2018 General Rate Case

Transcription

1 Application No.: A.1-0- Exhibit No.: SCE-0, Vol. 0 Witnesses: J. Billingsley (U -E) 01 General Rate Case Transmission & Distribution (T&D) Volume 0 Transmission Construction & Maintenance Before the Public Utilities Commission of the State of California Rosemead, California September 1, 01

2 SUMMARY This chapter describes SCE s transmission and fiber-optic network inspection and maintenance activities, which include: 1. Inspections of SCE s transmission and subtransmission lines;. Maintenance of SCE s transmission and subtransmission lines, including insulator washing, road and right-of-way maintenance, and transmission vegetation management;. Miscellaneous transmission activities, such as transmission line rating remediation, relocations, claims, tools and work equipment, and spare parts;. Inspections and maintenance of SCE s fiber-optic network. This exhibit presents SCE s requests for $1 million in O&M expenses for the 01 Test Year and $1 million in CPUC jurisdictional capital expenditures from Transmission Construction & Maintenance O&M Expenses 01 Forecast (Total Company Constant 01 $Millions)

3 Transmission Construction & Maintenance Capital Expenditures Forecast (CPUC-Jurisdictional Only Nominal $Million)

4 SCE-0: Transmission & Distribution Volume 0 - Transmission, Construction & Maintenance Table Of Contents Section Page Witness I. INTRODUCTION...1 J. Billingsley A. Content and Organization...1 B. Summary of O&M and Capital Request...1 C. Regulatory Background/Policies Driving SCE s Request... D. 01 Decision Comparison of 01 Authorized to Recorded... II. INSPECTING AND MAINTAINING THE SYSTEM... A. Overhead Inspections and Patrols (Portion of GRC Account.) Cost Forecast... B. Underground Inspections (Portion of GRC Account.) Cost Forecast... C. Maintenance Transmission Maintenance... a) Cost Forecast Transmission Planned Capital Maintenance... b) Cost Forecast Transmission Breakdown Capital Maintenance...1 c) Overhead and Underground Maintenance (Portion of GRC Account.)...1 (1) Cost Forecast...1 D. Transmission Line Rating Remediation Capital Cost Forecast...1 -i-

5 SCE-0: Transmission & Distribution Volume 0 - Transmission, Construction & Maintenance Table Of Contents (Continued) Section Page Witness. Transmission Line Rating Remediation O&M Forecast (Portion of GRC Account 1.)...1 E. Fiber-Optic Network Maintenance Cost Forecast...1. Fiber-Optic Network Inspection and Maintenance O&M Forecast, Portion of GRC Accounts....0 F. Insulator Washing (Portion of GRC Account.) Cost Forecast... G. Road and Right-of-Way Maintenance (Portion of GRC Account 1.) Cost Forecast... H. Transmission Vegetation Management (Portion of GRC Account 1.) Cost Forecast... III. RESPONDING TO EMERGENCIES... A. Transmission and Substation Storm Capital Cost Forecast... B. Transmission/Substation Storm O&M Forecast (GRC Account.) Cost Forecast... C. Transmission and Substation Claims Cost Forecast... IV. TRANSMISSION SYSTEM SUPPORT WORK...0 A. Transmission Spare Parts Cost Forecast...1 -ii-

6 SCE-0: Transmission & Distribution Volume 0 - Transmission, Construction & Maintenance Table Of Contents (Continued) Section Page Witness B. Transmission Relocations Cost Forecast... a) Transmission Tools and Work Equipment.... Cost Forecast... C. Transmission Line Expenses (Portion of GRC Account.) Cost Forecast... V. SUMMARY OF GRC ACCOUNTS... A. GRC Account.... B. GRC Account C. GRC Account.... -iii-

7 I. INTRODUCTION A. Content and Organization This volume describes SCE s transmission inspection, maintenance, and construction activities. SCE s transmission system comprises over 1,000 miles of transmission lines that operate at voltage levels of 00 kv, 0 kv, kv, kv, kv, kv, and kv. SCE s California Independent System Operator (CAISO)-controlled facilities, which are under FERC jurisdiction, include all line positions of 00 kv or greater, most 0 kv lines, and certain kv, kv, kv and kv lines. Transmission inspection activities include routine annual patrols and inspections of SCE s overhead and underground transmission lines and additional inspections during and after storms or other emergencies. Transmission maintenance activities include transmission line maintenance, insulator washing, and road and right-of-way maintenance. In addition, this chapter discusses remediation activities resulting from SCE s transmission line rating study, and capital expenditure request associated with activities such as transmission relocations, claims, and maintaining spare parts inventory. This chapter also includes costs to inspect and maintain the company's fiber-optic network. SCE operates and maintains a communications network that includes over,000 miles of fiber-optic cable. This network is used for communications for the dispatch of personnel, for restoration of electric service, for new service activation, to support operations and maintenance of the electric grid, and for interaction with customers and vendors. This system enables communications between the relays and other equipment installed to protect electrical equipment, such as circuit breakers and substation transformers, and SCE s internal telecommunication system. To maintain this system, the fiber-optic lines must be inspected and repaired when necessary to maintain the integrity of the communications network. This volume will detail these activities and describe their importance in maintaining a safe and reliable transmission system and fiber-optic network. It will summarize how these activities address risks related to operating a transmission system and fiber-optic network and a summary of the regulatory background and polices that influence how we operate and maintain it. B. Summary of O&M and Capital Request The tables below summarize the O&M and capital activities discussed in this volume along with the associated expenditures. 1

8 Table I-1 Transmission Construction and Maintenance O&M Activities (Total Company Constant 01 $000) Activity 01 Forecast Inspection of Transmission Overhead System $, Inspection of Transmission Underground System $1,01 Transmission Overhead and Underground Line Maintenance $,1 Transmission Line Rating Remediation $,00 Fiber-Optic Network Inspection and Maintenance $1,0 Transmission Insulator Washing $1,0 Road and Right of Way Maintenance $, Transmission Vegetation Management $, Transmission/Substation Storm O&M $1, Transmission Line Expenses $, Total $1,0 Table I- Transmission Construction and Maintenance Capital Activities (Total Company Nominal $000) Description Transmission Planned Capital Maintenance,,,1,0, Transmission Breakdown Capital Maintenance,0,,1,, Transmission Line Rating Remediation,, 1,1 1,0 1,01 Fiber-Optic Network Maintenance,,,,,1 Transmission and Substation Storm,,0,01,, Transmission and Substation Claims,,,1,1,01 Transmission Spare Parts 1 Transmission Relocations 1,1 1,1 1, 1,1 1, Transmission Tools and Work Equipment 1,0 1,1 1, 1,,0 Total $1,01 $,1 $1, $0,01 $,0 Table I- Transmission Construction and Maintenance Capital Activities (CPUC-Jurisdictional Nominal $000) Description Transmission Planned Capital Maintenance 1, 1,,,1,0 Transmission Breakdown Capital Maintenance 1, 1, 1, 1, 1, Transmission Line Rating Remediation,,,,1, Fiber-Optic Network Maintenance,,,,,1 Transmission and Substation Storm,0,1,0,1,01 Transmission and Substation Claims,0,1,,1, Transmission Spare Parts 1 Transmission Relocations 1,1 1,1 1, 1,1 1, Transmission Tools and Work Equipment 1,0 1,1 1, 1,,0 Total $, $, $,0 $,01 $,

9 C. Regulatory Background/Policies Driving SCE s Request Electrical construction and maintenance standards covered in this chapter are governed by the California Public Utilities Commission (CPUC). Overhead line construction is governed by CPUC General Order (GO). Underground construction is governed by CPUC GO 1. Inspection cycles for electric lines are governed by CPUC GO 1 and inspection cycles for communication lines are governed by CPUC GO. 1 In addition, the TLRR program in Section II.D is to comply with the North American Electricity Reliability Corporation s (NERC) recommendation in its May, 0 Assessment Plan Review Criteria and developed to meet commitments that SCE made to the Safety and Enforcement Division of the California Public Utility Commission. The Fiber-Optic program also addresses terms of the Commission s Fire Safety OIR. D. 01 Decision 1. Comparison of 01 Authorized to Recorded Figure I-1 summarizes our Test Year 01 GRC O&M request, the 01 GRC Test Year authorized amounts, and our 01 recorded costs compared to authorized amounts. 1 General Order, Rule 0.1 adopted by Decision in Rulemaking R

10 Figure I-1 Transmission Construction and Maintenance 01 GRC Authorized Variance Summary 01 O&M (Total Company Constant 01 $Millions) 1 1 The reduced expenditures in 01 is attributable to several factors, the main being Transmission Maintenance. Transmission Maintenance s variance was due primarily to underspend in Transmission Line Rating Remediation O&M, which resulted from a delay in O&M spending as the program focused more on capital remediation work and program strategy in 01. Other contributing factors include Road and Right-of-Way Maintenance and Insulator Washing. Road and Right-of-Way Maintenance saw a lower grading requirement than the historical average, which happens due to the cyclical nature of that work. A change in our approach to Insulator Washing as well as favorable weather patterns reduced Insulator Washing expenditures below authorized as well. Conversely, Vegetation Management expenditures were higher than the authorized amount. Figure I- summarizes SCE s Transmission Construction and Maintenance Capital request in the 01 GRC, the 01 GRC authorized amounts, and variance between recorded and authorized amounts. Refer to WP SCE-0 Vol. 0, pp. -.

11 Figure I- Transmission Construction and Maintenance 01 GRC Authorized Variance Summary 01 Capital (CPUC-Jurisdictional Nominal $Millions) 1 In 01, expenditures for Transmission Construction and Maintenance were higher than authorized levels. These increased expenditures are attributable to several factors. In 01, Transmission Capital Maintenance rose above authorized levels due to additional items identified through grid and/or engineering analysis which came about after the 01 GRC was filed, such as switch replacements, tower reinforcements, freeway crossing pole replacements, and underground cable and component replacements. This increase was partially offset by reduced expenditures in our Transmission Relocation program due to fewer customer-initiated projects than expected. Other smaller yet contributing factors to the higher overall expenditures in 01 include: increased expenditures for Fiber-Optic Maintenance because of items discovered from high-fire inspections; and increased costs associated with Transmission and Substation Storm because of slightly more storm activity than expected during this period. Refer to WP SCE-0 Vol. 0, pp. -.

12 II. INSPECTING AND MAINTAINING THE SYSTEM SCE performs routine and reactive inspections of our Transmission system. These inspections are necessary to meet various regulatory requirements and to help maintain a safe and reliable system. Transmission inspections are grouped between Overhead and Underground inspections and the section below provides a more detailed description of each. A. Overhead Inspections and Patrols (Portion of GRC Account.) SCE s overhead transmission lines, along with the structures (poles and towers) supporting the lines, must be routinely patrolled and inspected to detect any problems that may compromise the integrity of the structures or impede the transmission of electricity. These activities are performed on a predetermined schedule to comply with the requirements of CPUC GO 1, and have been approved by CAISO. These patrols and inspections occur at least annually and involve visually inspecting every structure and its related components, the lines in between the structures, and the rights-of-way. Additional inspections are performed on lines that run through densely populated urban areas, more rugged rural areas, or geographic locations facing severe weather or environmental conditions (e.g., high winds, coastal areas exposed to salt, etc.). Inspections are also performed after unplanned events, such as severe weather, fires, and equipment malfunctions. Inspectors document any discrepancies, which are evaluated against construction and compliance standards to determine the item s priority level, which sets the timeframe for corrective actions.

13 1. Cost Forecast Table II- Inspection of Transmission Overhead System Portion of GRC Account. Recorded and Adjusted 0-01/Forecast (Constant 01 $000) Recorded Forecast Labor $,00 $,0 $, $,0 $,1 $,0 $,0 $,1 Non-Labor $,0 $, $, $1, $1, $1,0 $1, $1,0 Total $,0 $, $, $,0 $,0 $, $, $, Line Miles,1,,,1,,,0, Cost Per Mile $ $ $ $ $ $ $ $ Ratio of Labor to Total % % % % % % % % Basis of Forecast: Itemized Forecast (Last Year Recorded Cost per Mile x Line Miles) Basis of Labor/Non-Labor Split: Last Year Recorded Labor/Non-Labor Ratio 1 1 As shown in Table II-, overhead inspection expenses varied from $ a line-mile in 01 to $ a line-mile in 01. The numbers vary from year-to-year depending on the number of unscheduled patrols and inspections required due to line outages caused by fires and other unexpected conditions, such as severe weather and equipment malfunctions. As the number of such unplanned events we experience every year is unpredictable, SCE has historically forecast overhead inspection costs using a five-year average of annual inspection expenses-per-transmission line-mile. This methodology was adopted in SCE s 01 GRC. However, due to an accounting change in division overheads starting in 01, 0 01 non-labor expenses are not reflective of current practices. As such, SCE does not consider the use of an averaging methodology appropriate to forecast future costs. Instead, SCE used last year (01) recorded costs as a basis to forecast expenditures, as these costs represent the best available data to use in forecasting our future costs. As shown in Table II-, the 01 cost per overhead transmission line-mile was $ per overhead line-mile. Refer to WP SCE-0 Vol. 0, pp See D.1--01, p. 1. See SCE-0 Vol. 0 and the response to Master Data Request Question I.A.1.

14 SCE then applied this unit cost to the line mile forecast in 01 01, which is described in more detail below. At the end of 01, SCE had, overhead transmission line-miles. Due to the transmission projects coming on-line over the next three years (01 01), SCE forecasts adding an additional line-miles in 01, line-miles in 01, and line-miles in 01. D states that SCE s forecast of line miles based on specific construction projects is superior to a forecast based on historical averages. The total annual expenses in this activity are forecast by multiplying the unit cost for inspecting a mile of overhead transmission line by the number of miles of overhead transmission lines. The labor expenses in this account are for SCE crews and other personnel performing inspections. The non-labor expenses are primarily related to vehicle expenses and other allocated overheads. The expenses vary between labor and non-labor expenses from year-to-year, primarily due to how much of the work was performed by air patrols. Due to the change in overhead accounting discussed above, SCE recommends that the 01 labor ratio of % be used as the basis to forecast expenses. B. Underground Inspections (Portion of GRC Account.) SCE s underground transmission lines, along with the structures housing the lines, require routine inspections to detect and remedy any degradation. We perform these activities on a predetermined schedule to comply with the requirements of CPUC GO 1, and these activities have been approved by the CAISO. At a minimum, all overhead components including riser poles, terminations and lightning arrestors are inspected annually under CPUC GO. Inspections of the underground components, which include vaults, cable, splices and shield arrestors, are inspected at a minimum once every three years. Annual inspections also include the examination of transmission components within each substation. Emergent line inspections to assess component or structural damage are performed after unplanned events, such as severe weather, lightning, fires, equipment malfunction, and other incidents that may have caused circuit interruption or damage. Refer to WP SCE-0 Vol. 0, pp. 0-1 (Transmission Line Miles). See D.1--01, p. 1.

15 1. Cost Forecast Table II- Inspection of Transmission Underground System Portion of GRC Account. Recorded and Adjusted 0-01/Forecast (Constant 01 $000) Recorded Forecast Labor $ $1,0 $ $ $ $1,00 $1,00 $1,00 Non-Labor $1 $1 $ $ $10 $1 $1 $1 Total $1,1 $1, $1,1 $1,01 $1,1 $1,1 $1,01 $1,01 Line Miles 1 1 Cost Per Mile $,1 $, $,1 $, $,1 $,1 $,1 $,1 Ratio of Labor to Total % % % 0% % % % % Basis of Forecast: Itemized Forecast (Last Year Recorded Cost per Mile x Line Miles) Basis of Labor/Non-Labor Split: Last Year Recorded Labor/Non-Labor Ratio 1 1 As shown in Table II-, underground inspection expenses varied from $, a line-mile in 01 to $, a line-mile in 01. The average cost per line-mile can vary from year-to-year depending on the number of unscheduled patrols and inspections, which are typically caused by uncontrollable events such as severe weather or fires. Historically, SCE has forecast underground inspection expenses as a five-year average of annual inspection expenses per underground transmission line-mile. This forecast methodology was adopted in SCE s 01 GRC. However, due to an accounting change in division overheads starting in 01, non-labor expenses are not reflective of current practices. As such, SCE does not consider the use of an averaging methodology appropriate to forecast future costs. Instead, SCE used last year (01) recorded costs to forecast expenditures, as these costs represent the best available data to use in forecasting our future costs. As shown in Table II-, the 01 cost per underground transmission line-mile was $,1. SCE then applied this unit cost to the line mile forecast in 01 01, which is described in more detail below. Refer to WP SCE-0 Vol. 0, pp See D.1--01, pp See SCE-0 Vol. 0 and the response to Master Data Request Question I.A.1.

16 At the end of 01, SCE had underground transmission line-miles. Due to transmission projects coming on-line over the next three years, SCE forecasts an additional three linemiles in 01 and one additional line-mile in Expenses also vary between labor and non-labor from year-to-year. Labor expenses are for SCE personnel performing inspections. Non-labor expenses are primarily related to vehicle expenses and other allocated overheads. Due to the change in overhead accounting discussed above, SCE recommends that the 01 labor ratio of % be used to forecast expenses. C. Maintenance SCE performs a variety of proactive and reactive maintenance activities on our Transmission system. Inspections drive the maintenance work to address potential risks before failures occur and reactive maintenance addresses items that fail in service. Transmission Maintenance is separated between Preventative or Planned Capital Maintenance, Breakdown or Reactive Capital Maintenance, and Overhead and Underground O&M expenses. 1. Transmission Maintenance Transmission Capital Maintenance includes the costs to remove, replace, and retire assets on a programmatic or reactive basis. Planned transmission capital maintenance is driven by inspection results or Infrastructure Replacement Program activities. Sometimes, field observations lead to projects to address emergent issues in a particular grid or equipment or structure type. In other instances, projects are identified through SCE s Transmission Infrastructure Replacement program, which programmatically identifies capital maintenance work for items such as conductor and switch replacements using grid and/or engineering analyses. SCE initiated its Transmission Infrastructure Replacement program in 01 to address issues that were identified but had not yet led to equipment failure. These issues result from aging transmission infrastructure and address safety and/or reliability risk. The criteria for projects identified in this program varies, but includes the replacement of obsolete or deteriorated assets. Reactive replacements are initiated when equipment fails in-service, equipment failure is imminent, or possible safety issues are identified. Equipment identified as requiring replacement must 1 Refer to WP SCE-0 Vol. 0, pp. 0-1 (Transmission Line Miles).

17 be replaced in a timely manner because transmission equipment failures may lead to prolonged outages, unsafe operating conditions, or a more expensive reactive solution. Depending on the maintenance work, the costs either record to O&M or capital. For example, insulator replacements are treated as O&M expenses and conductor or tower replacements are treated as capital expenditures. a) Cost Forecast Transmission Planned Capital Maintenance Figure II- Transmission Planned Capital Maintenance 1 Multiple WBS Elements 1 Recorded 0-01/Forecast (Total Company Constant 01 and Nominal $000) 1 The forecast for Transmission Capital Maintenance, as shown in Figure II-, includes planned capital maintenance driven by inspection results or identified through the Transmission Infrastructure Replacement program. Planned capital maintenance includes the replacement of obsolete equipment (which prevents operational issues), projects that increase public safety (using steel poles, where possible, for conductor that spans a freeway), the installation of fencing around rights-of-way, and projects for GO or GO 1 compliance. 1 Refer to WP SCE-0 Vol. 0, pp WBS elements include: CET-PD-IR-TP, CET-RP-OT-CF.

18 Due to the age and condition of our transmission infrastructure, SCE implemented a new planned capital maintenance approach in 01 that increased the number of maintenance items addressed in the planned capital maintenance category. Prior to 01, SCE planned capital maintenance primarily focused on items that needed immediate replacement. Due to the change in the program in 01, 0 and 01 recorded costs represent inspection-driven activities and should not be considered when forecasting activities as they do not accurately represent the current program. Because of the new program, costs increased in 01 and peaked in 01 as we targeted underground cable that has high material costs. Costs decreased in 01 to levels closer to 01 when the program first started. While 01 is most representative of what the average annual program expenditures will be during this GRC cycle, we expect to incur resource constraints that will inhibit our ability to support this level of planned capital maintenance work in 01 and 01. For example, SCE must ramp up its work in its Transmission Line Rating Remediation (TLRR) program in 01 and 01, which will require additional resources to be reassigned from existing work to support the program in the short run until we can build up our resource pool. As such, SCE is proposing an adjustment to reduce its planned capital maintenance forecast in 01 and 01, to 0% of the last year (01) recorded costs. 1 Beginning in 01, SCE expects our resource pool to be built up to perform maintenance at the 01 level and is proposing to use 01 recorded capital expenditures as the basis of the forecast and 01 = $, x 0% = $,1 in Constant 01 $000. 1

19 b) Cost Forecast Transmission Breakdown Capital Maintenance Figure II- Transmission Breakdown Capital Maintenance 1 WBS Element CET-PD-BM-TU Recorded 0-01/Forecast (Total Company Constant 01 and Nominal $000) Figure II- shows the historical capital expenditures in this work category. In 01 and 01, many poles were purchased to re-construct helicopter pads in remote areas. After the purchase of these poles, SCE developed other design alternatives that were less intrusive and more environmentally friendly than the reconstruction of these helicopter pads using these poles. Since the poles could also be used for pole replacements, material costs have since been transferred from this account to other jobs, which resulted in a negative amount in 01. Transmission Breakdown Capital Maintenance costs are driven by unforeseen equipment failures, which can lead to significant fluctuations in recorded costs year-to-year. Because of this, and due to the adjustment discussed previously, SCE proposes using a five-year average to forecast expenditures for this activity. This forecast is shown in Figure II- for this activity. 1 Refer to WP SCE-0 Vol. 0, pp. -. 1

20 c) Overhead and Underground Maintenance (Portion of GRC Account.) This activity includes performing repairs on transmission line equipment and structures, such as poles, towers, and conductors. Maintenance work on the transmission system can be both proactive work identified during regular inspections, or reactive maintenance due to unplanned events. Proactive maintenance is performed based on inspection results and analysis of issues found in the field. Lines that are exposed to extreme or unusual conditions often experience accelerated degradation of components. These extreme areas include coastal areas exposed to salt, urban and industrial areas exposed to high levels of pollution and related contaminants, and rugged rural areas exposed to extreme fluctuations in temperature and sustained high winds. Maintenance activities are prioritized based on circuit performance and outage and/or safety risk. Systematic maintenance is then executed based on the prioritized need. These proactive activities help maintain transmission equipment, reduce outages caused by failed equipment, and reduce the need for costly replacements. Reactive maintenance is performed when equipment fails in service either due to equipment degradation or because of weather, animal intrusion, third-party damage, or after a fire. (1) Cost Forecast Table II- Transmission Overhead and Underground Line Maintenance 1 Portion of GRC Account 1. Recorded and Adjusted 0-01/Forecast (Constant 01 $000) Recorded Forecast Labor $,0 $, $,1 $,1 $, $, $, $, Non-Labor $, $1, $1, $, $, $, $, $, Total $,0 $,0 $,1 $1, $,1 $,1 $,1 $,1 Ratio of Labor to Total % 1% % % % % % % Basis of Forecast: Last Year Recorded Basis of Labor/Non-Labor Split: Last Year Recorded Labor/Non-Labor Ratio 1 Refer to WP SCE-0 Vol. 0, pp

21 In 01, SCE performed significant programmatic maintenance activities, especially in the areas of tower painting, torqueing, insulator replacement, and overhead conductor repair. SCE does not anticipate performing programmatic maintenance at this level going forward. Labor expenses are for SCE crews and personnel performing transmission maintenance. Non-labor expenses include costs for contract crews, and allocated costs for vehicles and other allocated overheads. The total costs in this activity vary from year-to-year based on unplanned equipment breakdown, and the number of issues identified during inspections. Since the level of maintenance activity will vary due to unplanned situations, SCE has historically utilized a five-year average to develop its forecast. SCE s use of an average was uncontested and adopted in the 01 GRC. 1 However, due to an accounting change in division overheads starting 01, 0 0 to 01 non-labor is not reflective of current practices. In light of this accounting change, SCE does not consider the use of an averaging methodology appropriate to forecast future costs. In addition, 01 is not representative of future spend due to the abnormally high amount of work performed that year. Instead, SCE proposes to use last year (01) recorded costs, as shown in Table II-, to forecast expenditures in Considering the change in accounting methods, the one-time increase in 01, and the fact that no additional changes to work practices or maintenance levels are being considered relative to what was done in 01, using last recorded year to forecast costs gives the most accurate estimate of our future costs in the activity. Correspondingly, SCE recommends that the 01 labor ratio of % be used to forecast D. Transmission Line Rating Remediation As discussed in the 01 GRC, 1 T&D has been conducting a Transmission Line Rating Study to identify transmission lines potentially in violation of GO. As part of the study, T&D has completed its initial survey of all of SCE s CAISO-controlled transmission lines built before 00. Based on the results of the survey, SCE prioritized the transmission line discrepancies that will require line clearance remediation. A discrepancy is any condition found in the field requiring remediation to meet GO requirements during peak loading conditions. Discrepancies have been prioritized based on criteria such as line sag when operating at or below degrees Fahrenheit, and potential risk to public safety and 1 See D.1--01, p.. 0 See SCE-0 Vol. 0 and the response to Master Data Request Question I.A.1. 1 See Application 1--00, SCE-0 Vol. 0, pp. -. 1

22 system reliability based on location of span, terrain, encroachment type, and extent of deviation from standards. The study prioritized the discrepancies within a span into six levels, with A1 being the highest priority, followed by A, A, B1, B, and B. Remediation work to address discrepancies includes replacing towers and poles, clearing brush, replacing insulators, removing slack from lines, and other efforts to remediate line clearance issues. In 01, SCE finalized work on a plan to remediate all CAISO discrepancies over a ten-year period, This plan requires a significant increase in work and spend over the ten-year period. Through 01, remediation efforts have focused on the higher priority discrepancies. This remediated discrepancies, cleared discrepancies, and identified discrepancies cleared by other SCE programs or projects. As of the end of 01, there are approximately,1 CAISO discrepancies to be remediated within the ten-year period. To accomplish this increased level of work, SCE plans to take a more programmatic approach to the remediation work, including the utilization of CPUC licensing projects, major projects exempt from licensing (i.e. reconductors), and minor projects exempt from licensing (individual tower/pole modifications or replacements). The ten-year plan was developed with NERC and Western Electricity Coordinating Council (WECC) input. Besides the CAISO discrepancies, NERC/WECC requested that SCE perform studies on the non-caiso controlled lines (radial lines). This study was completed in 01 and will require additional discrepancies to be remediated by 00, as agreed to by SCE and NERC/WECC. Transmission Line Rating Remediation efforts include both O&M and capital work. A high percentage of these expenditures are for work on CAISO-controlled transmission, which is under FERC jurisdiction. Refer to WP SCE-0 Vol. 0, pp. - (TLRR Priority Matrix) for additional details. Refer to WP SCE-0 Vol. 0, pp. - (01_Q_CPUC_Report) for additional details. Capital expenditures are forecast to be % FERC. 1

23 1. Capital Cost Forecast Figure II- Transmission Line Rating Remediation WBS Element CET-PD-OT-PJ Recorded 0-01/Forecast (Total Company Constant 01 and Nominal $000) 1 The forecast of TLRR capital expenditures is based on a specific, project-based forecast. The forecast includes the costs for remediation activities, engineering and design work, and materials, allocated by year and by priority level. Most projects and associated costs are FERC jurisdictional. The significant increase in spend starting in 01, as shown in Figure II-, is correlated with the change in program strategy to meet the regulatory requirements discussed above. Using the previous strategy, it would have taken SCE well beyond the agreed upon ten-year timeframe to remediate all discrepancies. To shorten the time to achieve compliance, SCE developed a plan that focuses more on bundling many discrepancies by circuit and geographic location, such as utilizing major licensed re-conductor projects which can remediate many discrepancies in the scope of one large project. Since licensing projects take longer to complete, the costs requested in this rate case are for Refer to WP SCE-0 Vol. 0, pp. -. Only includes projects that close by 00. Refer to WP SCE-0 Vol. 0, pp. -0 (TLRR Cost Forecast). 1

24 many smaller scale projects that do not require licensing, though the same bundling approach applies. This will allow SCE to complete the remediations to meet the regulatory requirements. Forecasts for projects in the preliminary stages of engineering use a cost per remediation method and projects with completed engineering use cost estimates for specific scope.. Transmission Line Rating Remediation O&M Forecast (Portion of GRC Account 1.) Table II- Transmission Line Rating Remediation 0 Portion of GRC Account 1. Recorded and Adjusted 0-01/Forecast (Constant 01 $000) Recorded Forecast Labor $ $1 $ $0 $ $1, $,1 $,0 Non-Labor $ $ $ $0 $ $,1 $, $,1 Total $ $0 $0 $0 $ $, $, $,00 Ratio of Labor to Total N/A % % 0% % % % % Basis of Forecast: Itemized Forecast (% of TLRR Capital) Basis of Labor/Non-Labor Split: Year Weighted Average of Labor/Non-Labor Ratio 1 1 The forecast of TLRR O&M, shown in Table II-, is based on preliminary planning by program management. As discrepancies are looked at in more detail, some are identified as candidates for O&M remediation (as opposed to Capital) because of the nature of the fix and associated cost. For example, in some cases it may be possible to grade the land under a transmission line to address the line clearance and avoid having to increase the height of the towers. This O&M funding is necessary for SCE to perform the remediation in a cost efficient manner while complying with capitalization rules. We estimate our O&M to be % of annual capital expenditures, which is generally aligned with the recorded All costs associated with TLRR licensing projects close after 00 and therefore are not being requested in this GRC. Refer to WP SCE-0 Vol. 0, pp. 1- (TLRR Cost Estimates). 0 Refer to WP SCE-0 Vol. 0, pp

25 historical O&M to capital ratio. 1 Since the O&M forecast follows TLRR capital spend, there is, expectedly, a corresponding ramp up in O&M expenses to support the TLRR program. E. Fiber-Optic Network Maintenance SCE performs capital maintenance on the telecommunications system. This work includes replacement of fiber-optic cables, towers, copper wire cables and microwave systems. To maintain this system, the fiber-optic lines must be inspected and repaired when necessary to maintain the integrity of the communications network. The expenses associated with these activities are recorded in GRC Account.. 1. Cost Forecast Figure II- Fiber-Optic Network Maintenance WBS Element CET-OO-UT Recorded 0-01/Forecast (CPUC-Jurisdictional Constant 01 and Nominal $000) 1 1 Figure II- shows the historical capital expenditures in this work category. In 01, SCE began work to replace skywrap cables, which are long distance fiber-optic cables used primarily for long distance data transmission. Cable replacements such as these are necessary when cables fail, are aged to where they become unreliable, or cannot handle new fiber-optic systems. Some of our cables cannot 1 Refer to WP SCE-0 Vol. 0, pp. - (TLRR O&M Forecast). Refer to WP SCE-0 Vol. 0, pp. -. 1

26 1 1 1 reliably handle the newer, higher speed fiber-optic terminals we are installing to meet increasing network capacity requirements or support new facilities (i.e., substations, business offices, etc.). SCE began large-scale installation of fiber-optic cable in the mid-10 s. By 00, these cables will be over -years old. Because our fiber network provides some of our most critical communications connections to substations, customer call centers, data centers, and large office facilities, maintaining a reliable fiber network is critical to maintaining safe and reliable operations of the electric grid and business operations. As these cables age they will fail due to wear, weather, and other factors. This work is expected to run through the next several years at least, and combined with increased workload identified from inspections in high fire areas make 01 a more accurate reflection of future spend than using any historical average. Since this activity is a mix of reactive and some planned work for the skywrap project, SCE expects the required level of replacements to continue at the 01 level and is proposing to use 01 recorded as a the basis for forecasts costs shown in Figure II-.. Fiber-Optic Network Inspection and Maintenance O&M Forecast, Portion of GRC Accounts. Table II- Fiber-Optic Network Inspection and Maintenance Portion of GRC Accounts. Recorded and Adjusted 0-01/Forecast (Constant 01 $000) Recorded Forecast Labor $ $0 $ $1 $ $ $ $ Non-Labor $ $ $1 $ $ $ $ $ Total $1 $1,0 $1,0 $1,1 $1,0 $1,0 $1,0 $1,0 Ratio of Labor to Total % % % % % % % % Basis of Forecast: Last Year Recorded Basis of Labor/Non-Labor Split: Last Year Recorded Labor/Non-Labor Ratio The labor expenses in these accounts represent payroll charges for personnel performing the activities discussed above. The non-labor expenses include contract personnel charges, allocated vehicles, and other overhead costs. The maintenance work in this category is mostly reactive, while Refer to WP SCE-0 Vol. 0, pp

27 inspections are completed on high-fire areas and after episodes of severe weather. Due to the increased inspections in high-fire areas, and to follow the approach used to forecast fiber-optic network maintenance capital costs, SCE is recommending the use of 01 recorded costs as the basis for this forecast, as shown in Table II-. Due to a change in overhead accounting starting in 01, SCE proposes that the 01 labor ratio of % be used to forecast as this is most representative in those years. F. Insulator Washing (Portion of GRC Account.) Insulator washing is performed by spraying high-pressure water onto insulators to remove contaminants such as salt, dirt, or automobile exhaust. Excessive contamination on an insulator reduces its ability to insulate the energized line from the grounded support structure, which will cause lines to short circuit. Insulator washing is performed through various means. The term Hot-wash refers to the washing of energized lines, while Cold-washing refers to the washing of de-energized lines. Hotwashing is the preferred and most commonly used practice as it does not require the lines to be taken out of operation. When practical, SCE uses specially equipped water trucks equipped with a derrick and water nozzle to direct a high-pressure stream of water safely onto the insulators while the line remains in service. Where a derrick/truck usage is not practical, structures must be climbed by a lineman and the insulators are then washed by a portable wash gun connected by a high-pressure hose to a water truck below. Insulator washing of sub-transmission lines is typically performed by two-man patrol crews. High voltage transmission lines are washed mostly by larger four-to-six man dedicated crews in coastal areas or other areas impacted by industrial or agricultural contamination. The crews comprise personnel normally assigned to construction work. In 01, SCE moved away from a Calendar based wash schedule to a Condition based wash program. The intention of this change is to lower costs while still properly maintaining the insulators. The new program requires that a visual inspection of a circuit for contamination or signs of imminent failure, such as arcing or buzzing, be done before hot-washing is conducted. If no signs of contamination are evident, the circuit will continue to be monitored until it is deemed necessary to perform a hot-wash. Beach areas with high salt levels and high traffic volume require more frequent washing than a desert area with dryer air and less exhaust from traffic. See SCE-0 Vol. 0 and the response to Master Data Request Question I.A.1. 1

28 1. Cost Forecast Table II- Transmission Insulator Washing Portion of GRC Account 1. Recorded and Adjusted 0-01/Forecast (Constant 01 $000) Recorded Forecast Labor $,0 $,00 $,1 $1,1 $ $1,000 $1,000 $1,000 Non-Labor $,1 $,0 $,0 $, $1 $0 $0 $0 Total $, $,0 $, $, $ $1,0 $1,0 $1,0 Ratio of Labor to Total % % 0% 1% 0% 1% 1% 1% Basis of Forecast: Itemized Forecast Basis of Labor/Non-Labor Split: Itemized Forecast Labor costs in this activity are for SCE field personnel performing insulator washing. Non-labor costs include vehicles and other division overhead costs allocated to this activity. As shown in Table II-, insulator washing expenses varied from $.0 million in 0 to $0. million in 01. These numbers vary from year-to-year depending on the rainfall and the prevailing wind patterns during the late winter to late fall period along the coast, which are difficult to predict and outside of SCE s control. Abnormal weather patterns in 01 contributed significantly to the low recorded cost in 01. Sporadic and historic levels of rainfall in the summer and fall months made washing unnecessary in some of the months when we typically would otherwise wash. In addition, offshore winds throughout the year reduced salt contamination along the coastal areas. Because of this, SCE does not believe 01 is an accurate indicator of future cost and is proposing an adopted forecast based on the estimate of the new program in a normal weather year. The estimate is based on the expectation that we will perform approximately 0% of the washing that we did from 0-01 based on our new Condition based washing strategy. Until there is recorded data with this new insulator washing strategy, SCE believes this estimating method is the best approach. The test year forecast of $1.1 million represents a decrease from all recorded years except for 01, which again had abnormally Refer to WP SCE-0 Vol. 0, pp Refer to WP SCE-0 Vol. 0, pp. - (Precipitation History).

29 1 1 favorable weather in relation to the need to wash insulators. Due to a change in overhead accounting starting in 01, SCE recommends that the 01 labor ratio of 1% be used to forecast as this is most representative in those years. G. Road and Right-of-Way Maintenance (Portion of GRC Account 1.) SCE performs both proactive and reactive road and right-of-way maintenance. This work is required to provide field crews with safe access to SCE facilities. SCE s roads and rights-of-way are also used by public agencies as fire breaks and for access during other emergencies. Maintenance activities include annual grading, repairs of damaged storm drains, repairs of access roads, and annual brush clearing along access roads to allow safe passage of vehicles and equipment. Transmission right-of-way clearing also includes weed abatement on parcels of property owned by SCE along transmission rights-of-way, as required by city or county fire codes. Occasionally this work is performed during emergencies when roads must be cleared to allow crew access to facilities. 1. Cost Forecast Table II- Transmission Road and Right-of-Way Maintenance Portion of GRC Account 1. Recorded and Adjusted 0-01/Forecast (Constant 01 $000) Recorded Forecast Labor $1, $1 $ $1, $1,0 $1,0 $1,0 $1,0 Non-Labor $, $,0 $,0 $,0 $,0 $,0 $,0 $,0 Total $,1 $, $,0 $, $, $, $, $, Ratio of Labor to Total % 1% 1% 1% % % % % Basis of Forecast: Last Year Recorded Basis of Labor/Non-Labor Split: Last Year Recorded Labor/Non-Labor Ratio Labor expenses are for the SCE right-of-way crews and their supervisors. Non-labor expenses are primarily contract labor, vehicles, and other organizational overhead allocations. As shown in Table II-, road and right-of-way maintenance expenses varied from $. million in 01 to $. million in 01. These costs vary from year-to-year based on a variety of factors, including Refer to WP SCE-0 Vol. 0, pp. 1-1.

30 conditions like rain or fire that contribute to the variability of annual clearing requirements, access issues driven by external agencies, and specific due dates to meet compliance schedules. Historically, SCE has used a five-year average cost as the basis for the forecast in this work activity due to the fluctuations in annual expenses. Consistent with the CPUC s guideline in D on the selection of methodologies for forecasts, use of an averaging methodology would normally be appropriate. However, due to an accounting change in division overheads starting 01, 0 to 01 non-labor is not reflective of current practices. As such, SCE does not consider the use of an averaging methodology appropriate to forecast future costs. Instead, SCE proposes the use of last year (01) recorded costs to forecast expenditures. While 01 recorded costs are significantly lower than those recorded in 0-01, SCE believes that 01 serves as the best basis to forecast future expenses, in light of the accounting change that occurred in 01. Additionally, SCE recommends that the 01 labor ratio of % be used to forecast H. Transmission Vegetation Management (Portion of GRC Account 1.) Vegetation management includes all of the expenses associated with tree trimming and tree removal in proximity to transmission and distribution high voltage lines, and weed abatement around overhead structures in high fire designated areas in proximity to transmission and distribution high voltage lines. It also includes costs of planting different species of trees as replacements and in handling preventive soil treatment. The majority of costs are from a fixed price contract with SCE s tree trimming contractors, which requires them to maintain compliance for the approximately 1. million trees that exist in proximity to energized conductors throughout SCE s service territory. SCE must comply with many vegetation regulations including GO Rules and, Public Resources Code Sections and, and FERC FAC-00-, which require SCE to manage vegetation near its wires. SCE engages a contractor to trim and remove trees and weeds, and other activities, to facilitate compliance with these requirements. Table II- summarizes the recorded and forecast costs related to SCE s vegetation management for transmission assets that recorded to GRC account 1.. Additional information for SCE s vegetation management program, including justification for our test year forecast, is included in SCE- 0, Vol.. See SCE-0 Vol. and the response to Master Data Request Question I.A.1.

31 1. Cost Forecast Table II- Transmission Vegetation Management Portion of GRC Account 1. Recorded and Adjusted 0-01/Forecast (Constant 01 $000) Recorded Forecast Labor $ $ $1 $ $1,1 $1,1 $1,1 $1,1 Non-Labor $,0 $, $, $, $, $, $, $, Total $,0 $, $, $,0 $, $, $, $, Ratio of Labor to Total % % % % % % % % Basis of Forecast: Last Year Recorded Basis of Labor/Non-Labor Split: Last Year Recorded Labor/Non-Labor Ratio As discussed in SCE-0, Volume, labor expenses in this category are driven by the work performed by SCE arborists and employees that manage the vegetation management program. Non-labor costs include contractor costs and other allocated charges associated with the vegetation management program. Labor and non-labor costs, collectively, for vegetation management remained relatively stable from 0 to 01. Costs increased in 01 due to a change in contract terms, and have since stabilized. SCE expects to continue to perform the same level of activities in this area going forward, as shown in Table II-. Refer to WP SCE-0 Vol. 0, pp. 1-1.

32 III. RESPONDING TO EMERGENCIES A. Transmission and Substation Storm SCE s electrical system can be affected by both weather conditions (including rain, wind, lightning, and heat) and by natural disasters (such as earthquakes and forest fires). Storms are declared based on pre-established criteria that consider the magnitude of the storm and the response required to provide timely restoration of service to customers. Once a storm is declared, an Incident Command Team initiates notification and assembly of personnel for situation assessment, service restoration, and communication within SCE and with external agencies. SCE incurs both O&M expenses and capital expenditures to restore service caused by storm conditions. Storm Response capital expenditures include all costs associated with replacing electrical facilities, structures, or equipment damaged during storm events. Storm O&M expenses include costs incurred to manage the storm at the command center, identification of the electrical facilities or structures that have been affected, assessments for required repairs or replacements, performing switching to isolate problem areas, and repairing of damaged equipment.

33 1. Capital Cost Forecast Figure III- Transmission and Substation Storm Capital Expenditures 0 Multiple WBS Elements 1 Recorded 0-01/Forecast (Total Company Constant 01 and Nominal $000) As with storm expenses, CEMA-related capital expenditures that have been or that will be recovered through CEMA filings have been removed from SCE s recorded expenditures in this account. The 0 Windstorm capital expenditures have also been removed from recorded capital expenditures to calculate the five-year average. Since storm events are driven by weather and other environmental factors outside of SCE s control, SCE used a five-year average of recorded costs as the basis for the forecasts in these accounts. This forecast methodology was adopted in the 01 GRC and follows the CPUC s guidance in D.-1-0 to use an average when accounts experience fluctuations due to external forces beyond SCE s control such as weather. Storm-related expenditures are summarized in Figure III-. 0 Refer to WP SCE-0 Vol. 0, pp WBS elements include: CET-PD-ST-TS, CET-PD-ST-SS. See D.1--01, p. 1.

34 B. Transmission/Substation Storm O&M Forecast (GRC Account.) 1. Cost Forecast Table III-1 Transmission and Substation Storm Expenses GRC Account. Recorded and Adjusted 0-01/Forecast (Constant 01 $000) Recorded Forecast Labor $ $ $0 $ $ $ $ $ Non-Labor $1, $,0 $1 $ $1,1 $1,0 $1,0 $1,0 Total $1,1 $, $1,0 $1,0 $1, $1, $1, $1, Ratio of Labor to Total 1% 1% % % % % % % Basis of Forecast: Year Average Basis of Labor/Non-Labor Split: Year Weighted Average Labor/Non-Labor Ratio Storm-related expenses are recorded in FERC Account. for substation and transmission facilities, as shown in Table III-1. Storm expenses that occur during emergency events that the Governor of California declares states of emergency and exceed Commission-authorized amounts for storm-related expenses are sometimes recovered through a Catastrophic Events Memorandum Account (CEMA) filing. Any CEMA-related expenses that have been or that will be recovered through CEMA filings have been removed from SCE s recorded expenses in this account. Since storm events are driven by weather and other environmental factors outside of SCE s control, we use a five-year average of recorded costs to forecast future expenses in these accounts. In SCE s 01 GRC, the Commission stated that SCE s five-year average forecast method is reasonable given the inherent variability of storm expenses. C. Transmission and Substation Claims Transmission Claims captures the expenditures associated with casualty damage to Transmission facilities, such as cars hitting and damaging poles. Claim damage events are random and are beyond SCE s control. Claim work is performed to repair damaged facilities, restore service, and return the Refer to WP SCE-0 Vol. 0, pp See D.1--01, p. 1.

35 system to normal operating conditions. Substation Claims captures the expenditures associated with casualty damage to substation facilities, such as copper theft. 1. Cost Forecast Figure III- Transmission and Substation Claims Multiple WBS Elements Recorded 0-01/Forecast (Total Company Constant 01 and Nominal $000) The Commission in SCE s 01 GRC decision adopted SCE s proposed five-year average for transmission and substation claims. Because claim expenditures are outside of SCE s control and vary significantly from year-to-year, SCE is again proposing to use a five-year average to forecast these expenditures for 01-00, as shown in Figure III-. Refer to WP SCE-0 Vol. 0, pp. -. WBS elements include: CET-PD-CL-TC, CET-PD-CL-SC. See D.1--01, pp. -1.