ORA DATA REQUEST ORA-DR-SDG&E-42 A SDG&E RESPONSE

Transcription

1 Subject: Gas Distribution - Capital Request ORA DATA REQUEST ORA-DR-SDG&E For project #00867, SDGE-DR-ORA-28 mentioned a minimum of 2 phases with costs of approximately $5,000,000 for phase 1. Please provide the expected date of completion for phase 1, how this date was determined, and confirmation that this phase of the project primarily relates to implementation and does not relate to data conversion. Since the Cost of Service case was filed, SDG&E has continued development and evaluation work on both the SDG&E Gas M&I Systems project (#02869) and the SDG&E Gas GIS project (#00867). Efforts to date have further defined the details associated with project requirements, execution plans, costs and technical challenges. As this information has continued to develop, SDG&E has found it necessary to reconsider the priority of these projects compared to other business needs, and the also likelihood of being able to complete the projects in accordance with the schedule as originally proposed given resource limitations. Several months have passed since the Cost of Service case was being prepared during the second half of During this period, many factors influencing business and customer needs have changed. As time passes, the need for new projects may develop, and the priority need of other existing projects can change. As part of effectively managing utility resources to best serve both internal operational needs and those of our customers, SDG&E must continuously evaluate priorities. As infrastructure ages, technology changes, new laws are passed, and customer expectations evolve, the utility must also change accordingly. Utility resources are limited and must be deployed in a logical and efficient manner that corresponds to needs. It has now been determined that the most appropriate course of action for the SDG&E Gas GIS and SDG&E Gas M&I Systems projects is to re-prioritize their deployment schedule relative to other Information Technology initiatives being developed in support of utility distribution operations. The SDG&E Gas M&I Systems project now has a target in service date of March of 2007, and the SDG&E Gas GIS project is targeted for complete and in service by March of Detailed revised schedules will be developed at a time closer to the actual start of each project. This delay will allow the development team to focus on implementing the SDG&E Electric GIS Project (Project #00868). Being that this information technology project is an enterprise wide type project, the experience gained during the development of this

2 Response to Question 1 (Continued) ORA DATA REQUEST ORA-DR-SDG&E-42 project first will benefit the SDG&E Gas project since the framework of the project will be similar. Additional discussion regarding changing requirements affecting capital expenditures is presented in the response to Question #5 of this Data Request.

3 ORA DATA REQUEST ORA-DR-SDG&E For project #00867, please provide when phase 2 is expected to commence, the expected date and determination of use and usefulness, the expected costs, and the major tasks expected to be completed (e.g. data conversion of x amount of raster maps, convert and implement district 2, etc.). As discussed in the response to Question #1 of this Data Request, it was decided that the most appropriate course of action for the SDG&E Gas GIS project is to re-prioritize its deployment schedule relative to other Information Technology initiatives being developed in support of utility distribution operations needs. A new project target start date is March of 2006, while the new target completed and in service date for the SDG&E Gas GIS project is now set for March of To incorporate applicable lessons learned from the completion of the Electric GIS project, the overall project plan for the SDG&E Gas GIS will be revisited during early With this delay in timing, some of the major tasks such as data conversion will require re-bidding. A detailed revised project plan, schedule and cost estimate will be developed at a time closer to the actual project start date and therefore is unavailable at this time.

4 ORA DATA REQUEST ORA-DR-SDG&E For project #00867, the July 2001 Business Case, page 14 indicated a Target Start and Completion Dates schedule. Please provide an updated schedule. As discussed in the response to Questions #1 and #2 of this Data Request, it was decided that the most appropriate course of action for the SDG&E Gas GIS project is to reprioritize its deployment schedule relative to other Information Technology initiatives being developed in support of utility distribution operations needs. A new project target start date is March of 2006, while the new target completed and in service date for the SDG&E Gas GIS project is now set for March of A detailed revised schedule will be developed at a time closer to the actual project start date and therefore is unavailable at this time.

5 ORA DATA REQUEST ORA-DR-SDG&E For project #00867, the Request for Proposal dated August 8 th, 2002 included an anticipated implementation timeline on page 43. Please provide an updated version of the timeline as it included information in relation to the data conversion process, that did not appear to be identified in the Target and Start Completion Dates schedule noted in the July, 2001 Business Case. As discussed in the response to Questions #1 and #2 of this Data Request, it was decided that the most appropriate course of action for the SDG&E Gas GIS project is to reprioritize its deployment schedule relative to other Information Technology initiatives being developed in support of utility distribution operations needs. A new project target start date is March of 2006, while the new target completed and in service date for the SDG&E Gas GIS project is now set for March of A detailed revised schedule will be developed at a time closer to the actual project start date and therefore is unavailable at this time.

6 ORA DATA REQUEST ORA-DR-SDG&E Given the Errata testimony to be filed, are there any other projects within the confines of Mr. Richard Phillips testimony dated 12/20/02 designated as for informational purposes only of which ORA should be made aware? The Gas M&I Systems project, and now the Gas GIS project, are the only two projects where the in-service date is moving beyond the Test year. As SDG&E endeavors to make the ORA aware of changing business needs that result in project in-service dates that are later than originally projected, such as the SDG&E Gas GIS and M&I Systems projects, it is also proper to advise the ORA where changing business requirements can result in project expenditures being incurred that were not originally foreseen at the time the Cost of Service case was filed. Utilities operate in a dynamic environment and must periodically adjust operating plans to accommodate changing priorities. As a result of evaluating changing priorities and deciding how SDG&E s resources, though limited, need to be allocated, it has become clear that capital resources will need to be devoted to complying with the new Federal rule for Pipeline Integrity Management sooner, and to a greater extent, than anticipated at the time the testimony was filed. The proposed rule incorporates the required elements for gas pipeline integrity management programs recently mandated in the Pipeline Safety Improvement Act of 2002, which was signed into law on December 17, 2002 (A copy of this Act is attached to this Data Request). This Act contains fixed deadlines for natural gas operators to develop and adopt integrity management programs and to perform a baseline assessment of their pipelines. Background information on this rule, and generalities of how it applies to SDG&E, can be found in the direct testimony of Richard D. Phillips on pages RDP-14 to16. At the same time as the decision was being made to re-prioritize the deployment schedule for these Information Technology initiatives being developed in support of utility distribution operations, SDG&E was also becoming more aware of the details of the scope and timing of the Pipeline Integrity Management regulation. These issues were not yet fully understood at the time of this filing back in December of The rule, in its proposed final form, was issued on January of 2003 (a copy of this rule is attached to this Data Request). SDG&E s engineering and operations staff has now had a chance to study the details of the rule and gain a better understanding of the corresponding work and its timing, that will need to be completed to ensure compliance with the rule while maintaining gas service to customers. The actual rule has more aggressive compliance requirements and implementation timelines than SDG&E anticipated. Prior to seeing the details of the proposed rule, SDG&E believed that it would be able to initially comply with the rule through the review and analysis of existing construction, operations, and maintenance

7 Response to Question 5 (Continued) ORA DATA REQUEST ORA-DR-SDG&E-42 records combined with somewhat limited external inspections. It was assumed that the more capital-intensive work would occur later in the compliance period. However, the actual rule will not necessarily allow SDG&E to choose its inspection method, but instead require the use of the most appropriate method given the specific circumstances associated with each pipeline segment. In order to comply with the pipeline priority sequence and inspection methods determined under the rule, capital improvements will need to be made sooner than originally thought by SDG&E. These improvements may include installing launchers and receivers for internal inspection tools, removal of restrictive port plug valves and replacement with full port ball valves, removal of bottom tap fittings and un-barred large diameter tees, and replacement of short radius elbows that don t facilitate passage of the inspection tool. Other improvements may involve replacement of sections of a pipeline, and installation of new pressure control devices should changes in operating pressures be necessary in order to comply with the regulation. System back-ties may also be constructed to allow for pipeline shutdowns and inspections while minimizing the impact to customers. With a better understanding of the impact of this new regulation, SDG&E s pipeline integrity team has stepped up its effort. Detailed pipeline information is now being gathered, assessed, and an overall integrity management and compliance plan is in the process of being developed. The overall result of the new rule is that the Pipeline Integrity effort will lead to higher expenditures in both O&M and in Capital. SDG&E addressed O&M impacts in the original filing, although based on current information, actual O&M costs required to comply with the rule may prove to be higher than anticipated in this original filing. The capital expenditures required to comply with this rule were anticipated to occur after Test Year 2004, and were not included in the original filing. Utilities like SDG&E operate in a dynamic environment, and must be allowed flexibility to adjust operating plans to meet changing business needs. Just as SDG&E has adjusted plans to incorporate a later in-service date for the Gas GIS and M&I systems projects, it must also adjust its plans to incorporate the capital work associated with Pipeline Integrity. Much of the capital budget set aside for use on the SDG&E Gas GIS and M&I Systems projects will now be used on capital improvements associated with SDG&E s Pipeline Integrity work. Thus, the delayed deployment of Gas GIS and M&I systems does not necessarily result in reduced capital requirement for SDG&E s gas system since it will be offset by the increase associated with Pipeline Integrity.

8 Response to Question 5 (Continued) ORA DATA REQUEST ORA-DR-SDG&E-42 The following table illustrates the resulting changes in capital expenditure allocation from delay of project #02869 (Gas M&I Systems) and #00867 (Gas GIS) and the addition of fund allocations to Pipeline Integrity Management: Capital Allocation filed with Direct Testimony (12/20/02): Description 2003 Estimated 2004 Estimated Gas GIS $5,500,000 $1,710,000 M&I system $914,000 $1,836,000 Pipeline Integrity Management $0 $0 Revised Capital Allocation (5/15/03): Description 2003 Estimated 2004 Estimated Gas GIS $0 $0 M&I system $0 $0 Pipeline Integrity Management $0 $2,400,000* * Represents estimated total yearly capital spending for the SDG&E gas system to facilitate compliance with the Pipeline Integrity Rule. Annual capital expenditures will occur starting in 2004 and continue through the initial 10-year program compliance period ending on 12/17/2012.