Wisconsin Utility Tackles Major Gas Construction Project

It is not unusual for a utility to face obstacles during a major improvement project. But, when construction bids come in higher than expected, it brings an interesting challenge to the table.

This was the scenario in Madison, WI last year. The local combination utility, Madison Gas & Electric Co. (MGE), was planning a large-scale natural gas project spanning 4.2 miles through three communities.

State regulators approved the work and a general timeline was set. However, high estimates from contractors put the $3.1 million budget at risk. After in-depth review and thorough analysis, MGE decided to use its own employees to get the work done. This seemingly unconventional approach worked well.

MGE generates and distributes electricity to 137,000 customers in Dane County and purchases and distributes natural gas to 141,000 customers in seven south central and western Wisconsin counties. MGE is a principal subsidiary of MGE Energy.

Project Details
The natural gas improvement project included installing a new:

• 400 psi 12-inch steel gas main through the town of Verona, city of Madison and city of Middleton.

• Regulator station at the end of the line to reduce pressure to a distribution level of 175 psi.

Reliability was the driving force behind this effort. Wisconsin’s western Dane and Iowa counties have been growing at a consistent pace – putting more pressure on existing facilities. New infrastructure was needed to build capacity and help MGE meet the changing needs of customers.

Additionally, the city of Madison was planning roadwork for 2010 that would require MGE to take outages at some other critical facilities that serve the area. The new gas main would be needed to ensure reliable service for customers during the road construction. With the city’s work imminent, it was important for MGE to find a way to get the gas project done in a timely manner.

One option was to move forward with a contractor who bid on the project. That would require asking MGE management for a budget increase and then asking the Public Service Commission of Wisconsin for permission to spend more money.

The other alternative was for MGE to do the work.

“It seemed like a good strategy to do the project ourselves, but we first had to take a close look at the details to make sure we could do it efficiently and cost effectively,” said John Kilsdonk, MGE’s Manager of Gas Engineering. “Making this decision was not black-and-white.”

MGE evaluated several components. One of the first considerations was employee skills and talent.

Skills. “It was crucial to make sure their skill sets matched the job requirements,” said Pete Luther, MGE’s manager of Gas Operations. “With a group of experienced welders and equipment operators on staff, we knew we were in a good starting position. Plus, several of our employees had worked for contractors doing this type of work in the past.”

With a management staff that had experience overseeing projects of this magnitude, it quickly became clear to MGE that its staff was qualified to take on this challenge.

Manpower. MGE also evaluated staffing. How many people would be needed for this project, and how would assigning staff to the new project impact other work? With a sluggish national economy, MGE did not have many other new construction projects scheduled. This made the pending gas project more feasible.