DIRECT TESTIMONY OF DONALD L. DUBOIS (ELECTRIC T&D VEGETATION MANAGEMENT AND MAINTENANCE EXPENSE)

Transcription

1 BEFORE THE NEW YORK STATE PUBLIC SERVICE COMMISSION x Proceeding on Motion of the Commission as to the Rates, Charges, Rules and Regulations of Central Hudson Gas & Electric Corporation for Electric Service Case -E x x Proceeding on Motion of the Commission as to the Rates, Charges, Rules and Regulations of Central Hudson Gas & Electric Corporation for Gas Service Case -G x DIRECT TESTIMONY OF DONALD L. DUBOIS (ELECTRIC T&D VEGETATION MANAGEMENT AND MAINTENANCE EXPENSE) June, 0

2 TABLE OF CONTENTS I. INTRODUCTION... II. PURPOSE OF TESTIMONY... III. FACTORS AFFECTING CONTRACTOR PRICING TRENDS... IV. ELECTRIC TRANSMISSION ROW MANAGEMENT PROGRAM... A. Routine ROW Maintenance - Electric Transmission... B. Danger Tree Removal - Electric Transmission... C. Hot Spot Trimming - Electric Transmission... D. ROW Edge Reclamation - Electric Transmission... E. Legal & Environmental - Electric Transmission... V. DISTRIBUTION LINE CLEARANCE PROGRAM... 0 A. Trimming Contractor Scheduled On-Road... B. Trimming Contractor Scheduled Off-Road... C. Trimming Contractor Danger Trees... D. Trimming Contractor EAB Danger Trees Phase only... E. Flagging Line Clearance... F. Trimming Contractor Trouble Orders... G. Trimming Contractor Enhanced Line Clearance... i

3 VI. OTHER ELECTRIC T&D EXPENSE... A. Expense Associated with Electric Transmission Capital Projects... B. Expense Associated with Electric Distribution Improvement Projects... C. Electric Transmission and Distribution Inspection Repairs.... Electric Transmission Inspection Repair Expenses.... Electric Distribution Inspection Repair Expenses... ii

4 Case -E- ; Case -G- I. INTRODUCTION Q. Please state your name and business address. A. My name is Donald L. DuBois, Jr. I am employed by Central Hudson Gas & Electric Corporation ( Central Hudson or the Company ), and my business address is South Avenue, Poughkeepsie, New York. Q. In what capacity are you employed by Central Hudson and what is your scope of responsibilities? A. I am employed by Central Hudson as the Company s Manager of Electric Transmission and Distribution ( T&D ). I have several responsibilities related to the electric T&D system. I have responsibility for Electric Transmission & Distribution Maintenance, Construction, and Operations. I have overall responsibility for vegetation management activities at Central Hudson including electric transmission and distribution, as well as gas transmission canopy removal. I am also responsible for the Estimating Department. The Estimating Department is responsible for developing the design, bill of materials, and labor estimates for all of the electric and gas Distribution Improvement and New Business projects, including acquiring the required easements and preparing the documentation necessary to apply for the highway permits to facilitate construction.

5 Case -E- ; Case -G- Q. Please summarize your educational background and professional experience. A. I received a Bachelor of Science in Mechanical Engineering from Union College in. Since, I have been continuously employed by Central Hudson, with assignments in its Production, Mechanical Engineering, Gas & Mechanical Engineering, Fuels Resources, Operation Services, and Customer Services groups. Prior to my current assignment, I served as the Manager of System Construction. Q. Have you previously testified before the New York State Public Service Commission ( PSC or the Commission )? A. Yes, I testified before the Commission in Cases 00-E-, 00-G-, 0-E-0 and 0-G-0. I also testified in Cases 0-E-0, 0-G-0, 0-E-0, 0-G-0, -E-0, and -G-0. II. PURPOSE OF TESTIMONY 0 Q. What is the purpose of your testimony in these proceedings? A. My testimony will address the actual expenditures for the twelve months ended March, 0, and the projected expenditures for the Rate Year ending June 0, 0 ( Rate Year ) for Central Hudson s: ) Electric Transmission Right of Way ( ROW ) Management Program; ) Electric Distribution Line Clearance Program; ) Expense Associated with Category (Electric Transmission) and Category (Electric Distribution Improvement) Capital Projects; and ) Electric Transmission and Distribution Inspection Repair Expenses.

6 Case -E- ; Case -G- Q. Are you sponsoring any exhibits in support of your testimony? A. Yes. I have prepared two exhibits. These exhibits provide the actual expenditures for the twelve months ended March, 0, the projected bridge period expenditures for calendar years 0 and 0, and the Rate Year for Electric Transmission ROW Management (Exhibit (DLD-)) and Distribution Line Clearance (Exhibit (DLD-)). I will be referencing the Revenue Requirements Panel projections to discuss the relationship between project mix and the associated expense for the Category and capital forecasts as well as the existing backlog levels and anticipated findings and subsequent required repairs for both electric distribution and electric transmission inspection repairs. III. FACTORS AFFECTING CONTRACTOR PRICING TRENDS 0 Q. Please provide an overview of the Transmission ROW Management and Distribution Line Clearance contractor pricing trends and its impact on projected expenditures. A. New unit and hourly rates went into effect on January, 0 for Transmission ROW Management contractors that included an average yearly escalation factor of.0% per year for work performed on an hourly basis and.% per year for ROW floor work that is performed based on unit rates. New hourly rates also went into effect on January, 0 for Distribution Line Clearance contractors that included an average yearly escalation factor of.% per year for work activities that are performed on an hourly basis.

7 Case -E- ; Case -G- 0 Q. Are there any factors other than contractor hourly and unit rates impacting the cost of Transmission ROW Management and Distribution Line Clearance? A. Yes, the lack of sufficient funding in the current rate plan to remain on a five year cycle for Transmission ROW Management and a four year cycle for Distribution Line Clearance is impacting the cost per acre and cost per mile for both programs, which will be discussed later in my testimony. Other factors include the United States Fish and Wildlife Service ( USFWS ) and New York State Department of Environmental Conservation ( NYSDEC ) regulations pertaining to the Northern Long- Eared Bat ( NLEB ) and the Indiana Bat, as well as the significant increase in the number of danger trees resulting from the Emerald Ash Borer ( EAB ) (ash trees), Wooly Adelgid (hemlock trees), Dutch Elm Disease (elm trees), White Pine Decline (pine trees), and Gypsy Moths/Oak Wilt (oak trees), which are impacting both Transmission ROW Management and Distribution Line Clearance. Q. What is the impact of the regulations pertaining to the NLEB and Indiana Bat? A. The USFWS and NYSDEC have classified the NLEB as a Threatened Species and the Indiana Bat as an Endangered Species. The rules regarding the protection of each bat species is determined based on the classification.

8 Case -E- ; Case -G- 0 There are certain exemptions granted for the NLEB under Federal ((d) rule) and State law (NYSDEC Guidance) to reduce the mortality impacts on the bat species by outlining when certain activities such as cutting and removing trees can be done. The (d) rule prohibits the incidental take of the NLEB in areas of the country, like New York State, that are within the White Noise Syndrome Zone. Tree removal/trimming cannot occur within 0. miles of a known hibernaculum at any time of the year nor within a foot radius of known occupied maternity roost trees during the pup season (June st -July st). Unrestricted cutting is allowed during the November st through March st time period except within the buffer of a known hibernaculum as defined above. The NYSDEC Guidance requires adherence to the USFWS (d) rule, but expands the buffer around a known hibernaculum from 0. miles to miles for tree removal and/or trimming. The foot buffer still applies to maternity roost trees and any other documented summer occurrence. One noted difference between the two rules is that the NYSDEC provided clarification in its guidance document on the definition of protection of human life and property. For the purpose of the NYSDEC Guidance, protection of human life and property includes removal of a tree or trees that, if not removed, could result in the loss of electric service. Therefore, in some cases it may reduce the five mile buffer for the NLEB to the USFWS 0. mile buffer for known hibernaculum.

9 Case -E- ; Case -G- 0 Since the Indiana Bat is classified as an Endangered Species, the USFWS prohibits the take of a bat either purposefully or by incidental means except for the protection of human life, property, and/or research. A buffer of. miles around each known occurrence or hibernaculum has been established and no tree removal and/or trimming can be done except during the November st through March st time period without first consulting with the USFWS. The NYSDEC follows the Federal rules for the Indiana Bat. The New York Heritage Program acts as the repository for both the USFWS and NYSDEC data related to Endangered and Threatened Species. Central Hudson has entered into an agreement with the New York Heritage Program to obtain the necessary data from the agencies to determine where the known hibernaculum and/or roost trees are located. The data is updated annually and provided to Central Hudson indicating where expanded habitat and/or additional locations have been identified during the previous year. In order to protect the exact location of the species listed, the data is provided to Central Hudson in five mile buffers making it difficult to determine the 0. mile or foot buffer zones. Utilizing extrapolation, Central Hudson has been able to approximate the actual locations and then apply the appropriate buffer radius. This information is plotted and then overlaid on a map of Central Hudson s service territory to determine the impacts on the current trimming cycle to include circuits included in the backlog. The circuits impacted by either

10 Case -E- ; Case -G- 0 the NLEB or Indiana Bat are reviewed to determine if line clearance work can be started and completed during the November st to March st time period based on available resources. Circuits that cannot be completed within this time period are deferred until the following time period. This results in an increase in the backlog of uncompleted miles. Q. Utilizing the data from the New York Heritage Program, has Central Hudson been able to determine the impacted miles associated with each bat species? A. Yes, based on the latest data from the New York Heritage Program, Central Hudson has been able to determine that the regulations pertaining to the Indiana Bat currently impact,. miles of distribution and. miles of transmission. Fortunately, the regulations pertaining to NLEB currently only impact. miles of distribution and. miles of transmission. Q. How does Central Hudson ensure compliance with the regulations regarding the Indiana Bat and NLEB while still adhering to the trimming schedule? A. Operationally, Central Hudson does not intentionally exclude distribution circuits or transmission lines from the cycle year due to bat zone impacts. In an attempt to prevent double mobilization and/or duplicate customer notifications, each distribution circuit or transmission line is evaluated to determine the number of miles impacted by either the Indiana Bat or NLEB and a work plan is developed taking into consideration the

11 Case -E- ; Case -G- anticipated time and crewing required to complete the identified work within the allowed November st through March st time period. If sufficient funding and/or crewing is not available to complete all of the mileage impacted by the bat zones between November st and March st then the unfinished miles are added to the carry over or backlog miles when the work can be scheduled for completion in compliance with the regulations. IV. ELECTRIC TRANSMISSION ROW MANAGEMENT PROGRAM 0 Q. Have you reviewed the actual costs of Central Hudson s Electric Transmission ROW Management in the twelve-month period ending March, 0? A. Yes. The costs of the Electric Transmission ROW Management Plan for the period ending March, 0 are summarized on Exhibit (DLD-). Q. Were there any assumptions utilized in developing the forecasted expenditures for Transmission ROW Management during the bridge period for calendar years 0 and 0? A. Yes. The forecasted expenditures during the bridge period were developed assuming that the pending deferral petition filed by the Company on May, 0 in Case -E-00 ( Deferral Petition ), requesting additional funding for Transmission ROW Management during the second half of 0 and first half of 0 ($,,), is approved and includes a proposed offset against the existing regulatory liability balance available for moderation as indicated on Exhibit (DLD-).

12 Case -E- ; Case -G- 0 Q. If the requested funding associated with the Deferral Petition is reduced or denied, will that have an impact on your testimony and forecasted funding as indicated on Exhibit (DLD-)? A. Yes. The funding requested in the Deferral Petition is required to remain on a five year cycle as prescribed in Central Hudson s Long Range Transmission ROW Management Plan ( Plan ), as revised and filed on May, 0 in Case 0-E-0. The requested funding will facilitate completing the backlog of work left over from 0 and 0, completing the work identified for calendar year 0, and the work forecasted for completion during the first six months of 0. If the funding requested in the Deferral Petition is reduced or eliminated, then additional funding will be required as part of this rate filing. This will need to be reflected in the final determination of electric revenue requirements. The Deferral Petition is based on actual work inventories or the historical five year average for all of the work activities except for danger trees. Q. Please explain the basis for the forecasted number of danger tree removals that would be required during the forecast period. A. The Emerald Ash Borer (ash trees), Wooly Adelgid (hemlock trees), Dutch Elm Disease (elm trees), White Pine Decline (pine trees), and Gypsy Moths/Oak Wilt (oak trees) are all impacting (increasing) the number of danger trees identified for removal during the quarterly aerial patrols of the Electric Transmission System performed in 0 and thus far in 0. For this reason, the actual quantity of danger trees removed during calendar

13 Case -E- ; Case -G- 0 year 0 was used as the basis for the number of danger trees to be removed during the forecasted period. Q. Please describe the scope of Electric Transmission ROW Management activities for the Rate Year reflected in Exhibit (DLD-). A. Central Hudson s Plan, as revised and filed on May, 0 in Case 0-E- 0, outlines the work to be performed and provides the basis for the forecasted expenditures reflected in Exhibit (DLD-). The Staff of the New York State Department of Public Service ( Staff ) reviewed and approved the Plan revisions, as indicated by letter dated June, 0 from Secretary Kathleen H. Burgess. This Plan identifies a total of miles and, acres of electric transmission ROW to be maintained on a five-year cycle (equating to approximately miles and, acres per year). Q. Please describe the activities that comprise the Company s Electric Transmission ROW Management and how the Rate Year forecast was developed for each activity as reflected in Exhibit (DLD-). A. The seven activities that comprise Central Hudson s Electric Transmission ROW Management Program as reflected in Exhibit (DLD-) are: Maintenance of ROW Floor, Mowing & Access Roads, Side Trimming, Danger Tree Removal, Hot Spot Trimming, ROW Edge Reclamation, and Legal & Environmental. Most of these activities are directed or impacted by the Commission s Order Requiring Enhanced Transmission Right-of- Way Management Practices by Electric Utilities issued on June 0, 00

14 Case -E- ; Case -G- 0 in Case 0-E-0, its Order Adopting Recommendations issued on May, 0 in Case -E-0, NYCRR., and North American Electric Reliability Corporation ( NERC ) Vegetation Management Standard, FAC-00-. Q. Please describe in more detail the ROW activities you identified. A. I will discuss each in turn. A. Routine ROW Maintenance - Electric Transmission Maintenance of ROW Floor, Mowing & Access Roads, and Side Trimming are the three activities that comprise Routine ROW Maintenance Electric Transmission. Maintenance of the ROW Floor includes mechanical cutting of all tall growing plant species from within the ROW corridor as well as chemical control with herbicides. This work is typically performed between June and September when herbicide applications are most effective. Since the work plan for 0 includes the bulk transmission lines where the typical ROW width is feet instead of 0 feet, the acres of floor work for 0 is approximately 0% greater than the five year average (, acres versus,0 acres). Although there are, acres of ROW included in the average annual plan, Central Hudson projects that,0 acres of ROW (%) will require floor maintenance, with the remaining % consisting of either agricultural fields or regulated wetlands. The projected,0 acres is consistent with the average floor acres maintained per year in the five calendar years since 0.

15 Case -E- ; Case -G- 0 Therefore, the Rate Year forecast for maintaining the ROW floor assumes that,0 acres will be treated. Calculating the weighted cost per acre based on actual expenditures for maintaining the ROW floor for the five years starting with 0 resulted in an average cost per acre of $. Applying the escalation factor of.% per year resulted in a projected cost of $0/acre in 0, $/acre in 0, and $/acre in 0 for ROW floor maintenance. It is anticipated that % of the expenditures for this work will occur in June with the remaining % occurring in the July through September time period. Total Rate Year expenditures are forecasted to be $,0 for ROW floor maintenance. Mowing and access road work is either performed in conjunction with the routine ROW floor work or is completed to facilitate performing other work activities. As such, mowing and access road work has been included as a component of Routine ROW Maintenance. Based on the five year average, the Rate Year forecast assumes that acres of mowing will need to be completed. Typically 0% of the mowing is completed between January and June with the remaining 0% completed between July and December. The five year average cost for mowing was $0 per acre. Applying the hourly time and equipment ( T & E ) cost increase factor of.0% per year resulted in a projected cost of $/acre in 0, $/acre in 0, and $/acre in 0 for mowing. Total Rate Year

16 Case -E- ; Case -G- 0 expenditures for the mowing and access roads activity are forecasted to be $,. Side trimming operations are required to maintain the edge of the electric transmission ROW. Assuming a five year cycle, there would be miles of ROW to be maintained each year. The average annual miles of side trimming completed since 0 has been. miles. Calculating the weighted cost per mile based on actual side trimming completed in the five calendar years starting with 0 resulted in an average cost per mile of $,. Applying the hourly T & E cost increase factor of.0% per year results in projected costs for side trimming of $,/mile in 0, $,0/mile in 0, and $,/mile in 0. Typically 0% of the side trimming is completed between January and June with the remaining 0% completed between July and December. Total Rate Year expenditures for side trimming are forecasted to be $0,. In summary, the projected cost to complete the Routine Electric Transmission ROW Maintenance activities, which include maintaining the ROW floor (including herbicide application), performing mowing and access road work, and completing the required side trimming for 0% of the total ROW miles and acres each year (five year cycle) will require annual expenditures of $,0,0 for the Rate Year.

17 Case -E- ; Case -G- 0 B. Danger Tree Removal - Electric Transmission Because danger trees are, by definition, located outside of the ROW, removal of danger trees from private property generally requires Central Hudson to obtain permission from the property owner to remove the identified trees. The introduction of invasive species such as the Emerald Ash Borer and Wooly Adelgid, coupled with Dutch Elm Disease, White Pine Decline, and Gypsy Moths/Oak Wilt, has accelerated the decay of ash, hemlock, elm, pine, and oak trees within Central Hudson s service territory. It is anticipated that most ash trees along Central Hudson s transmission ROWs will either be in a state of decline or dead within one to five years. If these trees are capable of falling into a transmission line, they will require topping or removal to avoid a potential transmission interruption. Customers have been reluctant to give permission to remove trees that are in decline, but have been more willing to grant permission to top a tree that poses an imminent danger to a transmission line. Due to the insufficient funding level in the 0 Rate Plan to complete the Routine ROW Maintenance work associated with our five year cycle, the funding for danger tree removals has been reallocated to the Routine ROW Maintenance activity to complete more of that maintenance. As a result, the danger tree removals completed have been limited to only those trees posing an imminent threat to our facilities or danger trees identified during the quarterly aerial patrols. There were

18 Case -E- ; Case -G- 0 danger trees removed during 0 with a backlog of danger trees that were identified but not removed in 0. It is assumed that the backlog of danger trees will be eliminated prior to June 0, 0 if the funding requested in the Deferral Petition is approved. Central Hudson has been utilizing the same contractor to perform its quarterly aerial patrols since 00. One of Central Hudson s Utility Foresters accompanies the contractor s inspector during the quarterly aerial patrols. For comparison purposes, there were a total of danger trees identified during the quarterly aerial patrols conducted in 0, 0 danger trees identified during the 0 patrols, and danger trees identified during just the first and second quarterly patrols performed in 0. Since there was a.% increase ( additional trees) in danger tree removals in 0 compared to 0 (not including the backlog of trees), it is anticipated that the level of Danger Tree Removal activity will continue to increase in 0, 0, and 0. The Rate Year forecast assumes that, danger trees will be removed in total, with danger trees removed between July, 0 and December, 0 and 0 danger trees removed between January, 0 and June 0, 0. The five year average cost for Danger Tree removal was calculated to be $ per tree. Applying the annual hourly T & E cost increase factor of.0% per year results in projected costs of $ per tree in 0, $

19 Case -E- ; Case -G- 0 per tree in 0, and $0 per tree in 0. Total Rate Year expenditures for danger tree removals are forecasted to be $,0. C. Hot Spot Trimming - Electric Transmission Central Hudson performs a ground patrol each year on the bulk transmission lines as well as any line segments identified for mid-cycle review as part of the Hot Spot Trimming activity. Work to be performed as part of the Hot Spot Trimming activity is also identified through comprehensive ground inspections and quarterly aerial patrols. Utilizing the five year average, it is anticipated that, trees per year will need to be removed as part of the hot spot trimming work activity. Typically, 0% of the hot spot trees are removed between January and June with the remaining 0% removed between July and December. The five year average cost for hot spot tree removal was $0 per tree. Applying the annual hourly T & E cost increase factor of.0% per year results in projected costs of $ per tree in 0, $ per tree in 0, and $ per tree in 0. Total Rate Year expenditures for hot spot tree removals are forecasted to be $0,. D. ROW Edge Reclamation - Electric Transmission ROW Edge Reclamation work was completed on all of the Company s transmission lines based on the Plan and Profile drawings for each line. This work was completed in June 00 and no additional expenditures were anticipated for the ROW Edge Reclamation activity.

20 Case -E- ; Case -G- 0 Survey work associated with the acquisition of additional easements in areas where Central Hudson had less than optimal ROW width has identified some discrepancies between the Plan and Profile drawings and the Company s actual easement rights. Based on this new information, additional ROW edge reclamation work is necessary in order to clear to the full extent of the ROW width. The edge reclamation work is either completed in conjunction with the scheduled Routine ROW Maintenance or as additional ROW widths are acquired on kv and kv transmission lines. The work plan for 0 includes completing. miles of ROW edge reclamation. There is also a backlog of miles of ROW edge reclamation that was not completed from 0 and 0 that will be completed prior to June 0, 0 provided that the funding requested in the Company s Deferral Petition is approved. It is anticipated that miles of ROW edge reclamation will need to be completed annually in 0 and 0 to align with the five year average. Typically, 0% of the ROW edge reclamation work is completed between January and June with the remaining 0% completed between July and December. Calculating the weighted cost per mile based on actual ROW edge reclamation completed in the five calendar years starting with 0 resulted in an average cost per mile of $,. Applying the hourly T & E cost increase factor of.0% per year results in projected costs of $,0

21 Case -E- ; Case -G- 0 per mile in 0, $, per mile in 0, and $0, per mile in 0 for ROW edge reclamation. Total Rate Year expenditures for ROW edge reclamation are forecasted to be $,0. E. Legal & Environmental - Electric Transmission Due to the acquisition of additional ROWs associated with Central Hudson s ROW width deficiency initiative coupled with more accurate delineation of the ROW edge from land surveying work completed as part of the transmission rebuild projects, the need to remove danger trees and/or edge trees from these areas has the potential to impact residential properties along Central Hudson s ROWs. Requesting title searches to ascertain the Company s existing rights prior to negotiating with land owners is also becoming more typical. The need to utilize a land surveyor to delineate the ROW edges or install property line demarcation to establish line of sight to facilitate performing clearing activities without any legal action is also becoming more prevalent. The cost associated with performing the title searches and survey demarcations are being allocated to the Legal & Environmental activity as shown on Exhibit (DLD-). NYSDEC has revised its regulations regarding invasive and endangered/threatened species, which has required the expertise of environmental consultants to assist in developing practices and procedures and to identify and locate these species in the field. An environmental consultant is also being utilized to provide annual training to Central Hudson s Utility Foresters as well as the contractor crews

22 Case -E- ; Case -G- 0 performing the field work to ensure compliance with the regulations regarding invasive and endangered/threatened species as well as herbicide application. The cost associated with utilizing these consultants is also being allocated to the Legal & Environmental activity. In addition, to maintain compliance with NYSDEC and New York State Department of Health ( NYSDOH ) requirements for herbicide application buffers related to the location of public and private drinking water wells along and adjacent to ROWs, Central Hudson has been utilizing the services of an environmental consultant to notify landowners of the Company s need for this information and to work with them to identify locations in the field including taking GPS coordinates. Once completed, the environmental consultant provides the data in a format conducive to ArcGIS mapping so Central Hudson can provide the data to its line clearance contractors to ensure compliance. These costs are also being allocated to the Legal & Environmental activity. It is anticipated that the level of Legal & Environmental activity will be consistent with what was experienced in 0; therefore the expenditures for 0 are anticipated to be $,0. Applying the hourly T & E cost increase factor of.0% per year results in projected Legal & Environmental costs of $, in 0 and $, in the Rate Year.

23 Case -E- ; Case -G- 0 V. DISTRIBUTION LINE CLEARANCE PROGRAM Q. Have you reviewed the actual costs of Central Hudson s Distribution Line Clearance Program for the twelve-month period ending March, 0? A. Yes. The costs for the Distribution Line Clearance Program for the twelve month period ended March, 0, are summarized in Exhibit (DLD-). Q. Were there any assumptions utilized in developing the forecasted expenditures for the Distribution Line Clearance Program during the bridge period for calendar years 0 and 0? A. Yes. The forecasted expenditures during the bridge period were developed assuming that the pending Deferral Petition requesting additional funding for removal of EAB danger trees during the second half of 0 and first half of 0 ($,,0) is approved and includes a proposed offset against the existing regulatory liability balance available for moderation as indicated on Exhibit (DLD-). Q. If the requested funding associated with the Deferral Petition is reduced or denied, will that have an impact on your testimony and forecasted funding as indicated on Exhibit (DLD-)? A. Yes. The funding requested in the Deferral Petition is required to proactively begin to address the impact of the EAB on tree-related outage performance. If the funding requested in the Deferral Petition is reduced or eliminated, then additional funding will be required as part of this rate 0

24 Case -E- ; Case -G- 0 filing. This will need to be reflected in the final determination of electric revenue requirements. Q. Please describe the scope of the Electric Distribution Line Clearance Program for the projected Rate Year reflected in Exhibit (DLD-). A. Central Hudson has consistently focused on reliability and reinforced this commitment over a decade ago when an independent consulting firm was retained in 00 to analyze our distribution line clearance practices from an electric reliability perspective. Based on a review of Central Hudson s tree related outage data, it was determined that most of the outages were being caused by tree or limb failure not growth contact. The consultant recommended that Central Hudson establish greater clearances by reducing the overhang and removal of tall growing species from within the ROW ( Modified Enhanced Trimming ). This methodology was implemented in March of 00 and has become the standard for our routine line clearance program on three-phase as well as singlephase lines. Since only a small percentage of Central Hudson s tree-related outages were determined to be caused by growth contacts, the decision was made in 00 to extend the distribution trimming cycle from three years to four years to help offset the increased costs associated with transitioning from standard box trimming to Modified Enhanced Trimming. As a means to further improve reliability, the consultant also identified completing Enhanced Line Clearance on the worst performing

25 Case -E- ; Case -G- 0 three-phase lines (prioritized by tree-caused customer interruptions) and include expanding the hazard/danger tree removal initiative on a system basis. There are currently 00 miles of Enhanced Line Clearance remaining from the 0 miles of three-phase lines originally identified by the consultant. The Company recommends that the remaining 00 miles of Enhanced Line Clearance be completed over three years (0 miles per year) to improve reliability and storm resiliency in the areas served from these circuits. Q. Has any additional work been performed since 00 to assess the effectiveness of the current line clearance program from a tree related outage perspective? A. Yes. In 0, Central Hudson re-engaged the same consultant that was utilized in 00 to perform a comprehensive assessment of the current line clearance program and to identify the drivers of the deteriorated vegetation related reliability performance to include developing recommendations for improvements. Q. What were the consultant s key findings and recommendations? A. The consultant s four key findings are listed below: ) Central Hudson s Vegetation Management Practices for Distribution Line Clearance are consistent with Industry Best Practices. ) There were significant logistical and operational constraints associated with the restriction of trimming within the bat zones.

26 Case -E- ; Case -G- 0 The Indiana Bat and NLEB impact over,000 circuit miles (% of the system) and,. miles are directly within the Indiana Bat zone with only. miles directly within the NLEB zone. ) The impact of hazard trees and particularly the ash trees devastated by the EAB was a significant contributor to the deterioration of tree related reliability performance. ) The level of funding provided in the current rate agreement was insufficient to maintain the recommended four year cycle for distribution line clearance and that the backlog by July, 0 would be,0 miles. The consultant s six recommendations are listed below: ) Address the EAB issue by either adjusting expectations for reliability and associated restoration costs and/or through additional funding targeted for the removal of ash trees. ) Return to a four year maintenance cycle length to prevent growin outages. ) Begin to manage routine maintenance of circuits affected by protected bats separately from the other circuits. ) Segregate Off-ROW danger (hazard) tree removal costs from other routine maintenance costs. ) Separate EAB program dollars from other routine danger tree program dollars.

27 Case -E- ; Case -G- 0 ) Perform a cost/benefit analysis to evaluate the use of herbicides to control stump sprouts. Q. How does Central Hudson plan to address the consultant s recommendations? A. Implementation of recommendations through was discussed in the Deferral Petition as well as within this testimony including the incremental funding requirements. Recommendation pertains to the use of herbicides as part of the distribution line clearance program. The language contained in our typical distribution easements does not include the use of herbicides. Therefore, the use of herbicides to control stump sprouts would require obtaining permission from impacted landowners, which is significantly more time consuming and costly than the notifications required for transmission herbicide applications. Central Hudson will perform the cost/benefit analysis in 0 for recommendation prior to deciding on the appropriate course of action regarding implementation. Q. Please describe the activities that comprise the Company s Electric Distribution Line Clearance Program and how the Rate Year forecast was developed for each activity as reflected in Exhibit (DLD-). A. Central Hudson s Distribution Line Clearance Program has typically consisted of six activities: Trimming Contractor Scheduled On-Road; Trimming Contractor Scheduled Off-Road;

28 Case -E- ; Case -G- Trimming Contractor Danger Trees; Flagging Line Clearance; Trimming Contractor Trouble Orders; and Trimming Contractor Enhanced Line Clearance. 0 A new activity has been added entitled Trimming - Contractor EAB Danger Trees Phase only. Exhibit (DLD-) reflects the seven activities that comprise Central Hudson s Distribution Line Clearance Program. The Trimming Contractor Scheduled On-Road and Trimming Contractor Scheduled Off-Road activities can be referred to as the routine portions of the program and should be completed on a fouryear cycle basis. This equates to, (,/) miles of on-road and (,0/) miles of off-road clearing per year. The two factors that determine the forecasted cost for the on-road and off-road line clearance activities are cost per mile and miles to be completed during the forecasted period. A. Trimming Contractor Scheduled On-Road Trimming - Contractor Scheduled On-Road includes completing an average of, miles of modified enhanced on-road line clearance per year. Based on insufficient funding to remain on a four year cycle, the backlog of on-road miles on July, 0 is forecasted to be,0 miles. To get back on cycle over a period of three years would require completing an additional miles per year for a total of, miles per year. It is assumed that 0% of the miles would be completed between

29 Case -E- ; Case -G- 0 January and June with the remaining 0% completed between July and December. Since the cost per mile for on-road line clearance has been increasing each year due to the lack of funding to remain on a four year cycle as well as increased contractor labor and equipment costs, it is recommended that the actual average cost per mile for 0 of $,0 per mile be utilized as the basis for forecasting the future cost per mile for this work activity. Applying the hourly T & E cost increase factor of.% per year results in projected costs per mile of $, in 0, $, in 0, and $, in 0. Total Rate Year expenditures for the On-Road Line Clearance activity are forecasted to be $,,0. B. Trimming Contractor Scheduled Off-Road Trimming Contractor Scheduled Off-Road activity includes completing an average of miles of modified enhanced off-road line clearance per year. Based on insufficient funding to remain on a four year cycle, the backlog of off-road miles on July, 0 is forecasted to be miles. To get back on cycle over a period of three years would require completing an additional miles per year for a total of miles per year. It is assumed that 0% of the miles would be completed between January and June with the remaining 0% completed between July and December. Similar to on-road, the cost per mile for off-road line clearance has been increasing each year due to the lack of funding to remain on a four

30 Case -E- ; Case -G- 0 year cycle as well as increased contractor labor and equipment costs, it is recommended that the actual average cost per mile for 0 of $,0 per mile be utilized as the basis for forecasting the future cost per mile for this work activity. Applying the hourly T & E cost increase factor of.% per year results in projected costs per mile of $, in 0, $, in 0, and $,0 in 0. Total Rate Year expenditures for the Off-Road Line Clearance activity are forecasted to be $,0,. C. Trimming Contractor Danger Trees Trimming Contractor Danger Trees is an activity that includes the removal of trees from outside of the Company s ROW that are either dead or in a state of decay and if they fall into the Company s distribution line would result in significant damage and/or an extended outage. As discussed previously, invasive species have accelerated the decay of ash, hemlock, elm, white pine, and oak trees within Central Hudson s service territory. Central Hudson has been receiving requests from municipalities to assist in the removal of these trees as they pose a public safety threat in these communities. Where the trees are in close proximity to our lines, Central Hudson has committed line clearance contractor resources to cut the trees down and municipal crews have assumed responsibility for clean-up and disposal of the debris. Expenditures for this activity depend on the number of danger trees identified and removed during the year. Since a new activity is being proposed to deal with the impacts of EAB danger trees, it is recommended that the number of danger trees to be

31 Case -E- ; Case -G- 0 removed on an annual basis as part of the routine danger tree program be based on the two year average of danger tree removals from 0 and 0 (0 trees). It is assumed that 0% of the danger trees would be removed between January and June with the remaining 0% removed between July and December. The average cost to remove a danger tree during the month period from January, 0 through December, 0 was $ per tree. Applying the hourly T & E cost increase factor of.% per year results in projected costs of $ per tree in 0, $ per tree in 0, and $ per tree in 0. Total Rate Year expenditures for routine danger tree removals are forecasted to be $,0. D. Trimming Contractor EAB Danger Trees Phase only The consultant completed a sample survey of 0 one mile segments to determine the number of hazard trees adjacent to our distribution lines. Although white pine, hemlock and ash trees were observed to be either dead or in decline, the outage data indicated that the EAB impact on the mortality of ash trees has been the most significant contributor to the increase in the number of tree related outages. Based on the consultant s sample inventory they determined that, on average, there are. ash trees per mile along our three phase circuitry. Assuming that the Deferral Petition is approved to provide the required funding to complete EAB danger tree removals along miles of three phase circuitry by July, 0, it is recommended that the EAB danger

32 Case -E- ; Case -G- 0 tree removal program be scaled back to include completing danger tree miles per year. If the Deferral Petition is not granted, the level of the program should not be scaled back. It is assumed that 0% of the miles would be completed between January and June with the remaining 0% completed between July and December. Central Hudson conducted an EAB Pilot Project in 0 to evaluate the costs associated with performing a danger tree inventory, obtaining permission from impacted property owners to remove the identified danger trees, as well as the contractor costs associated with the actual danger tree removals. The average cost per tree for the 0 trees removed as part of the 0 EAB Pilot Project was $ per tree. The average cost per tree for the trees removed as part of the routine danger tree program in 0 was $ per tree. It is recommended that the average EAB danger tree removal for 0 be calculated as the average of the routine and EAB danger tree removals or $ per tree. Applying the hourly T & E cost increase factor of.% per year results in projected costs of $ per tree in 0, $ per tree in 0, and $ per tree in 0. Total Rate Year expenditures for EAB danger tree removals are forecasted to be $,,00. E. Flagging Line Clearance Flagging is directly related to completing on-road line clearance, enhanced line clearance, danger tree removal, and trouble orders, but the

33 Case -E- ; Case -G- 0 costs for flagging are accounted for independently of performing these work activities. Appropriate signage and flagging continue to be required to meet local town, county, state and federal guidelines for work zone safety when performing work to include trimming operations along or across any roadway. Work zone safety continues to be a paramount concern and providing trained and qualified flagging personnel is an integral part of performing distribution line clearance activities along state, county, and town roads. It is anticipated that the flagging activity work will continue to be performed, and staffed as needed, through temporary employment with compensation paid on an hourly basis. The total forecasted expenditures for flagging were developed by calculating an average flagging cost per mile for both on-road and enhanced line clearance. Since the cost per mile for on-road line clearance has been increasing each year due to the lack of funding to remain on a four year cycle as well as increased contractor labor and equipment costs, it is recommended that the actual average cost per mile for flagging in 0 of $ per mile be utilized as the basis for forecasting the future cost per mile for this work activity. Applying the hourly T & E cost increase factor of.% per year results in projected costs per mile of $ in 0, $ in 0, and $0 in 0. 0

34 Case -E- ; Case -G- 0 Incorporating the additional time required to complete enhanced line clearance compared to modified enhanced on-road line clearance, the forecasted cost per mile for enhanced line clearance flagging was projected to be % higher than the on-road line clearance flagging cost. This resulted in projected costs for enhanced line clearance flagging of $ per mile for 0. Applying the hourly T & E cost increase factor of.% per year results in projected costs per mile of $ in 0, $ in 0, and $ in 0. Multiplying the average cost per mile for on-road line clearance flagging by the planned miles for on-road line clearance, multiplying the average cost per mile for enhanced line clearance flagging by the planned miles for enhanced line clearance, and then adding the totals together for both on-road flagging and enhanced line clearance flagging resulted in forecasted Rate Year expenditures of $,, for flagging. F. Trimming Contractor Trouble Orders Tree related conditions requiring off-cycle attention are categorized as Trouble Orders and in the past would have typically followed a storm event. Trouble Orders may result from localized wind events or lightning strikes that can damage tree limbs that are in contact, or will make contact, with our electrical facilities. The Distribution Line Clearance Program does not have an activity to address mid-cycle vegetation clearance issues. Line clearance work required to provide additional resiliency or to address sub-par tree related reliability performance prior to

35 Case -E- ; Case -G- 0 the next scheduled maintenance would be additional examples of Trouble Order conditions. Expenditures for this activity depend on the actual number of Trouble Orders created during the year. Since the Trouble Order activity expenditures increased by.% in 0 compared to 0 and increased another.% in 0 compared to 0 it is recommended that the actual expenditures from 0 of $,0 or $, per month be utilized as the basis for forecasting the future cost for this work activity. Applying the hourly T & E cost increase factor of.% per year results in projected costs per month of $, in 0, $, in 0, and $, in 0. The forecasted Rate Year expenditures of $,0 for Trouble Orders is consistent with the anticipated work load for this activity. G. Trimming Contractor Enhanced Line Clearance The Enhanced Line Clearance activity targets completing a more aggressive ground to sky line clearance (including tree removals and complete over-hang removal) on both the on-road and off-road threephase mainline sections of the worst performing circuits from a treerelated outage perspective. Although funding for this program has not been provided in the last several rate plans, reinstating the Enhanced Line Clearance Program (0 miles per year) in addition to the EAB Danger Tree Program is the most economical means of improving tree related outage performance and

36 Case -E- ; Case -G- 0 providing additional storm resiliency since most outages during storms can be linked to tree-related causes. The average cost per mile for performing enhanced line clearance is assumed to be % higher than the average cost per mile for modified enhanced (on-road and off-road) line clearance. Utilizing the average cost for modified enhanced line clearance during the month period from January, 0 through December, 0 of $,0 per mile and increasing the cost by % results in an average cost of $, per mile for 0. Applying the hourly T & E cost increase factor of.% per year results in projected costs per mile of $, for 0, $, for 0, $, for 0, and $,0 for 0. Multiplying the average cost for 0 by 0 miles and the average cost for 0 by 0 miles results in forecasted Rate Year expenditures of $,,00 to complete 0 miles of Enhanced Line Clearance during the Rate Year. Q. Has Central Hudson identified any other opportunities to improve tree related reliability performance and/or storm resiliency? A. Yes, Central Hudson has determined that there are,0 distribution poles that do not have a primary conductor assigned to them. These pole locations are used for secondary and aerial cable and are not currently included in our Distribution Line Clearance Program. There are no outages on the secondary cable as a result of contact with vegetation, but these lines are susceptible to damage from falling limbs and trees. A large percentage of the secondary cable is located in urban areas where

37 Case -E- ; Case -G- 0 performing modified enhanced line clearance is not practical. Increasing the focus on removing some of the overhang as well as the dead or decaying trees will reduce the storm related outages on these lines. Based on the reduced work scope planned for the secondary lines, it is anticipated that the cost per mile for clearing these lines would be roughly 0% of the cost per mile for modified enhanced line clearance of our primary lines. This would equate to an estimated cost for on-road secondary line clearance in 0 of $, per mile including $ per mile for flagging. The estimated cost for off-road secondary line clearance in 0 would be $, per mile. Since the estimated cost per mile for on-road and off-road are practically the same, there is no need to differentiate between on-road and off-road and an average cost per mile of $, can be utilized. Applying the hourly T & E cost increase factor of.% per year results in projected costs per mile of $, for 0 and $, for 0. Assuming that there are on average poles per mile this would equate to roughly,000 miles of secondary cable. If this work was performed as part of the four year cycle, then 00 miles of secondary trimming would be performed per year. The forecasted Rate Year expenditures to implement a secondary trimming program would be $,,0 which is $,00 more than the proposed enhanced line clearance activity including the associated flagging costs.