may be adversely affected.
20

21
22
The combined company may not be able to successfully integrate new technologies,
respond effectively to customer requirements or provide new services.

The combined company’s business, financial condition and results of operations
23
could be adversely affected if the combined company fails to maintain satisfactory
24
labor relations.
25
26

The combined company may face significant future liabilities or compliance costs in
connection with environmental and worker health and safety matters.
Surrebuttal Testimony of Joel F. Jeanson (on behalf of Vermont Department of Public Service).
August 10, 2007
Page 4

1
Regulatory changes in the communications industry could adversely affect the
2
combined company’s business by facilitating greater competition, reducing potential
3
revenues or raising its costs.
4
Risk factors are also discussed in the prefiled direct and prefiled surrebuttal testimony of
5
Staff witness Perry L. Wheaton.
6
7
Q.
Was the FairPoint financial model provided as Attachment A.DPS:FP.1-197
8
Supplemental (CONFIDENTIAL), the same financial model used to run the
9
financial projections provided in response to DPS:FP.1-86 (CONFIDENTIAL)?
10
A.
Yes. Huron compared the information contained in the financial model to the response to
11
DPS:FP.1-86. The information was identical. The financial model covers an eight year
12
period from 2008 through 2015.
13
14
Q.
15
16
Did Huron use the abovementioned financial model as its base case from which to
run the sensitivity analyses?
A.
No. In consultation with DPS staff, we created a new base case from which to run the
17
sensitivity analyses. The base case includes the following adjustments to the FairPoint
18
financial model:
19
 Increase revenue by $23 million per year for the Yellow Page revenue adjustment in
20
New Hampshire that is not applicable to FairPoint beginning in 2008;
 Decrease revenue by $9 million per year for the termination of the alt reg benefit in
21
22
Vermont beginning in 2010; and
 Decrease revenue by $45 million per year for Maine rate reduction beginning in 2008.
23
24
25
Q.
Why did you choose these three adjustments to calculate the base case?
Surrebuttal Testimony of Joel F. Jeanson (on behalf of Vermont Department of Public Service).
August 10, 2007
Page 5
1
A.
In our opinion, these adjustments represent events that are likely to transpire based on
2
what we know at this point in time. In the event these adjustments do not prove to be
3
required, FairPoint’s EBITDA and Net Long-term Debt Cushion as described below will
4
increase.
5
Q.
6
7
Has FairPoint adjusted its financial model for these same three items subsequent to
providing its response to DPS:FP.1-86?
A.
No.
Q.
Please describe in more detail how you evaluated the financial impact of the various
8
9
10
11
sensitivity analyses.
A.
For each scenario, I calculated the amount of EBITDA Cushion and Net Long-term Debt
12
Cushion available. The amount of cushion available is constrained by FairPoint’s debt
13
covenant in the form of two separate debt coverage ratios and by the total amount of debt
14
capacity available to FairPoint.
15
operating expenses can increase or revenues decrease (or some combination of the two)
16
and still satisfy the debt coverage ratio specified in the debt covenants. This coverage
17
ratio is defined as Adjusted EBITDA divided by Interest Expense, and must exceed 2.25.
EBITDA Cushion represents the amount by which
18
19
Long-term Debt Cushion represents the amount of additional borrowing capacity
20
available to FairPoint while satisfying the debt coverage ratio defined as Net Long-term
21
Debt divided by Adjusted EBITDA. This coverage ratio must be not exceed 5.75 in 2008
22
and must not exceed 5.50 each year thereafter.
23
24
Throughout the remainder of my testimony I refer to EBITDA Cushion and Long-term
25
Debt Cushion collectively as financial cushion.
26
Surrebuttal Testimony of Joel F. Jeanson (on behalf of Vermont Department of Public Service).
August 10, 2007
Page 6
1
Q.
Why is financial cushion important?
2
A.
Financial cushion represents the ability for FairPoint to absorb cost increases or revenue
3
decreases due to unanticipated events or transactions or assumptions that prove to be
4
inaccurate and still meet the needs of its various stakeholders.
5
6
Q.
How mush financial cushion does FairPoint have available in the base case?
7
A.
In the base case, FairPoint has financial cushion available by year (in million dollars) as
8
shown in the table below. As an example, in 2015 FairPoint has the ability to increase
9
operating expenses by $110.5 million and still satisfy the Adjusted EBITDA/Interest
10
Expense debt coverage ratio or add $472.0 million in long-term debt and still satisfy the
11
Net Long-term Debt/Adjusted EBITDA debt coverage ratio. But this does not mean that
12
FairPoint has the ability to both increase operating expenses and increase borrowings by
13
these amounts. If Adjusted EBITDA in 2015 is reduced by all or part of the $110.5
14
EBITDA Cushion, FairPoint’s Net Long-term Debt Cushion will decrease since adjusted
15
EBITDA is part of the Net Long-term Debt Cushion calculation.
16
2008
2009
2010
2011
2012
2013
2014
2015
EBITDA Cushion
$145.8
$170.5
$168.8
$149.3
$140.8
$128.8
$119.8
$110.5
Net Long-term Debt Cushion
$213.0
$279.0
$341.0
$391.0
$430.0
$461.0
$472.0
$472.0
17
18
Q.
Please describe the scenarios used in performing your sensitivity analyses.
19
A.
As shown in DPS-JFJ-2, I used seven scenarios in my sensitivity analysis in addition to
20
the new base case. These scenarios are:
21
1. New base case as described above.
22
2. Conversion-related capital expenditures increase by $25 million and conversion-
23
related operating expenses (e.g., the TSA fees) increase by $75 million in 2008.
Surrebuttal Testimony of Joel F. Jeanson (on behalf of Vermont Department of Public Service).
August 10, 2007
Page 7
1
3. Capital expenditures increase by $50 million per year beginning in 2008.
2
4. Operating expenses increase by $50 million per year beginning in 2008.
3
5. Revenues are less by five percent each year beginning in 2008.
4
6. Interest rate on borrowings increases by 200 basis points beginning in 2008.
5
7. Both operating expenses and capital expenses increase by $50 million per year
6
beginning in 2008.
7
8. In the “Perfect Storm” scenario, a) capital expenditures increase by $50 million per
8
year, b) operating expenses increase by $75 million per year, c) conversion-related
9
capital expenditures increase by $50 million, d) operating revenues are less by two
10
percent each year, and e) the interest rate on borrowings increases by 100 basis
11
points.
12
All of the items discussed above are assumed to be cash items. Related changes in
13
depreciation expense, long-term debt, interest expense, and income taxes are made within
14
the financial model. In the perfect storm scenario, dividends are reduced to zero in each
15
year; in the other scenarios, dividends remain unchanged at $142 million per year.
16
17
Q.
Does FairPoint have adequate financial cushion in the scenario in which conversion-
18
related capital expenditures increase by $25 million and conversion-related
19
operating expenses (e.g., the TSA fees) increase by $75 million in 2008?
20
A.
Yes. As can be seen in the table below, FairPoint has over $100 million of EBITDA
21
cushion on average in any single year. FairPoint’s Net Long-term Debt Cushion is
22
negative $15.0 million in 2008 averages well over $200 million in all other years. I do
23
not believe that the negative $15.0 million in 2008 should be of concern to the State of
24
Vermont since FairPoint has remedies, such as a reduction in dividends payments, which
25
can readily be applied to eliminate the negative Net Long-term Debt Cushion.
26
Surrebuttal Testimony of Joel F. Jeanson (on behalf of Vermont Department of Public Service).
August 10, 2007
Page 8
2008
2009
2010
2011
2012
2013
2014
2015
EBITDA Cushion
$57.3
$154.8
$153.0
$133.5
$122.8
$110.8
$101.8
$92.5
Net Long-term Debt Cushion
$(15.0)
$175.0
$235.0
$280.0
$314.0
$339.0
$337.0
$306.0
1
2
Q.
3
4
Does FairPoint have adequate financial cushion in the scenario in which capital
expenditures increase by $50 million per year beginning in 2008?
A.
Yes. In the years 2008 through 2014, EBITDA Cushion averages over $100 million per
5
year and Net Long-term Debt Cushion averages well over $100 million per year as well.
6
Net Long-term Debt Cushion doesn’t become negative and EBITDA Cushion doesn’t
7
drop below $50 million until 2015.
8
2008
2009
2010
2011
2012
2013
2014
2015
EBITDA Cushion
$139.0
$159.3
$150.8
$122.3
$102.5
$81.5
$61.3
$40.8
Net Long-term Debt Cushion
$161.0
$176.0
$189.0
$183.0
$160.0
$125.0
$57.0
$(42.0)
9
10
Q.
11
12
Does FairPoint have adequate financial cushion in the scenario in which operating
expenses increase by $50 million per year beginning in 2008?
A.
Yes, for about one-half of the eight year forecast period. Then, beginning in 2012, Net
13
Long-term Debt Cushion becomes negative and stays negative for the remainder of the
14
forecast period. EBITDA Cushion remains positive until 2015. In this scenario, one
15
option available to FairPoint to stay in compliance with its debt coverage ratios is to
16
reduce its cash dividend paid to common shareholders. Cash dividends are projected to be
17
$142 million per year.
18
EBITDA Cushion
2008
2009
2010
2011
2012
2013
2014
2015
$89.0
$109.3
$100.8
$72.3
$52.5
$33.8
$13.5
$(7.0)
Surrebuttal Testimony of Joel F. Jeanson (on behalf of Vermont Department of Public Service).
August 10, 2007
Page 9
Net Long-term Debt Cushion
$164.0
$182.0
$198.0
$86.0
$(6.0)
$(106.0)
$(202.0)
$(298.0)
1
2
Q.
3
4
Does FairPoint have adequate financial cushion in the scenario in which revenues
are less by five percent each year beginning in 2008?
A.
No. In this scenario both EBITDA Cushion and Net Long-term Debt Cushion become
5
negative before the end of the forecast period – in the case of Net Long-term Debt
6
Cushion as early as 2011. In this scenario, reductions in cash dividends paid to common
7
shareholders will have to be significantly greater than the reductions referred to in the
8
preceding scenario to satisfy the Net Long-term Debt coverage ratio. Cash dividends are
9
projected to be $142 million per year. By using cash to reduce debt rather than pay
10
dividends, interest expense will also be reduced. This reduction in interest expense will
11
likely be sufficient to satisfy the adjusted EBITDA debt coverage ratio.
12
noted that the base case includes a net decrease in operating revenues and that these
13
revenue reductions are in addition to the base case revenue reductions.
It should be
14
2008
2009
2010
2011
2012
2013
2014
2015
EBITDA Cushion
$66.8
$84.8
$74.0
$42.0
$17.8
$(6.8)
$(31.5)
$(56.5)
Net Long-term Debt Cushion
$46.0
$79.0
$49.0
$(107.0)
$(225.0)
$(346.0)
$(471.0)
$(599.0)
15
16
Q.
17
18
19
Does FairPoint have adequate financial cushion in the scenario in which the interest
rate on borrowings increases by 200 basis points beginning in 2008?
A.
Yes. In this scenario FairPoint is able to satisfy both debt coverage ratios in all years
forecasted.
20
EBITDA Cushion
2008
2009
2010
2011
2012
2013
2014
2015
$107.5
$132.3
$130.5
$108.8
$95.8
$81.5
$70.3
$58.8
Surrebuttal Testimony of Joel F. Jeanson (on behalf of Vermont Department of Public Service).
August 10, 2007
Page 10
Net Long-term Debt Cushion
$198.0
$251.0
$303.0
$339.0
$362.0
$375.0
$379.0
$369.0
1
2
Q.
Does FairPoint have adequate financial cushion in the scenario in which both
3
operating expenses and capital expenditures increase by $50 million per year
4
beginning in 2008?
5
A.
No. In this scenario, both EBITDA Cushion and Net Long-term Debt Cushion become
6
negative before the end of the forecast period – in the case of Net Long-term Debt
7
Cushion as early as 2011.
8
elimination of, the cash dividend paid to common shareholders may not in and of itself be
9
sufficient to satisfy the debt coverage ratios. Cash dividends are projected to be $142
10
And in this case, it appears that reductions in, or the
million per year.
11
2008
2009
2010
2011
2012
2013
2014
2015
EBITDA Cushion
$82.3
$98.0
$80.5
$43.0
$12.0
$(20.3)
$(51.8)
$(85.8)
Net Long-term Debt Cushion
$111.0
$75.0
$32.0
$(142.0)
$(299.0)
$(469.0)
$(640.0)
$(818.0)
12
13
Q.
Does FairPoint have adequate financial cushion in the “Perfect Storm” scenario,
14
that is, in which a) capital expenditures increase by $50 million per year, b)
15
operating expenses increase by $75 million per year, c) conversion-related capital
16
expenditures increase by $50 million, d) operating revenues are less by two percent
17
each year, and e) the interest rate on borrowings increases by 100 basis points?
18
A.
No. This scenario assumes that projected cash dividends paid to common shareholders of
19
$142 million per year have been eliminated in all years. Even with the elimination of the
20
cash dividend paid to common shareholders, FairPoint will not be in compliance with the
21
Net Long-term Debt coverage ratio beginning in 2008, the first year of the forecast
Surrebuttal Testimony of Joel F. Jeanson (on behalf of Vermont Department of Public Service).
August 10, 2007
Page 11
1
period. FairPoint will be in compliance with the adjusted EBITDA debt coverage ratio in
2
three of the eight years, and have negative cushion in the other five years.
3
2008
2009
2010
2011
2012
2013
2014
2015
EBITDA Cushion
$(4.5)
$27.0
$34.3
$13.5
$(0.5)
$(12.5)
$(22.8)
$(35.3)
Net Long-term Debt Cushion
$(290.0)
$(56.0)
$(26.0)
$(117.0)
$(170.0)
$(222.0)
$(261.0)
$(308.0)
4
5
Q.
Does this conclude your Rebuttal Testimony?
6
7
A.
Yes.
Surrebuttal Testimony of Joel F. Jeanson (on behalf of Vermont Department of Public Service).
August 10, 2007
Page 12
1
Exhibit DPS-JFJ-1
2
JOEL F. JEANSON
3
4
5
6
7
8
9
10
11
Mr. Jeanson, CPA, has extensive experience in utility finance and accounting, financial and
operational auditing, internal control review and assessment, corporate performance, capital and
O&M budgeting and management reporting. He is a member of the American Institute of CPAs,
the Wisconsin Institute of CPAs, the Institute of Management Accountants, and is a past
president of the Indianapolis Chapter of the Institute of Internal Auditors. During his business
career, Mr. Jeanson has directed the accounting, budgeting, corporate performance and auditing
departments at a major investor owned LDC headquartered in Indiana. He began his career with
Arthur Andersen & Co.
12
13
14
Mr. Jeanson received a Bachelor of Science degree in Accounting, with distinction, from
Indiana University. He has continued his studies with course work at the Indiana University
Graduate School of Business and is also a graduate of the Wabash Executive Program.
15
UTILITY INDUSTRY CONSULTING EXPERIENCE
16
17

Lead consultant for the independent assessment of Water System revenue requirements
of the Los Angeles Department of Water and Power for the LA City Council. (On-going)
18
19
20

Lead consultant for the review of affiliate transactions in connection with audit
preparation services provided to Peoples Gas Light and Coke Company in connection
with a management audit ordered by the Illinois Commerce Commission. (2007)
21
22

Lead consultant for the operational review of the financial services division of a large
Midwest water and wastewater utility. (2007)
23
24

Project manager and lead consultant for the management and operations audit of the
Martin County Water District for the Kentucky Public Service Commission. (2006-07)
25
26
27
28

Lead consultant for the review of business planning, cost allocations and benchmarking
for the Lower Colorado River Authority Water and Wastewater Utility (WWUS) in
connection with the management review of WWUS for the LCRA Board of Directors.
(2006)
29
30
31

Lead consultant for the review of customer services and cost allocations in connection
with the management audit of the Pennsylvania operating affiliates of FirstEnergy
Corporation for the Pennsylvania Public Utility Commission. (2006)
32
33
34

Project manager and lead consultant for the review of the meter reading and billing
practices of Arizona American Water Company for the Arizona Corporation
Commission. (2006-07)
35
36

Project manager and lead consultant for the review of the meter reading, usage estimation
and billing practices of Arizona Public Service Company for the ACC. (2005)
Surrebuttal Testimony of Joel F. Jeanson (on behalf of Vermont Department of Public Service).
August 10, 2007
Page 13
1
2
3

Lead BWG Consultant for cost of service litigation strategy support for Baltimore Gas &
Electric Company’s recent gas services rate case in Maryland. Analyzed company and
intervener testimonies and developed cross-examination strategies. (2005)
4
5
6
7

Lead consultant for the review of cost allocations in connection with management audit
preparation services provided to South Jersey Gas and New Jersey Natural Gas in
connection with management audits ordered by the New Jersey Board of Public Utilities.
(2004)
8
9
10

Lead consultant for the review of cost allocations and structural requirements of the
Southern New England Telephone Company (an SBC affiliate) for the Connecticut
Department of Public Utility Control. (2005)
11
12
13
14
15

Lead consultant for the analysis of variances by FERC account for the four utility
operating company subsidiaries of a major Midwestern utility holding company in
connection with the Companies’ applications for authority to increase utility rates.
Variances are attributable to operating efficiencies and other synergies from a recent
merger, changes in allocation methodologies, and accounting inconsistencies. (2004)
16
17
18

Lead consultant for the review of budgeting and accounting issues associated with the
focused management audit of Kentucky Utility’s and Louisville Gas & Electric’s
earnings sharing mechanism for the Kentucky Public Service Commission. (2003)
19
20
21
22

Lead Consultant for the program evaluation of SBX1 5 energy efficiency and low-income
assistance funds performed for the CPUC. Reviewed and tested SDG&E and Southern
California Gas’s program costs, administration and compliance with CPUC and
Legislative requirements. (2003)
23
24
25
26

Consultant for the audit of Atlantic City Electric’s (ACE) restructuring-related Deferred
Balances performed for New Jersey Board of Public Utilities (NJ BPU). Developed the
regulatory framework for the audit and assessed ACE’s compliance with NJ BPU Orders
and guidelines. (2002)
27
28

A lead consultant for the utility integration and organizational study of the City and
County of Denver Wastewater Management Division. (2004)
29
30
31

A lead consultant for the restructuring of the financial organization of The Metropolitan
District, a municipal water and sewer utility headquartered in Hartford, Connecticut.
(2004)
32
33
34
35

Lead Consultant for the review of financial, human resources, information technology,
and customer service (including meter reading and billing) functions in connection with
the comprehensive management study of a large municipal water and wastewater utility
(2003)
36
37
38
39

Consultant for BWG’s audit of the Los Angeles Department of Water & Power
(LADWP) performed for the City of Los Angeles. Assessed LADWP’s financial
management and control environment and assisted with the review of workforce planning
policies and procedures. (2002)
40
Surrebuttal Testimony of Joel F. Jeanson (on behalf of Vermont Department of Public Service).
August 10, 2007
Page 14
1
UTILITY INDUSTRY EXPERIENCE
2
3
4

Directed the accounting department with responsibility for financial (SEC, GAAP and
regulatory) and management reporting, budgeting, financial controls, financial
information systems, and the quarterly Gas Cost Adjustment accounting schedules.
5
6
7

Performed an internal audit of revenue requirement calculations and pro forma
accounting adjusting entries in connection with the application for an increase in rates
prior to filing.
8
9
10
11

Performed a comparative analysis and assessment of Indiana Gas’ main and service
extension policies to those of other gas distribution utilities across the United States.
Developed strategy for changing those policies and the internal operating procedures
related to those policies.
12
13
14
15
16

Directed the corporate business planning and budgeting process. Integrated the strategic
and operational planning processes so that departmental plans, capital and O&M budgets
and performance measures would be focused on both continuous improvement and the
accomplishment of corporate objectives – which included both financial and nonfinancial measures.
17

Directed the capital budgeting process, including the capital variance reporting process.
18
19
20

Developed responsibility reporting process, budgets (capital and O&M), and
management reports for Vectren Corporation for first year post-merger that reflected
merger-related costs and savings.
21
22
23
24

Financial lead in Vectren merger integration efforts for the various financial areas,
including identification of staffing levels and cost savings opportunities and making
recommendations to provide structure and direction for the company’s financial
organization.
25
26
27

Project director for activity-based management initiative focused on internal products and
services. ABM used to assess performance against other service providers, measure
performance, and improve decision-making.
28
29
30

Updated and enhanced monthly financial report used to review actual and projected
operating results, and set direction as to action required to meet corporate financial
objectives.
31
32
33

Directed team that established capital expenditure guidelines, policies and procedures for
new business capital investments.
Introduced discounted cash flow modeling to
decision-making process.
34
35
36

Developed quarterly performance measurement reports that included non-financial as
well as financial measures that tracked performance over time and across operating
regions as well as against external benchmarks.
37
38
39
40

Led customer service business process improvement initiative that assessed performance
and made recommendations for improvement of all customer service processes including
the customer billing process, leading to improved customer service and reduced costs.
Facilitated the development of customer service standards.
Surrebuttal Testimony of Joel F. Jeanson (on behalf of Vermont Department of Public Service).
August 10, 2007
Page 15
1
2
3

Key member of team that completed a study to identify the services, and levels of
service, that customers are willing to pay for. This study resulted in significant changes
in how the company delivered services to its customers.
4
5
6
7

Directed the service technician performance management pilot project to evaluate
customer satisfaction and identify cost savings opportunities. This pilot project
ultimately led to establishing processes to evaluating operating performance and quality
for the entire bargaining unit workforce.
8
9
10

Directed the internal audit department which included responsibility for testing the
accuracy of customer billing as well as operational reviews of field meter reading
processes.
11
WORK EXPERIENCE
12

Manager, Huron Consulting Group (2007 – present)
13

Director and Partner, Barrington-Wellesley Group (2001 - 2007)
14
15

Director of Accounting, Budgeting and Management Reporting, Indiana Gas / Vectren
(1996 - 2001)
16

Director of Corporate Performance, Indiana Gas (1992 - 1996)
17

Financial Director of Marketing and Operations, Indiana Gas (1989 - 1992)
18

Director of Internal Audit, Indiana Gas. (1983 - 1989)
19

Senior Auditor, Arthur Andersen (1979 – 1983)
20
Surrebuttal Testimony of Joel F. Jeanson (on behalf of Vermont Department of Public Service).
August 10, 2007
Page 16