2015 General Rate Case

Transcription

1 Application No.: Exhibit No.: SCE-0, Vol. 0 Witnesses: D. Neal (U -E) 01 General Rate Case Safety, Security, & Compliance (SS&C) Volume Corporate EH&S Before the Public Utilities Commission of the State of California Rosemead, California November 01

2 SCE-0: Safety, Security & Compliance Volume 0 Corporate EH&S Table Of Contents Section Page Witness I. OVERVIEW AND SUMMARY OF REQUEST...1 D. Neal A. Overview of CEHS Activities...1 B. Summary of Request... II. CEHS MANAGEMENT AND ENVIRONMENTAL SERVICES O&M (FERC ACCOUNTS 0/1)... A. Summary of Activities... B. Analysis of Recorded Expenses... C. Test Year Forecast Labor.... Non-Labor... III. TRANSMISSION ENVIRONMENTAL SERVICES (FERC ACCOUNT.0)... A. Summary of Activities... B. Analysis of Recorded Expenses... C. Test Year Forecast... IV. DISTRIBUTION ENVIRONMENTAL SERVICES (FERC ACCOUNT.0)...1 A. Summary of Activities...1 B. Analysis of Recorded Expenses...1 C. Test Year Forecast...1 V. HEALTH AND SAFETY (FERC ACCOUNT )...1 A. Summary of Activities...1 B. Analysis of Recorded Expenses...1 C. Test Year Forecast...1 -i-

3 SCE-0: Safety, Security & Compliance Volume 0 Corporate EH&S Table Of Contents (Continued) Section Page Witness 1. Labor.... Non-Labor... VI. OUTSIDE CONSULTING SERVICES (FERC ACCOUNT )... A. Summary of Activities... B. Analysis of Recorded Expenses... C. Test Year Forecast... VII. CAPITAL EXPENDITURES... A. Marine Mitigation Reef Construction and Wetland Restoration Introduction.... Wetlands Restoration Project Description and Background... a) Scope of Work... b) Cost.... SONGS Reef Construction Description and Background... a) Scope of Work... b) Cost.... Regulatory Considerations...0 Appendix A Witness Qualifications... -ii-

4 SCE-0: Safety, Security & Compliance Volume 0 Corporate EH&S List Of Figures Figure Page Figure II-1 Environmental Services Expense Forecast FERC Accounts 0-1 (Constant 01 $000s)... Figure III- Transmission Environmental Services Portion of GRC Account.0 Recorded and Adjusted 00-01/Forecast (Constant 01 $000)... Figure IV- Distribution Environmental Services Environmental Services Portion of FERC Account.0 Recorded and Adjusted 00-01/Forecast (Constant 01 $000)...1 Figure V- DART Injury Rates, Figure V- Health and Safety Forecast Expenses FERC Account (Constant 01 $000s)... Figure VI- CEHS Consulting Services Forecast Expenses FERC Account (Constant 01 $000s)... -iii-

5 SCE-0: Safety, Security & Compliance Volume 0 Corporate EH&S List Of Tables Table Page Table II-1 Environmental Services Recorded and Adjusted Expenses FERC Account 0-1 (Constant 01 $000s)... Table III- Transmission Environmental Services Recorded and Adjusted Expenses Environmental Services Portion of FERC Account.0 (Constant 01 $000s)... Table III- Major Project Onsite Mitigation (Constant 01 $000)...1 Table IV- Distribution Environmental Services Recorded and Adjusted Expenses Environmental Services Portion of FERC Account.0 (Constant 01 $000s)...1 Table V- 0 Safety Culture Assessment Strengths & Weaknesses Identified...0 Table V- Health and Safety Recorded and Adjusted Expenses FERC Account (Constant 01 $000s)...1 Table VI- CEHS Consulting Services Recorded and Adjusted Expenses FERC Account (Constant 01 $000s)... Table VII- Wetlands Restoration Forecast Capital Expenditures (Nominal $000)... Table VII- SONGS Reef Construction Forecast Capital Expenditures (Nominal $000)...0 -iv-

6 I. OVERVIEW AND SUMMARY OF REQUEST A. Overview of CEHS Activities SCE s Corporate Environmental, Health and Safety (CEHS) department provides services in two basic areas environmental services (Environmental Services) and health and safety (Health & Safety). The department is responsible for developing and managing programs to comply with environmental, health, and safety (EHS) requirements across SCE. These statutory and regulatory requirements, which are key drivers that influence how SCE conducts its operations, include the National Environmental Policy Act (NEPA), California Environmental Quality Act (CEQA), California Public Utility Commission (CPUC) General Order -D, Federal Endangered Species Act/California Endangered Species Act, Clean Air Act, Clean Water Act, Resource Conservation and Recovery Act, Migratory Bird Treaty Act, and the Occupational Safety and Health Act. CEHS collaborates with other Operating Units (OUs) to develop and implement standards to meet these and other federal, state, and local requirements. CEHS also has primary responsibility for obtaining necessary environmental permits and approvals from regulatory agencies. CEHS develops company-wide EHS standards and provides subject area expertise, company-wide EHS oversight and compliance assistance, and environmental project coordination, including construction compliance oversight. Costs for work on capital projects are charged to capital project work orders. Costs associated with OU-specific work are charged back to the OU for which the work is performed and are included in the expenses presented in those organizations testimony. 1 This volume presents our recorded and forecast expenses, which are recorded to FERC Accounts 0/1,, and. 1 In 01, approximately 0 percent of all Environmental Services chargebacks was for work performed for the Transmission and Distribution OU (T&D) and recorded to FERC Accounts.0 and.0. The remaining 0 percent of chargebacks was recorded to other FERC accounts for multiple other OUs throughout SCE, including Generation, Information Technology, and Customer Service. See workpaper entitled OU Chargeback FERC Accounts 01 Recorded Data. O&M expenses for Environmental Services and CEHS department management are recorded in FERC Accounts 0/1. O&M expenses for Health & Safety are recorded in FERC Account. Outside consulting services expenses for both Environmental Services and Health & Safety are recorded in FERC Account. 1

7 B. Summary of Request For 01, CEHS forecasts O&M expenses of $. million, $1. million above 01 recorded-adjusted expenses. As explained below, this increase is needed because recorded expenses for the 01 base year are anomalous and do not reflect the funding needed for CEHS on-going work. CEHS also forecasts capital expenses of $0. million for the period for San Onofre Nuclear Generating Stations (SONGS) Marine Mitigation Projects. The testimony below also provides the forecast for the Environmental Services portions of FERC Accounts.0 and.0 for services performed by CEHS for the Transmission and Distribution OU (T&D). Although these costs will be presented in this volume, the forecast costs for the Environmental Services portions of these accounts are captured in Mr. McDonald s testimony in Exhibit SCE-0, Vol. 0. This forecast is for expenses recorded in FERC Accounts 0/1,, and. As discussed below in Chapter VII, SCE s obligations relating to the marine mitigation projects arise under a California Coastal Commission Coastal Development Permit and are independent of SONGS continued operations. These obligations will continue even when SONGS is decommissioned. See workpaper entitled 1 SONGS Mitigation Coastal Development Permit (CDP).

8 II. CEHS MANAGEMENT AND ENVIRONMENTAL SERVICES O&M (FERC ACCOUNTS 0/1) A. Summary of Activities Costs charged to FERC Accounts 0/1 include the labor and non-labor expenses associated with activities that are not directly tied to a particular capital project or OU-specific project, including the following: Coordinating activities involving various public, private, and governmental agencies and organizations on environmental matters and issues that affect company operations, including legislative, regulatory, compliance, trends, and policies; Supporting project environmental siting, licensing, permitting, project construction mitigation, monitoring, and reporting. Examples of these labor expenses include interpretation and compliance with federal, state, and local government regulations on biological and natural resources, avian protection, wetland permitting support, water and air quality, hazardous materials and waste, and environmental engineering subject areas, such as Environmental Site Assessments (ESA), Spill Prevention Controls and Countermeasure (SPCC) plans, and site remediation activities; Working with other OUs and SCE leadership to develop and implement company-wide management systems, controls, and standards for compliance with the many and everchanging environmental regulations that affect SCE s operations; Developing and managing SCE s EHS compliance assurance process, monitoring and tracking regulatory agency actions, and monitoring and reporting on EHS compliance metrics Developing, maintaining, and monitoring CEHS EHS compliance management software tool; and Developing and implementing environmental and compliance training programs for new company personnel as part of the on-boarding process as well as for existing SCE personnel. Given the technical, regulatory, and compliance nature of their work, CEHS personnel require regular training and development, particularly in their areas of expertise, to keep abreast of continuing regulatory and technical developments. Additionally, to perform their duties, many of the See workpaper entitled Environmental 01 Standard Topics List.

9 environmental professionals and specialists require a variety of certifications that must be acquired and/or maintained with required training and professional development. The labor and non-labor costs associated with these activities, including travel time and costs, are recorded in FERC Accounts 0/1. Costs associated with general administrative and departmental activities and operations, including the development and implementation of departmental initiatives, are also charged to FERC Accounts 0/1. Examples of departmental initiatives include work to streamline the process of creating and maintaining purchase orders and developing departmental guidelines for increasing procurement of goods and services from Women, Minority, and Disabled Veteran Business Enterprises. B. Analysis of Recorded Expenses The recorded expenses for FERC Accounts 0/1 have been adjusted to remove one-time costs, such as those associated with relocating employees and the development costs for an air quality and EHS compliance programs. Adjustments have also been made to reflect transfers of Health & Safety costs to FERC Account and to capture employee transfers between departments that occurred in 01. Table II-1 below reflects the recorded expenses for Environmental Services, which includes CEHS department management expenses. Table II-1 Environmental Services Recorded and Adjusted Expenses FERC Account 0-1 (Constant 01 $000s) FERC Account Labor,00,,,,1 Non-labor 1, 1, 1, 1, 1 Other Total,,1,,00, The expenses shown in Table II-1 above exhibit significant fluctuation during The primary cause for this is the shift from year-to-year among the three categories in which CEHS expenses were recorded: (1) capital projects, () chargebacks for OU-specific projects charged to more than 0 different FERC accounts, and () FERC Accounts 0/1 for company-wide and CEHS-specific work, including training and development. CEHS must prioritize the demands for Environmental Service work in each of these three categories and allocate staff and resources based on the prioritization.

10 Increased work in one or more of these categories (and, therefore, associated costs) generally results in the reduction of work in the other categories. Thus, as priorities and demands shift from yearto-year, the amount of labor and associated non-labor expenses charged to these various categories also shift, leading to variability and fluctuations in the costs recorded to FERC Accounts 0/1. Therefore, there is an inverse correlation between the costs recorded to FERC Accounts 0/1 and the amount of work and costs devoted to capital projects and OU-specific work. For example, as capital project demands increased during 00-01, labor costs charged to capital projects increased from approximately percent of Environmental Services total labor expense in 00 to percent in 01. During the same period, labor costs charged to FERC Accounts 0/1 decreased from approximately 1 percent to percent. From 00 to 00, FERC Accounts 0/1 expenses remained relatively constant. From 00 to 0, they increased by 1 percent, consisting of a 1 percent increase, $0,000, in labor, and an percent increase, $,000, in non-labor. This increase was driven by a number of changes to the department workload. In 0, CEHS adopted a new Air Quality Wireless Remote Monitoring System (WRMS), resulting in $,000 of additional labor and non-labor expenses for the equipment and field implementation. In addition, capital project work continued to increase in 0 in response to increasing demands to support the environmental needs of major transmission projects. On-boarding and job-specific training costs to meet this demand recorded to this account, which resulted in an $,000 increase. The remaining $,000 increase is due to an increase in the number of employees to meet expanding environmental requirements and associated non-labor costs, such as equipment and supplies. From 0 to 0, total costs in this account decreased by 1 percent. During this period, labor costs decreased by percent as increased capital project demand shifted more employee time to capital projects. As more Environmental Services staff and resources were devoted to work on capital projects, departmental projects and OU-specific work were deferred. From 0 to 01, there was a significant decrease in both labor and non-labor expenses; a total decline of percent, consisting of a percent reduction in labor expenses and 0 percent reduction in non-labor expenses. The decrease in labor expenses was due to a combination of factors that created an See workpaper entitled CEHS Management and Environmental Services Labor Charge Components. WRMS utilizes global position system hardware/software to track the location and operating hours of portable internal combustion engines or assets.

11 anomalous year. Due to a company-wide hiring freeze in 01, continuing increases in capital project work demand in 01 caused CEHS to shift more Environmental Services resources from OU-specific and company-wide work to capital project work. Additionally, capital and OU-specific project work and the late 01 GRC decision led us to temporarily defer training and professional development. The reduced 01 non-labor costs are directly related to the reduced labor costs, including postponed employee training, professional development, and associated travel and related costs, which declined from $1,000 in 0 to $,000 in 01. The lower labor and non-labor costs in 01 are not sustainable. Moreover, given the high compliance nature of the environmental disciplines, continuing to defer training and professional development increases SCE s compliance risks as Environmental Services subject matter experts are less able to maintain regulatory knowledge and stay current on industry practices in the rapidly changing environmental disciplines. Some departmental resources that have shifted to support capital projects will need to be reallocated to support deferred departmental and company-wide activities. C. Test Year Forecast CEHS 01 test year forecast for FERC Accounts 0/1 is $. million, a $1.1 million increase above 01 recorded expenses. Figure II-1 below provides the labor and non-labor expense forecast along with the recorded expenses. See Mr. Litzinger s testimony in Exhibit SCE-01.

12 Figure II-1 Environmental Services Expense Forecast FERC Accounts 0-1 (Constant 01 $000s) Labor CEHS 01 labor O&M forecast for FERC Accounts 0/1 is $.1 million, an increase of $,000 from the 01 base year, to permit sufficient time for Environmental Services staff to address deferred training and professional development as well as departmental and companywide initiatives. As discussed above, the recorded amounts in this account have fluctuated significantly during the period. In D.-1-0, the CPUC stated that, for accounts having significant fluctuations in recorded expenses from year-to-year, an average of recorded expenses is appropriate. Because the expenses in this account have fluctuated during the period from a low of $.1 million to a high of $. million a five-year average of those expenses is an appropriate base estimate.. Non-Labor CEHS 01 non-labor O&M forecast for FERC Accounts 0/1 is $1.1 million, an increase of $,000 from the 01 base year, to cover costs associated with postponed training and development, and associated travel costs, as well as deferred departmental and company-wide work. As

13 discussed above, the recorded amounts in this account have fluctuated significantly during the period. In D.-1-0, the CPUC stated that for accounts having significant fluctuations in recorded expenses from year-to-year, an average of recorded expenses is appropriate. Because the expenses in this account have fluctuated during the period from a low of $0.1 million to a high of $1. million a five-year average of those expenses is an appropriate base estimate.

14 III. TRANSMISSION ENVIRONMENTAL SERVICES (FERC ACCOUNT.0) A. Summary of Activities The T&D Environmental Services activities are explained in this volume. However, the actual forecast for the O&M expenses is captured in Mr. McDonald s testimony in Exhibit SCE-0, Vol. 0. The rationale for this is because environmental activities for this T&D work is performed by CEHS but the costs are recorded in T&D s FERC Account.0. Expenses related to environmental activities, such as program development for T&D Transmission specific work, including program implementation, program management on behalf of T&D Transmission, project support, and any work associated with T&D Transmission for all environmental disciplines, are discussed below. Other expenses charged to this account include work associated with major transmission projects. As capital project construction is completed, the costs associated with those projects are shifted to the Environmental Services portion of T&D FERC Account.0 for onsite mitigation. The O&M expenses specific to these projects include what will be referred to as Onsite Mitigation. Onsite Mitigation addresses requirements of CEQA, NEPA, various state and federal resource protection statutes and regulations, and the California Coastal Act, among other laws and regulations. The degree of Onsite Mitigation that will take place for each project depends on the Environmental Impact Report (EIR), the Environmental Impact Statement (EIS), and any government permits needed for each project. Once each project is licensed, SCE develops a Habitat Mitigation Plan that addresses all CEQA, NEPA, regulating agency, permit, and license requirements that are the basis for all work performed during Onsite Mitigation. An EIR is a CEQA (1 C.C.R. 0) required document that proposes mitigations and alternatives that may reduce or avoid environmental impacts of projects. See workpaper entitled Environmental Impact Report (EIR). An EIS is a NEPA required document that lists all reasonable alternatives and their impacts to the environment. See workpaper entitled Environmental Impact Statement (EIS).

15 B. Analysis of Recorded Expenses CEHS records all T&D Transmission related Environmental Services to FERC Account.0. Table III- below provides the recorded-adjusted expenses for the Environmental Services portion of this account. Table III- Transmission Environmental Services Recorded and Adjusted Expenses Environmental Services Portion of FERC Account.0 (Constant 01 $000s) FERC Account Labor 1 Non-labor Other Total Overall costs have increased during the past five years as SCE has completed various phases of its major transmission projects, and completed the implementation of the EHS Compliance Management System (CMS). The Environmental Services portion of expenses charged to labor for this account has varied based on the function and specific requirements of the new projects and system implementation. The EHS CMS was in the implementation phase during years Costs associated with T&D Transmission s portion of the EHS CMS project increased during these years. In 0, a total of $,000 was charged to FERC Account.0 for the labor and non-labor expenses associated with implementing the release reporting module and the hazardous waste module for the EHS CMS. In 0, a total of $,000 was charged as the modules were being piloted to a limited number of users. In 01, a total of $,000 was charged to this account for the T&D-wide implementation of the release reporting module and development and implementation of the hazardous materials business plan module. As noted above, when major transmission projects complete construction, costs shift from capital expenditures to O&M expenses. In 0, the phases 1- of the Tehachapi Renewable Transmission Project (TRTP) completed construction. The Environmental Services provided by CEHS therefore Environmental Services is only one category of expenses charged to FERC Account.0. Please see Mr. McDonald s testimony in Exhibit SCE-0, Vol. for a discussion of the other categories of expenses charged to this account.

16 shifted to work associated with O&M costs for Onsite Mitigation. In 0 and 01, CEHS charged $1,000 and $,000, respectively, for Onsite Mitigation associated with TRTP phases 1-. C. Test Year Forecast The 01 O&M expense forecast for the Environmental Services portion of FERC Account.0 is $.1 million, a $. million increase from 01 recorded expenses. Figure III- below provides the labor and non-labor expense forecast along with the recorded expenses. Figure III- Transmission Environmental Services Portion of GRC Account.0 Recorded and Adjusted 00-01/Forecast (Constant 01 $000) To forecast 01 expenses, we began with 01 recorded, then added $. million to reflect capital project completion in 01, which means that work associated with those projects will shift from capital to O&M expenses. Total expenses steadily increased over the period as SCE put new infrastructure into service. Consistent with the CPUC s guidance in D.-1-0, SCE used 01

17 recorded expenses as the base for the test year estimate because the costs in this account have increased over the past five years. The incremental $. million is associated with Onsite Mitigation for major transmission projects that are projected to shift from capital expenses to O&M expenses, including fifteen projects in These projects include the three largest projects to date: TRTP, Eldorado Ivanpah Transmission Project (EITP), and Devers Colorado River (DCR). The forecast incremental expense for 01, shown in Table III- below, is based on the three-year average of forecast expenses from Table III- Major Project Onsite Mitigation (Constant 01 $000) Total Project Costs with draft Habitat Mitigation Plan Total Project Costs Estimate based on historical knowledge 1,1,, 1,1 1,0 1, Total,,0,0 01 forecast (01-01 average), This forecast was developed based on the draft Habitat Mitigation Plan that analyzes historical data, acreage, type of project, location, and the projected effort for the project. 1 O&M expensed Onsite Mitigation is anticipated to last five-to-ten years, and is outlined in each project s Habitat Mitigation Plan. At this time, TRTP, EITP, and DCR are the only projects far enough in the licensing process to have developed a draft Habitat Mitigation Plan and have a detailed forecast for the anticipated costs. The remaining projects are still in the licensing phase and therefore do not have a draft Habitat 1 See workpaper entitled Draft Example of Habitat Mitigation Plan. 1

18 Mitigation Plan; anticipated costs for these projects are based on historical data for similar projects and industry knowledge. 1 CEHS adopts the average for 01 test year expense. 1 See workpaper entitled Forecasting Assumptions for Large Transmission Projects. 1

19 IV. DISTRIBUTION ENVIRONMENTAL SERVICES (FERC ACCOUNT.0) A. Summary of Activities Similar to Transmission Environmental Services, the activities for this account are explained in this volume but the forecast is captured in Mr. McDonald s testimony in Exhibit SCE-0, Vol. 0. Expenses related to environmental activities, such as program development for T&D Distributionspecific work, program implementation, program management on behalf of T&D Distribution, project support, and any work associated with T&D Distribution for all environmental disciplines, is discussed below. This work includes management of environmental disciplines in the areas of hazardous materials and waste, California Accidental Release Program, drinking water, Department of Transportation, Financial Assurance for Environmental Liabilities, chemical usage, air quality permitting and compliance, property ESAs, site remediation, SPCC, and tank management. CEHS also manages technical subject matter area compliance with the Clean Air Act (CAA), Clean Water Act (CWA), and the Resource Conservation and Recovery Act (RCRA). In addition to permitting and reporting, the CEHS subject matter experts engaged in this work provide compliance process guidance, corporate governance, training, and technical support for existing infrastructure as well as new project licensing and construction. B. Analysis of Recorded Expenses CEHS records all T&D Distribution related Environmental Services expenses to FERC Account.0. Table IV- below provides the recorded-adjusted expenses for the Environmental Services portion of this account. 1 1 Similar to FERC Account.0, Environmental Services is only one category of expenses charged to FERC Account.0. Please see Mr. McDonald s testimony in Exhibit SCE-0, Vol. for a discussion of the other categories of expenses charged to this account. 1

20 Table IV- Distribution Environmental Services Recorded and Adjusted Expenses Environmental Services Portion of FERC Account.0 (Constant 01 $000s) FERC Account Labor 1, 1, 1, 1, Non-labor 1, 1,,0 1,1 1 Other Total,,,0,1, Expenses recorded to this account peaked in 0, then declined in 0 and 01. Multiple factors caused the expenses in this account to fluctuate over the period, including: activity based costs, 1 efficiencies gained in training, a new T&D Distribution-specific program for Avian Protection implemented in 0 (accounting for $,000 of the 0 expenses), and completion of the EHS CMS implementation. Much like the work performed for major transmission projects, T&D Distribution also has Onsite Mitigation costs for land directly related to the maintenance of equipment. This work accounted for a total of $1. million in 0 then dropped to $,000 in 0, which is reflective of the decrease in T&D Distribution field activity. In December 00, SCE determined that certain brackets being used on poles sustained long term surface deterioration, followed by crack initiation and growth through cyclic fatigue. Due to this finding, in 00 SCE began a program to replace aging transformers with these brackets. This program significantly increased activity levels during 0, which caused environmental costs for land mitigation and monitoring, and equipment disposal and related material, to increase during these years. This program accounted for percent of approximately,000 transformers disposed of in 0. Costs recorded to this account for 0 show disposal of transformers and related materials as $,000; then, as the program continued to increase activity, the costs to this account for 0 increased to $0, Activity based costs are tied to the number of units affected by T&D work, such as the number of transformers removed from service and the number of acres affected by maintenance activities. 1

21 The activity level of the program then decreased significantly in 01 and disposal costs decreased to a rate comparable to previous years at $1,000. CEHS provides training to T&D Distribution in various environmental disciplines. In 0, CEHS began looking at ways to streamline training, decrease seat time, and bring the training to the user. CEHS developed web-based training that allowed users to participate in the training from their work location. This resulted in decreasing or eliminating travel costs and decreasing the time allocated to travel to and participate in training. As a result, training costs for T&D Distribution decreased by $,000 from 0 to 0. In 0, CEHS continued to look for efficiencies around training and was able to limit the number of training courses by maximizing the number of attendees in each class. This accounted for an additional cost savings of $,000 in 01. The EHS CMS was in the implementation phase during the 0-01 period, during which costs associated with T&D Distribution s portion of the EHS CMS project increased. In 0, the project charged a total of $0,000 to FERC Account.0 for the labor and non-labor components of implementing the system. These costs related to the development of a release reporting module, drinking water module, and hazardous waste module within the EHS CMS system in 0. In 0, the total amount decreased to $0,000, as the modules had been developed and were being piloted to a limited number of users. In 01, the costs for this project increased to $1,000 due to the T&D-wide implementation of the release reporting module and development and implementation of the hazardous materials business plan module. C. Test Year Forecast The 01 O&M expense forecast for the Environmental Services portion of FERC Account.0 is $. million, which is the same as the 01 recorded expenses due to the stable nature of the work. 1 The scope of work is not expected to change during the forecast period (i.e., the costs are anticipated to remain constant through 01). Figure IV- below provides the labor and nonlabor expense forecast along with the recorded expenses. 1 Please see Exhibit SCE-0, Vol. for supporting workpapers 1

22 Figure IV- Distribution Environmental Services Environmental Services Portion of FERC Account.0 Recorded and Adjusted 00-01/Forecast (Constant 01 $000) 1

23 V. HEALTH AND SAFETY (FERC ACCOUNT ) A. Summary of Activities CEHS Health & Safety personnel provide subject matter expertise in health and safety program areas such as industrial hygiene, electrical safety, confined space, and safety culture. The Health & Safety subject matter experts develop and maintain corporate health and safety standards and work with OUs to safely implement these standards in the field. 1 Health & Safety personnel also track new and existing regulatory requirements in their area of responsibility, answer technical questions, and communicate requirements throughout SCE. 1 To help improve SCE s safety culture, CEHS s Safety Culture Section has designed a model based on an understanding of the specific hazards associated with operating an electric utility. 1 SCE is committed to having every employee leave the workplace injury free by: (1) using work behaviors and practices that uncompromisingly protect the safety of everyone, () caring for the safety of each individual, and () applying the Stop Work principle that allows all employees to stop work anytime an unsafe condition or behavior may be apparent until the job can be completed safely. Various initiatives implemented to improve SCE s safety culture have borne fruit. For example, in 01, SCE s days away, restricted or transfer (DART) injury rate was 1. a. percent decrease from 0. 0 Building on this improvement, SCE has set a corporate goal to reduce the 01 DART injury rate to 1.. In 01, percent of all DART injuries at SCE were due to repetitive motion or sprains and strains. To help prevent these types of injuries, SCE developed a work readiness program to get employees moving and stretching each day, and a comprehensive ergonomics program to provide employees with the right tools and training to remain injury free. As of April 01, the repetitive motion, sprains, and strains DART injury rate has decreased percent since the program s 1 See workpaper entitled Safety 01 Standard Topics List. 1 Public Safety programs are addressed by Corporate Communications. Please see Ms. Jordan s testimony at SCE-0 for a discussion of SCE s Public Safety programs. 1 In D.1--01, Ordering Paragraph (see workpaper entitled 01 GRC Excerpts ), the CPUC ordered SCE to provide in this GRC application a summary of the safety culture programs, achievements, and expenses at the San Onofre Nuclear Generating Station (SONGS). Please see testimony in in Exhibit SCE-0, Vol. 01 for more information. 0 The DART rate is calculated by taking the sum of all injuries that result in lost time, restricted duty or transfer, multiplying by 00,000, then dividing by the total number of hours worked. 1

24 inception in 01. Figure V- below shows the downward trend of SCE s DART injury rate from Figure V- DART Injury Rates, A Safety Culture Assessment, conducted every three years company-wide, will be administered again in 01 and 01. The Safety Culture Assessment is necessary to understand the effectiveness of SCE s safety culture promotion programs in a way that leads to appropriate targeted action. In 0, the Safety Culture Assessment was completed by 1, SCE employees. 1 SCE also conducted focus groups to clarify and verify the statistical findings from the survey. The focus group employees participated in open discussions and provided real life examples of situations that highlighted the strengths and weaknesses of SCE s Safety Culture. Table V- below lists the major strengths and weaknesses identified from the 0 assessment survey regarding SCE s safety culture. 1 See workpaper entitled 0 Safety Culture Assessment. 1

25 Table V- 0 Safety Culture Assessment Strengths & Weaknesses Identified Strengths 1. Safety Culture has improved, due to increased focus on safety as a value, increased communication and increased activities.. Positive impact of leadership visibility/engagement.. Managers are being held accountable when something happens in their work areas.. Employee communication around unsafe acts and conditions has improved.. Stopping work for safety is the norm. Weaknesses 1. Culturally, there is an acceptance that certain problems won t be fixed.. The isolation of individual business units inhibits creation of a companywide safety culture.. Perception that management cares more about numbers than safety of people.. Old and unsafe cultural norms persist (management and labor alike).. Lack of robust labor-management partnership SCE has implemented several safety programs designed to address the findings of the 0 Safety Culture Assessment, including: (1) parking lot safety, () restructuring the Rules to Keep You Alive program, () contractor safety, () Safety Leader in Me program, () leading indicators, and () integration of safety into the leadership training programs. Through the parking lot safety initiative, SCE has installed engineering controls throughout the facilities, such as adding speed limit signs and speed bumps, to reduce driving speeds. The Rules to Keep You Alive program was benchmarked against other high safety performing utilities and restructured to emphasize protecting co-workers from unsafe situations over discipline for performing unsafe acts. The Contractor Handbook was updated to address the changing scope of SCE s projects and provide direction on reporting contractor injuries. The Safety Leader in Me program addresses personal responsibility for safety among SCE employees, raising awareness about ergonomics, texting while walking, and tools for managers to discuss safety topics with employees. The leading indicator programs seek to change the focus of SCE s safety metrics from DART rate to metrics that are under the direct control of employees, including completing safety observations and reporting close calls as well as timely completing corrective actions resulting from incident investigations. 0

26 1 1 As noted above, the next Safety Culture Assessment will be conducted in 01. As shown by Figure V-, DART Injury Rates, 00-01, above, SCE s DART rate dropped significantly during the period, the period when the 00 and 0 Safety Culture Assessments were conducted and initiatives and programs were implemented based on those results. The results from the 01 assessment will be compared to the 00 and 0 assessment results to analyze SCE s safety culture performance, measure improvements, and identify additional steps that can be taken to further reduce the DART rate to advance the goal of trying to achieve an injury-free workplace. B. Analysis of Recorded Expenses The recorded-adjusted expenses for FERC Account are shown in Table V- below. The recorded expenses have been adjusted to transfer in Health & Safety costs from FERC Account 0/1 (Environmental Services), as well as adjustments made to capture the cost of the Safety Culture Assessment that is performed every three years. These costs had previously been distributed in other FERC accounts throughout SCE. Table V- Health and Safety Recorded and Adjusted Expenses FERC Account (Constant 01 $000s) FERC Account Labor,00,,,, Non labor 1, 1,1 1,0 1,1 1,0 Other Total,,,,, Total expenses remained relatively stable from 00-01, except for 0. The percent increase in non-labor expense from 0 to 0 was primarily due to costs associated with the 0 Safety Culture Assessment. Total expenses then return to historical levels in 01. C. Test Year Forecast CEHS 01 forecast for FERC Account is $. million, a $0.0 million increase above 01 recorded expenses. As noted above, the increase is primarily due to costs associated with the 01 Safety Culture Assessment, which is conducted every three years. The forecast seeks to maintain Health & Safety s funding for its activities and programs, including the Safety Culture Assessment, to continue and build on the progress that has been made toward reducing work-related injuries. Figure V- below 1

27 provides the labor and non-labor expense forecast along with the recorded expenses. Figure V- Health and Safety Forecast Expenses FERC Account (Constant 01 $000s) Labor FERC Account labor expenses were forecast based on 01 recorded expenses due to the relatively stable nature of the work and the expenses.. Non-Labor FERC Account non-labor expenses were forecast based on a three-year average of 0-01 expenses. Non-labor expenses for Health & Safety remained relatively stable during the period, except for 0, which is when the last Safety Culture Assessment was conducted. The Safety Culture Assessment adds nearly $1 million to the base non-labor expense. As noted above, CEHS will be conducting future assessments in 01 and 01. As the 01 assessment occurs during the rate case cycle, a three-year averaging technique spreads the costs associated with the assessment over the three year rate case cycle.

28 VI. OUTSIDE CONSULTING SERVICES (FERC ACCOUNT ) A. Summary of Activities CEHS records consulting service costs provided by outside consultants to FERC Account. Examples of consulting services used by CEHS include the costs for consultants to help build, develop, test, and implement the EHS CMS and to provide technical guidance on issues relating to electromagnetic fields (EMF). B. Analysis of Recorded Expenses Table VI- below provides the costs for labor and non-labor recorded to this account. CEHS did not make any department-level adjustments to remove one-time expenses or transfer money between accounts. Table VI- CEHS Consulting Services Recorded and Adjusted Expenses FERC Account (Constant 01 $000s) The recorded costs for outside consulting services shows large year-to-year variances due to the ebb and flow of projects that require the use of outside consultants. Outside consultants are used occasionally to supplement in-house expertise in the areas of environmental compliance (e.g., developing and implementing the EHS CMS) and addressing EMF issues (e.g., customer concerns regarding EMF measurements and EMF engineering issues). Outside services are also procured to provide training for systems and processes related to EHS technical disciplines. The recorded-adjusted data shows an increase of percent from 00 to 00, then another increase of percent from 00 to 0 due to increased consulting expenses relating to the EHS CMS. From 0 to 0, expenses declined percent, then further declined 0 percent from 0 to 01 as the EHS CMS consultant work concluded.

29 C. Test Year Forecast CEHS 01 forecast for FERC Account is $,000, which is equal to the five-year average (00-01). Figure VI- below provides the expense forecast along with the recorded expenses. Figure VI- CEHS Consulting Services Forecast Expenses FERC Account (Constant 01 $000s) CEHS only records non-labor expenses to this account. The recorded amounts in this account have fluctuated between 00 and 01, primarily due to the variability of CEHS need for consulting services. In D.-1-0, the CPUC stated that for accounts having significant fluctuations in recorded expenses from year-to-year, an average of recorded expenses is appropriate. Because the expenses in this account have fluctuated during the five year period from a low of $,000 to a high of $,000 a five year average of those expenses is an appropriate base estimate.

30 VII. CAPITAL EXPENDITURES A. Marine Mitigation Reef Construction and Wetland Restoration 1. Introduction San Onofre Nuclear Generating Stations (SONGS) Marine Mitigation Projects are required to comply with a Coastal Development permit (CDP) issued by the California Coastal Commission (CCC). The purpose of the projects is to mitigate marine environmental impacts associated with SONGS operations. The projects consist of four components: reef, wetlands, fish return system behavioral barriers, and a fish hatchery program. These marine mitigation projects are required under the CDP (which requires SCE remedial action for the full operating life of SONGS ), are independent of SONGS operating status, and will continue and require funding even after SONGS is decommissioned. On July 1,, the CCC amended SCE s CDP for SONGS. The CCC s amendments mandated that SCE mitigate certain impacts on the marine environment that the CCC found were caused by the operation of SONGS Units and. The mitigation requirements included: (1) developing and implementing a wetland restoration project to mitigate fish egg and larval losses, () installing fish behavioral barrier devices to reduce adult fish mortality in the cooling water intake system, and () constructing an artificial kelp reef to mitigate discharge impacts on the San Onofre kelp reef. On March 1, 1, the CCC again amended the CDP, adding a fourth mitigation project. This mitigation project required SCE to fund a fish hatchery program to be developed by a CCCappointed entity. The CDP conditions adopted by the CCC at that time also included a requirement for monitoring the wetlands restoration and artificial reef projects. On April, 1, the CCC amended the CDP requirements once more, expanding the scope of the mitigation requirement for the artificial reef project. SCE has completed three of the four mitigation projects. SCE completed the fish hatchery project in 1. The CCC affirmed compliance with that permit condition in June 1. SCE completed the fish behavioral barrier devices in 000. The CCC affirmed compliance with that CDP condition on October 1, 000. Construction of the artificial reef was completed in September 00. All major construction for the fourth project, the wetlands restoration, was completed in 0. See workpaper entitled 1 SONGS Mitigation Coastal Development Permit (CDP).

31 However, despite affirmed compliance, additional ongoing capital is needed to maintain the projects and to improve the performance of the artificial reef.. Wetlands Restoration Project Description and Background The capital funding requested for this project is for ongoing maintenance and performance improvements for the wetlands restoration project. The original wetlands restoration requirement adopted in called on SCE to create or restore a minimum of acres in the Southern California Bight as tidal wetland to provide habitat for fish. The requirement also specified maintenance of a buffer zone of at least 0 feet upland from the restored wetlands. SCE was also required to conduct CCC-supervised monitoring and oversight of the wetlands for a period equivalent to the full operating life of SONGS Units and. On June, 1, the CCC approved SCE s proposal that the San Dieguito River Valley in San Diego County be the site for the wetlands restoration project. After securing all the necessary permits and approvals, SCE started construction of the wetlands restoration project on September 1, 00 and completed major construction on September, 0, with the opening of the San Dieguito River inlet. To date, approximately acres of tidal wetlands have been created or substantially restored as required by the CCC s CDP and subsequent amendments. Additional activities completed over the last three years include: Regrading of Areas W and W in November 0 at the request of the CCC to enhance the flow of tidal waters to these areas to improve plant establishment; Planting 1,0 pacific cordgrass plants; Modifying four California Least Tern nesting sites, which included: (1) removing the top layers of sand and re-capping the sites with sand approved by the U.S. Fish and Wildlife Service; () topping the sites with a thin layer of crushed shell; and () after completion of the sites in December 0, the transfer of the sites to the nd Agricultural District for on-going maintenance, management, and monitoring; Constructing the Riverbend Revetment, completed in July 01, including the addition of topsoil and hydroseeding completed in August 01; The Southern California Bight includes coastal Southern California, the Channel Islands, and part of the Pacific Ocean. The California Least Tern is a federally-listed endangered subspecies of least tern.

32 Completed improving the beach access ways from Camino Del Mar to the beach, south of the river mouth in the City of Del Mar, per Special Condition 1 on June, 0; and Dredging of the inlet completed September, 0, which included the removal of approximately 0,000 cubic yards of sand and sediment, which was used on the least tern nesting sites, for beach nourishment, or on-site disposal. As required by the CDP, SCE provided funding for park rangers for the wetlands. Their responsibilities include site patrol and security, trail maintenance, and interpretive tours and education. SCE entered into a Memorandum of Understanding (MOU) with the San Dieguito River Valley Regional Open Space Park Joint Powers Authority (JPA), which employs and manages the rangers and their activities, and manages trail maintenance. SCE is currently funding the JPA annually, pursuant to the MOU. In 0, an amendment to the trail agreement provided for funding for JPA ranger office space. a) Scope of Work SCE expects to conduct maintenance dredging of the ocean inlet by the end of 01 due to the accumulation of sand. SCE has existing permits from both the CCC and the U.S. Army Corps of Engineers to conduct this work and will obtain all necessary regulatory approvals prior to starting the work. Dredging is planned to commence in September or October 01. SCE expects that the remaining minor site construction work will be completed in 01. This work includes the construction of a drainage crossing within the Caltrans right-of-way Interstate under-crossing. The CCC began its first full year of wetland performance monitoring in January 01 and, although data analysis is ongoing, CCC scientists have stated that early results suggest great promise in the ability of the restored site to support wetland biological resources. Preliminary results indicate that not all CDP performance standards will be met in 01, primarily the performance standard relating to vegetative cover. Modifications to certain wetland areas may be needed to improve plant establishment. SCE anticipates that the CCC will require SCE to undertake additional work, such as regrading, to meet the CDP performance requirements. SCE projects additional expenditures for further corrective or remedial construction activity in 01, and possibly into 01, to address improvements to the wetlands that may be necessary to achieve CDP performance standards. The CCC will continue See workpaper entitled SONGS Mitigation 01 Annual Status Report.

33 1 1 performance monitoring during the period. Ongoing activities to remove exotic weed species will continue through 01, and possibly 01. SCE anticipates maintenance dredging of the ocean inlet will be needed every eight to twenty-four months. Additional costs could be incurred in 01 and 01 associated the dredging of the inlet, including costs for design, dredging, construction management, and monitoring. During the period, SCE will also be funding the CCC s post-construction independent performance monitoring and oversight, as mandated by the CDP. b) Cost Between 0 and 01, SCE spent a total of $1.0 million on this project. SCE expects to spend approximately $. million in 01 and $1.0 million in 01. Table VII- below summarizes CEHS s cost forecast for this project. This section of testimony and Table VII- reflect only SCE s.1% share of the full project cost whereas the workpapers provide all participants 0% share of the project cost. SCE is only requesting revenues for SCE s share of the project s cost. Table VII- Wetlands Restoration Forecast Capital Expenditures (Nominal $000) Capital Expenditures ($000) WBS ID Total COS-00-EH-EH- 01, 1,,,00,0, SONGS Reef Construction Description and Background The original CCC permit condition required SCE to construct a 00-acre artificial reef near the San Onofre Kelp Bed. This artificial reef was designed to support a healthy giant kelp forest and associated ecosystem. The reef was to be constructed in two phases. The first, smaller phase, consisting of. acres, was intended to only cover an area large enough to represent and analyze the important processes affecting the full reef. The Phase I reef was to be monitored for three years. The Phase II reef would be built following the completion of the first phase, covering the balance of the 00- acre requirement. Similar to the wetlands restoration condition, the artificial reef permit condition