2015 General Rate Case

Transcription

1 Application No.: Exhibit No.: SCE-0, Vol. 0 Witnesses: G. Ferree (U -E) 01 General Rate Case Transmission and Distribution (T&D) Volume Customer Driven Programs and Distribution Construction Before the Public Utilities Commission of the State of California Rosemead, California November 01

2 SUMMARY SCE is requesting $1 million in O&M expenses for the 01 test year in 01 constant dollars and $,1 million in capital expenditures for in nominal dollars for customer driven distribution work, and other costs associated with performing distribution construction and maintenance. This includes: New service connections and electrical facility installations to accommodate customer growth; Rule 0 related overhead to underground facilities conversions; Customer requested relocation of facilities Special non-standard requests for electrical facility installation at customer requests (added facilities); Claims associated with distribution infrastructure; Prefabrication related expenditures; Expenditures associated with maintaining distribution transformer inventory; and, Distribution tools, work equipment, and safety device expenditures.

3 Customer Driven Programs and Distribution Construction O&M Expenses 01 Forecast (Total Company Constant 01 $Million) Grid Operations (Volume ) $ 1% Transmission & Substation Maintenance (Volume ) $ 1% Safety, Training, and Environmental Programs (Volume ) $ % T&D Other Costs and OOR (Volume ) $ 1% Pole Loading (Volume, Part ) $ % T&D Engineering and Grid Technology (Volume ) $ % Distribution Maintenance (Volume, Part 1) $10 0% Customer Driven Prog & Distr. Con. (Volume ) $1 % Customer Driven Programs and Distribution Construction Capital Expenditures Forecast CPUC Jurisdictional Only (Nominal $Million) Transmission & Substation Maintenance (Volume ), $, % Grid Operations (Volume ), $, % T&D Engineering and Grid Technology (Volume ), $1, 1% System Planning Capital Projects (Volume ), $,1, 1% Infrastructure Replacement Programs (Volume ), $,0, 1% Pole Loading (Volume, Part ), $1,0, % Distribution Maintenance (Volume, Part 1), $,1, 1% Customer Driven Prog & Distr. Con.(Volume ), $,1, %

4 SCE-0: Transmission and Distribution Volume - Customer Driven Programs and Distribution Construction Table Of Contents Section Page Witness I. CUSTOMER-DRIVEN PROGRAMS AND DISTRIBUTION CONSTRUCTION...1 G. Ferree A. Introduction Planned Activities...1 a) Customer Requests...1 b) Inspection-Driven... c) Infrastructure Upgrade, Growth, and Replacement.... Unplanned Activities... a) Storm Response and Service Restoration... b) Claims... c) Breakdown Maintenance.... Forecast O&M Expenses and Capital Expenditures.... Comparison of 01 GRC Authorized and Recorded O&M Expenses and Capital Expenditures... B. O&M Expenses Meter Installations and Replacements, FERC Account.... a) Cost Forecast.... Distribution Construction Support, FERC Account... a) Miscellaneous Construction Inspection Expenses, Portion of FERC Account... (1) Cost Forecast... -i-

5 SCE-0: Transmission and Distribution Volume - Customer Driven Programs and Distribution Construction Table Of Contents (Continued) Section Page Witness b) Facility Inventory Mapping, Portion of FERC Account....1 (1) Cost Forecast...1 c) Field Accounting Expenses, Portion of FERC Account....1 (1) Cost Forecast...1 d) Stand-by Time, Portion of FERC Account...1 (1) Cost Forecasts...1 e) Distribution Line Rents, Portion of FERC Account....1 (1) Cost Forecast...1 f) Shop Services and Instrumentation Division (SSID) Operating Expenses, Portion of FERC Account....1 (1) Cost Forecast...1 g) Wireless Technology Services, Portion of FERC Account....1 (1) Cost Forecast...1 h) Summary of O&M Expenses for FERC Account....0 C. Capital Customer Meter Connections...1 a) Residential Service Connections... (1) Unit of Work Definition... () Unit Cost Analysis, Work Volume and Cost Forecast... -ii-

6 SCE-0: Transmission and Distribution Volume - Customer Driven Programs and Distribution Construction Table Of Contents (Continued) Section Page Witness b) Residential Line Extensions... (1) Unit of Work Definition... () Unit Cost Analysis, Work Volume and Cost Forecast...0 c) Residential Tract Development...1 (1) Unit of Work Definition... () Unit Cost Analysis, Work Volume and Cost Forecast... d) Residential Backbone Development... (1) Unit of Work Definition... () Unit Cost Analysis, Work Volume and Cost Forecast... e) Commercial/Industrial Service Connections...0 (1) Unit of Work Definition...0 () Unit Cost Analysis, Work Volume and Cost Forecast...1 f) Commercial/Industrial Line Extensions... (1) Unit of Work Definition... () Unit Cost Analysis, Work Volume and Cost Forecast... g) Commercial/Industrial Tract Development... (1) Unit of Work Definition... () Unit Cost Analysis, Work Volume and Cost Forecast... h) Agricultural Service Connections... -iii-

7 SCE-0: Transmission and Distribution Volume - Customer Driven Programs and Distribution Construction Table Of Contents (Continued) Section Page Witness (1) Unit of Work Definition... () Unit Cost Analysis, Work Volume and Cost Forecast... i) Agricultural Line Extensions...0 (1) Unit of Work Definition...0 () Unit Cost Analysis, Work Volume and Cost Forecast...1 j) Street Light Installations... (1) Unit of Work Definition... () Unit Cost Analysis, Work Volume and Cost Forecast.... PEV Transformer Replacement... (1) Cost Forecast.... Overhead to Underground Conversions (Distribution and Transmission)... (1) Distribution Rule 0A... () Distribution Rule 0B and Rule 0C...0 () Transmission Rule 0B and Rule 0C and Circuit Breaker 0 B&C).... Relocations of Distribution Lines... a) Cost Forecast.... Distribution Added Facilities... a) Cost Forecast.... Distribution Claims... a) Cost Forecast... -iv-

8 SCE-0: Transmission and Distribution Volume - Customer Driven Programs and Distribution Construction Table Of Contents (Continued) Section Page Witness. Prefabrication... a) Cost Forecast...0. Distribution Transformers... a) Cost Forecast.... Tools and Lab Equipment... a) Cost Forecast.... Shop Services and Instrumentation Division (SSID) Tools and Equipment... a) Cost Forecast... D. Distribution Field Program Benefits Cost Forecast... a) O&M Benefits, FERC Account.1... b) Capital Benefits... Appendix A Witness Qualifications... -v-

9 SCE-0: Transmission and Distribution Volume - Customer Driven Programs and Distribution Construction List Of Figures Figure Page Figure I-1 01 O&M Expenses (Constant 01 $million)... Figure I- 01 Capital Expenditures (Constant 01 $million)... Figure I- Summary of O&M Expenses for FERC Account. Recorded 00-01/Forecast (Constant 01 $000)... Figure I- Summary of O&M Expenses for FERC Account. Forecast (Constant 01 $000)...0 Figure I- Customer Meter Connections Capital Expenditure Summary Recorded 00-01/Forecast (Nominal and Constant 01 $000)... Figure I- Residential Service Connection Capital Expenditure Summary (Overhead and Underground) WBS Element CET-PD-NS-RS Recorded 00-01/Forecast (Nominal and Constant 01 $000)... Figure I- Residential Service Connections Overhead & Underground Service Conductor Installations versus Residential Meters Sets... Figure I- Residential Line Extension Capital Expenditure Summary WBS Element CET- PD-NS-RS Recorded 00-01/Forecast (Nominal and Constant 01 $000)... Figure I- Residential Line Extensions Correlation of Miles of Conductor Installation to New Meter Sets... Figure I- Residential Tract Development Capital Expenditure Summary WBS Element CET-PD-NS-RS Recorded 00-01/Forecast (Nominal and Constant 01 $000)...1 Figure I- Tract vs. Backbone Connections... Figure I-1 Residential Tract Development - Cumulative Miles of Tract Installations Comparison of Estimates, Recorded and Forecast... Figure I-1 Residential Backbone Development Capital Expenditure Summary WBS Element CET-PD-NS-RS Recorded 00-01/Forecast (Nominal and Constant 01 $000)... -vi-

10 SCE-0: Transmission and Distribution Volume - Customer Driven Programs and Distribution Construction List Of Figures (Continued) Figure Page Figure I-1 Residential Backbone Development - Cumulative Miles of Tract Installations Comparison of Estimates, Recorded and Forecast... Figure I-1 Commercial/Industrial Service Connections Capital Expenditure Summary WBS Element CET-PD-NS-CL Recorded 00-01/Forecast (Nominal and Constant 01 $000)...0 Figure I-1 Commercial/Industrial Line Extensions Capital Expenditure Summary WBS Element CET-PD-NS-CL Recorded 00-01/Forecast (Nominal and Constant 01 $000)... Figure I-1 Commercial/Industrial Tract Development Capital Expenditure Summary WBS Element CET-PD-NS-CL Recorded 00-01/Forecast (Nominal and Constant 01 $000)... Figure I-1 Agricultural Service Connections Capital Expenditure Summary WBS Element CET-PD-NS-AG Recorded 00-01/Forecast (Nominal and Constant 01 $000)... Figure I-1 Agricultural Line Extensions Capital Expenditure Summary WBS Element CET-PD-NS-AG Recorded 00-01/Forecast (Nominal and Constant 01 $000)...0 Figure I-0 Street Light Installations Capital Expenditure Summary WBS Element CET- PD-NS-SL Recorded 00-01/Forecast (Nominal and Constant 01 $000)... Figure I-1 PEV Transformer Replacement Capital Expenditure Summary WBS Element CET-PD-NS-RS-EVXFMR Recorded 00-01/Forecast (Nominal and Constant 01 $000)... Figure I- Distribution Rule 0A Conversions Capital Expenditure Summary... Figure I- Distribution Rule 0B Conversions Capital Expenditure Summary...0 Figure I- Distribution Rule 0C Conversions Capital Expenditure Summary WBS Element CET-PD-CR-C Recorded 00-01/Forecast (Constant 01 $000)...0 -vii-

11 SCE-0: Transmission and Distribution Volume - Customer Driven Programs and Distribution Construction List Of Figures (Continued) Figure Page Figure I- Distribution Overhead to Underground Conversions (Rule 0B and 0C) Correlation Between Miles of Conversion and Residential Line Extensions...1 Figure I- Transmission Overhead to Underground Conversions Capital Expenditure Summary (Rule 0B, Rule 0C and Rule 0 B/C Circuit Breakers)... Figure I- Relocation of Distribution Lines Capital Expenditure Summary WBS Element CET-PD-CR-RL Recorded 00-01/Forecast (Nominal and Constant 01 $000)... Figure I- Distribution Added Facilities Capital Expenditure Summary WBS Element CET-PD-AF-DA Recorded 00-01/Forecast (Nominal and Constant 01 $000)... Figure I- Distribution Claims Capital Expenditure Summary WBS Element CET-PD- CL-DC Recorded 00-01/Forecast (Nominal and Constant 01 $000)... Figure I-0 Prefabrication Capital Expenditure Summary WBS Element CET-PD-OT-PF Recorded 00-01/Forecast (Nominal and Constant 01 $000)... Figure I-1 Distribution Transformers Capital Expenditure Summary WBS Element CET-PD-OT-TR-TRANSF Recorded 00-01/Forecast (Nominal and Constant 01 $000)... Figure I- Tools and Lab Equipment Capital Expenditure Summary WBS Elements CET-PD-OT-DL, CET-PD-OT-DT Recorded 00-01/Forecast (Nominal and Constant 01 $000)... Figure I- SSID Tools and Equipment Capital Expenditure Summary WBS Elements CET-OT-OT-SD-01 Recorded 00-01/Forecast (Nominal and Constant 01 $000)... Figure I- Distribution Field Program Capital Expenditure Benefits WBS Element CET-OT-OT-BN-00 Recorded 00-01/Forecast (Nominal and Constant 01 $000)... -viii-

12 SCE-0: Transmission and Distribution Volume - Customer Driven Programs and Distribution Construction List Of Tables Table Page Table I-1 Customer-Driven Programs and Distribution Construction Summary of 01 O&M Forecast (Constant 01 $000)... Table I- Customer-Driven Programs and Distribution Construction Summary of Capital Expenditure Forecast (Nominal $000)... Table I- Meter Installations and Replacements FERC Account. Recorded and Adjusted 00-01/Forecast (Constant 01 $000)... Table I- Meter Installations and Replacements Forecasts FERC Account. Recorded 00-01/Forecast Table I- Miscellaneous Construction Inspection Expenses... Table I- Miscellaneous Civil Expense Percentage to Underground Work Recorded and Adjusted (Constant 01 $000)... Table I- Miscellaneous Civil Expense Forecast Forecast (Constant 01 $000)... Table I- Warranty Expense Percentage to Underground Work Recorded and Adjusted (Constant 01 $000)...1 Table I- Warranty Inspection Expense Forecast Forecast (Constant 01 $000)...1 Table I- Facility Inventory Mapping Expenses Portion of FERC Account. Recorded and Adjusted 00-01/Forecast (Constant 01 $000)...1 Table I- Field Accounting Expenses Portion of FERC Account. Recorded and Adjusted 00-01/Forecast (Constant 01 $000)...1 Table I-1 Stand-by Time Expenses Portion of FERC Account. Recorded and Adjusted 00-01/Forecast (Constant 01 $000)...1 Table I-1 Distribution Line Rents Portion of FERC Account. Recorded and Adjusted 00-01/Forecast (Constant 01 $000)...1 Table I-1 SSID Operating Expenses Portion of FERC Account. Recorded and Adjusted 00-01/Forecast (Constant 01 $000)...1 -ix-

13 SCE-0: Transmission and Distribution Volume - Customer Driven Programs and Distribution Construction List Of Tables (Continued) Table Page Table I-1 Wireless Technology Services Portion of FERC Account. Recorded and Adjusted 00-01/Forecast (Constant 01 $000)...1 Table I-1 Gross Meter Set Forecast Historical Data 00-01/Forecast Table I-1 Customer Meter Connections Capital Expenditure Summary by Category Recorded 00-01/Forecast (Nominal $000)... Table I-1 Customer Meter Connections Capital Expenditure Summary by Category... Table I-1 Unit Cost Analysis - Residential Service Connections (Overhead and Underground) Recorded (Constant 01 $000)... Table I-0 Residential Service Connections Expenditure Forecast (Overhead and Underground) Forecast (Constant 01 $000)... Table I-1 Unit Cost Analysis- Residential Line Extensions Recorded (Constant 01 $000)...0 Table I- Residential Line Extensions Expenditure Forecast Forecast (Constant 01 $000)...0 Table I- Unit Cost Analysis - Residential Tract Development Recorded (Constant 01 $000)... Table I- Residential Tract Development Expenditure Forecast Forecast Table I- Unit Cost Analysis - Residential Backbone Development Recorded (Constant 01 $000)... Table I- Residential Backbone Development Expenditure Forecast Forecast (Constant 01 $000)... Table I- Commercial/Industrial Service Connections Ratio of Number of Service Conductors Per Meter (00-01)...1 Table I- Unit Cost Analysis - Commercial/Industrial Service Connections Recorded (Constant 01 $000)...1 Table I- Commercial/Industrial Service Connections Expenditure Forecast Forecast (Constant 01 $000)... Table I-0 Commercial/Industrial Line Extensions Ratio of Feet of Cable Per Meter... -x-

14 SCE-0: Transmission and Distribution Volume - Customer Driven Programs and Distribution Construction List Of Tables (Continued) Table Page Table I-1 Unit Cost Analysis - Commercial/Industrial Line Extensions Recorded (Constant 01 $000)... Table I- Commercial/Industrial Service Connections Expenditure Forecast Forecast (Constant 01 $000)... Table I- Commercial/Industrial Tract Development Ratio of Feet of Cable Per Meter Set... Table I- Unit Cost Analysis - Commercial/Industrial Tract Development Recorded (Constant 01 $000)... Table I- Commercial/Industrial Tract Development Expenditure Forecast Forecast (Constant 01 $000)... Table I- Agricultural Service Connections Forecast of Number of Conductors based on Gross Meter Sets... Table I- Unit Cost Analysis - Agricultural Service Connections Recorded (Constant 01 $000)... Table I- Agricultural Service Connections Expenditure Forecast Forecast (Constant 01 $000)... Table I- Agricultural Service Connections Forecast of Feet of Cable based on Gross Meter Sets...1 Table I-0 Unit Cost Analysis - Agricultural Line Extensions...1 Table I-1 Agricultural Line Extensions... Table I- Forecast of Total Number of Electroliers based on Residential Gross Meter Sets... Table I- Unit Cost Analysis - Street Lighting Installation Recorded (Constant 01 $000)... Table I- Streetlight Installations Expenditure Forecast... Table I- Unit Cost Analysis - PEV Transformer Replacement... Table I- Unit Forecasts (Number of Overloaded Transformers) Summary of Recorded 0-01/Forecast xi-

15 SCE-0: Transmission and Distribution Volume - Customer Driven Programs and Distribution Construction List Of Tables (Continued) Table Page Table I- PEV Transformer Replacement Expenditure Forecast... Table I- Distribution Rule 0B and Rule 0C Unit Volumes, Cost-per-Unit and Total Costs Recorded 00-01/Forecast (Constant 01 $000)... Table I- Percentage Splits Distribution Rule 0B and Rule 0C Capital Expenditures (Nominal $000)... Table I-0 Distribution Rule 0B and Rule 0C Capital Expenditure Forecast (Constant $00)... Table I-1 Transmission Rule 0B and Rule 0C and Circuit Breaker 0B&C Capital Expenditures Summary (Constant 01 $000)... Table I- Transmission Rule 0B and Rule 0C and Circuit Breaker 0B&C Capital Expenditure Summary... Table I- Prefabrication Work Percentage Spend Analysis (Nominal $000)...1 Table I- Prefabrication Expenditure Forecast Forecast (Constant 01 $000)...1 Table I- Transformer Forecast for kv Cutovers Forecast (Constant 01 $000)... Table I- Distribution Field Program Operating Expense Benefits (FERC Account.1)... -xii-

16 I. CUSTOMER-DRIVEN PROGRAMS AND DISTRIBUTION CONSTRUCTION A. Introduction Distribution work includes all activities associated with installing, inspecting, maintaining, replacing, and removing distribution electrical equipment, structures, and other facilities. This chapter focuses on the costs associated with a subset of these activities, primarily programs related to connecting new customers to the system, customer requests, and costs incurred to support distribution construction. Personnel in Transmission & Distribution s (T&D) Distribution Business Line (DBL) organization are primarily responsible for performing this work. The testimony below provides a brief overview of distribution work and the work processes involved. Other exhibits within Exhibit SCE-0 describe some of these activities and their corresponding cost forecasts. SCE categorizes distribution work into the following broad categories: 1. Planned Activities Planned distribution activities are identified through customer requests, inspections, and engineering analyses. In these instances, planners develop detailed work orders based on design standards, facility inventory maps, and site visits. Work is scheduled based both on the optimum allocation of the T&D resources available, along with external drivers, such as requirements for permits and other compliance obligations. Both SCE and contract field crews perform planned work. Postconstruction, SCE performs inspections to validate that the work meets SCE standards for construction and quality. Finally, field accountants record all the relevant units of property and cost information before recording the costs to either O&M expenses or capital expenditures. The sections below discuss the capital expenditures and O&M expenses associated with some of these activities. SCE categorizes planned work as follows: a) Customer Requests Customer requests include activities initiated by customers such as: New electrical services and service modifications for residential, commercial, or agricultural customers Conversion of facilities from overhead to underground service (Tariff Rule 0) by cities and municipalities (Tariff Rule 0A) and residential customers or commercial builders (Tariff Rules 0B and 0C). In some instances, customers make overhead to underground conversion requests for SCE s 1

17 transmission facilities. This may require related substation circuit breaker upgrades as well. Relocation of distribution facilities at the request of developers and municipalities b) Inspection-Driven When inspections of existing distribution facilities locate deterioration or other equipment problems, SCE makes appropriate repairs or replacements to maintain the integrity of the system. The volume of this work is driven by regulatory standards (such as G.O. and G.O. 1), and by internal inspection and maintenance standards. Further details on SCE s distribution inspection and maintenance program are included in Mr. Stark s testimony in Exhibit SCE-0, Volume. c) Infrastructure Upgrade, Growth, and Replacement As load requirements on the grid change based on increased usage by existing customers, new customers, or changes in energy markets (e.g., distributed generation), SCE analyzes system capacity to identify specific upgrades and additions required to maintain safe and reliable service. SCE also performs engineering analyses to identify the impact of equipment aging and resulting degradation on service reliability and infrastructure replacement needs. SCE s discussion of this work is in various sections of Exhibit SCE-0, including Mr. Payne s testimony in Volume 0 (Engineering), Mr. Woods testimony in Volume 0 (System Planning Capital Projects), and Mr. Lee s testimony in Volume 0 (Infrastructure Replacement Programs).. Unplanned Activities Unplanned distribution activities include emergent work to restore service caused by inservice equipment failures or other service interruptions. SCE categorizes this work into three major groups: a) Storm Response and Service Restoration Storm response and service restoration includes damage assessment, repair, and replacements associated with damage to SCE s equipment and structures caused by weather, fire, earthquake, or other natural disasters. Exhibit SCE-0, Volume 0 (Mr. Grigaux s testimony), discusses storm activities and their associated costs. b) Claims Claims include the costs of repairing or replacing SCE facilities damaged by other parties. Examples of claims damage include a car hitting a distribution pole leading to downed wires

18 and other damaged equipment or another party digging into an underground cable while installing duct for new phone or cable service. SCE s discussion of these activities and costs is contained in the Distribution Claims section below. c) Breakdown Maintenance Breakdown maintenance includes the repair and replacement of SCE equipment and structures that fail in service. Breakdown maintenance remedies damage caused by equipment failures, degradation, rodents, birds, or other means. Mr. Stark s testimony in Exhibit SCE-0, Volume 0 discusses breakdown maintenance.. Forecast O&M Expenses and Capital Expenditures Table I-1 and Table I-, provide the O&M expenses and capital expenditure forecasts that SCE describes and supports in this chapter. Table I-1 Customer-Driven Programs and Distribution Construction Summary of 01 O&M Forecast (Total Company Constant 01 $000) Account Activity 01. Setting, Removing, and Relocating Meters $,. Distribution Construction Support $,.1 Distribution Field Program Benefits ($,) Total O&M Expenses $1,00

19 Table I- Customer-Driven Programs and Distribution Construction Summary of Capital Expenditure Forecast (0% CPUC-Jurisdictional Nominal $000) Activity Total Distribution Field Benefits $0 ($1,) ($,) ($,) ($,) ($,) PEV Transformer Replacement $, $, $,1 $1,0 $1,0 $, Overhead to Underground Conversions $, $0,0 $,0 $, $,01 $,0 Relocation of Distribution Lines $,0 $, $,1 $0, $1, $1, Distrbution Added Facilities $,0 $,1 $, $, $,1 $1,1 Distribution Claims $, $, $, $, $,01 $,1 Prefabrication $,0 $,1 $, $0,0 $1,0 $1,0 Customer Meter Connections $0, $1,00 $, $1, $1,0 $1,0, Transformers $0,1 $,0 $, $,1 $, $, Tools and Lab Equipment $, $,1 $, $, $, $1, SSID Tools and Equipment $, $,1 $, $, $, $,10 $, $,0 $,1 $,01 $,00 $,1,0

20 . Comparison of 01 GRC Authorized and Recorded O&M Expenses and Capital Expenditures Figure I-1 01 O&M Expenses (Total Company Constant 01 $million) 0 $1. $ $. $ Authorized Setting and Relocating Meters Dist. Construction Support 01 Recorded Setting and Relocating Meters Dist. Construction Support Diff from Auth Figure I-1 summarizes SCE s authorized and recorded operating and maintenance expenses in 01 for the work activities included in this exhibit. Distribution construction support activities accounted for $1. million in recorded expenses over authorized, primarily driven by work performed to implement operational efficiency in planning and execution of distribution work. 1 Meter settings and relocation expenses were $1 million over the authorized amount as the average cost to set or replace a meter has increased due to changes in work methods related to smart meters. 1 We explain the benefits resulting from these initiatives later in this exhibit.

21 Figure I- 01 Capital Expenditures (0% CPUC-Jurisdictional Constant 01 $million) 0 00 $0 ($) $1 $ $ ($) $ $ ($) $ Authorized Res New Serv Conn Comm New Serv Conn Agr New Serv Conn Streetlight New Serv Conn Rule 0 Relocations Dist Const Misc 01 Recorded Res New Serv Conn Comm New Serv Conn Agr New Serv Conn Streetlight New Serv Conn Rule 0 Relocations Dist Const Misc Diff from Auth 1 Figure I- summarizes SCE s 01 authorized and recorded capital expenditures for the work categories included in this exhibit. SCE spent approximately $ million more than authorized in 01. Capital expenditures associated with new residential, commercial, agricultural, and streetlight service connections were $0 million more than authorized. Rule 0-related capital expenditures were $ million less than authorized. The $ million increase in Distribution Construction expenditures was due primarily to the replenishment of distribution transformer inventory. In D (pp.1-1), the CPUC authorized TURN s base case meter set forecast. SCE installed more nonresidential meter sets than authorized in 0 and 0, which partly led to the increase in capital expenditures. We based the comparison on Ms. Sheng s historical data of actual number of meter sets installed. See Exhibit SCE-, Vol. 1.

22 B. O&M Expenses 1. Meter Installations and Replacements, FERC Account. Table I- Meter Installations and Replacements FERC Account. Recorded and Adjusted 00-01/Forecast (0% CPUC-Jurisdictional Constant 01 $000) Recorded Forecast Labor $, $,0 $, $,0 $, $, $, $, Non-Labor $, $, $, $,0 $, $,0 $,1 $,0 Total $, $, $, $,1 $,1 $,01 $, $, Total Number of Meters 1,0,01,,1,00, 1, 1,1 Cost Per Meter $ $0 $ $ $ $ $ $ Ratio of Labor to Total % % % % % % % % Basis of Forecast: Cost Per Meter is based on 01 Recorded. Meter Sets Forecast based on Ms. Shengs' Meter Forecast Basis of Labor/Non-Labor Split: 01 Recorded This category includes the expenses for the installation, replacement, and relocation of customer meters. Meter installations include setting meters for new customers. Meter replacements include meter relocations at a customer s request and replacements of broken meters. Both SCE and contractor crews perform the work; depending on the volume of meter related work each service center has on a given day. Labor costs associated with this work category include SCE crew and field personnel labor for installing and relocating meters. Non-labor costs include contractor costs, transportation, and other allocated charges. a) Cost Forecast The primary cost drivers in this category are the number of meter set installations and replacements. Table I- provides the historical meter sets and replacements. The recorded expense for this activity does not include SmartConnect replacement program meters. Historical unit costs, as shown in Table I-, are calculated by dividing the total recorded annual expenses by the total meter sets and replacements. Annual expenses have varied due to the number of meters installed, removed, or replaced each year. Additionally, the cost of performing this activity has also increased. The cost to

23 install or replace a meter depends on the type of customer (residential, commercial, or agricultural), the geographical location, and the meter type (electro-mechanical or smart meter). Unit costs remained relatively stable in 00 and 00, then increased from Due to a reduction in the number of Field Service Representatives (FSR) because of the SmartConnect program, field construction personnel, with higher labor rates, perform more of these activities. Since both the recent meter installations have been and the future meter installations will be almost exclusively smart meter installations, the 01 costs per meter best represent SCE s costs going forward. Therefore, the 01-recorded cost per meter of $ is used as the basis for unit forecasts SCE s forecast for meter installations includes both meter sets and meter replacements. Ms. Sheng s testimony in Exhibit SCE-, Volume 01 discusses the forecast for the number of meter sets in Recorded meter replacements have varied from year-to- year based on both customer requests for relocations and meter replacements for malfunctions. Therefore, SCE forecasts, meter replacements each year from 01-01, which is the best representative of 01-recorded meter replacement count and is lower than the average. The total unit count for this forecast is the sum of the meter sets and meter replacements, as shown in Table I-. Table I- Meter Installations and Replacements Forecasts FERC Account. Recorded 00-01/Forecast Meter Installations,0,1, 1,,,1,1 0,,,1 Meter Replacements,,,,,,,,,, Total Meters 1,0,01,,1,00, 1, 1,1,, SCE developed the cost forecast for this activity by multiplying the meter count forecast by the unit cost for installing or replacing a meter. SCE then allocated the forecast between labor and non-labor based on the 01 ratio, as shown in Table I-. For the 01 meter replacement forecast, SCE used the three-year average of forecasts to levelize the spending over the rate case period. See workpaper entitled Meter Installations and Replacements Forecast which represents FERC Account..

24 Figure I- Summary of O&M Expenses for FERC Account. Recorded 00-01/Forecast (0% CPUC-Jurisdictional Constant 01 $000) 1. Distribution Construction Support, FERC Account. a) Miscellaneous Construction Inspection Expenses, Portion of FERC Account. Table I- Miscellaneous Construction Inspection Expenses Portion of FERC Account. Recorded and Adjusted 00-01/Forecast (Total Company Constant 01 $000) Recorded Forecast Labor $,1 $ $ $ $ $ $ $ Non-Labor $1,1 $0 $1 $1 $ $1 $ $1 Total $,0 $ $ $ $ $ $ $1,1 Ratio of Labor to Total % % % 1% % % % % Basis of Forecast: Percentage of Underground Capital Work (Tract, Backbone, Rule 0A, Rule0B, Rule 0C) Basis of Labor/Non-Labor Split:01 Recorded

25 Miscellaneous construction inspection activities include jobsite pre-fielding, warranty, and miscellaneous civil construction inspections performed by DC&M personnel to facilitate construction by electrical and civil crews. Construction coordinators that work in the service centers perform jobsite prefielding inspections, which involve visiting the planned construction site and to see if the site is ready for construction crews. An example of such inspection activity is confirming that the customer s electrician has installed the panel where SCE connects the service wire. Construction coordinators also inspect all work performed under the applicant-installed provision before SCE crews start their work, and perform a warranty inspection one year after construction is complete to confirm that all applicantinstalled equipment is performing as expected. Contractor crews perform all civil work on SCE s distribution system. SCE s civil inspectors visit jobsites to verify that crews are following all applicable construction standards, work method standards, and municipal regulations. Civil inspectors also confirm that civil construction crews will complete the job in the timeframe needed for electrical work to begin. Most construction inspections are capital related and charged directly to capital work orders. The O&M expenses discussed here represent miscellaneous activities performed by construction coordinators and civil inspectors, including processing timesheets and arranging for outages. As underground capital work increases, SCE expects additional inspectors and construction coordinators charging to this account, resulting in an increase in O&M expense for this activity. (1) Cost Forecast Expenses in this activity have decreased from 00 to 01, as shown in Table I-, because of two primary factors. Due to a change in accounting practices starting in 00, SCE no longer charges costs associated with pre-fielding to O&M, but to capital. Moreover, new underground civil construction work, mostly driven by tract and backbone installation associated with customer growth and overhead to underground conversion, has also decreased in the last five years due to the economic downturn. The civil and warranty inspection expenses forecast reflects these circumstances. SCE forecasts miscellaneous civil inspection expenses as a ratio of the capital expenditures in tract and backbone installation for new service connections and Rule 0

26 distribution work. To develop the forecast, SCE calculated the O&M expense as a percentage of historical capital expenditures for tact, backbone and Rule 0 distribution work. The historical trend shows variability in the ratio. The expense ratio stabilized at 0. percent in both 0 and 01, as shown in Table I-. The five-year average ratio is also 0. percent. Therefore, SCE used the recorded 01 ratio multiplied by the forecast capital expenditures for underground work for to forecast the miscellaneous civil inspection expenses, as shown in Table I-. Due to SCE s forecast of increased volumes in underground capital work in 01-01, driven primarily by growth in customer meter connections, the O&M expenses related to miscellaneous civil inspections will increase proportionally due to increased workload that will charge to this activity. For the 01 forecast, SCE used the three-year average of forecasts to levelize the spending over the rate case period. Table I- Miscellaneous Civil Expense Percentage to Underground Work Recorded and Adjusted (Constant 01 $000) Total Capital Expenditure for Tract, Backbone and Rule 0A, 0B and 0C 1,0,1 1,,, Total - Miscellaneous Civil Inspection Expense Expense % to the Total Capital Underground Expenditure 0.% 0.% 0.% 0.% 0.% Table I- Miscellaneous Civil Expense Forecast Forecast (Constant 01 $000) Capital Expenditure Forecast for Tract, Backbone and Rule 0A, 0B and 0C 1, 0,1,1 Total -Miscellaneous Civil Inspection Expense Percent 0.% 0.% 0.% Miscallaneous Civil Inspection Expense Forecast 1, Applying the same methodology as described above for miscellaneous civil inspection expenses, SCE used the recorded 01 ratio multiplied by the forecast capital expenditures for residential tract and backbone underground work for to forecast the See workpaper entitled Miscellaneous Construction Inspection Expenses which is a portion of FERC Account.. The expense forecast shown for 01 in Table I- uses a levelized -year average.

27 warranty inspection expenses as shown in Table I- and Table I-. Recorded 00 and 00 expenses include costs associated with job pre-fielding and hence shows a relatively higher value when compared to the other years. Due to forecast increased work volumes in underground capital work in 01-01, driven primarily by growth in customer meter connections, the O&M expenses related to warranty inspections would increase proportionally. Table I- Warranty Expense Percentage to Underground Work Recorded and Adjusted (Constant 01 $000) Total Capital Expenditure for Residential Tract and Backbone,1 0,01 1,,0, Total Warranty Inspection Expense,1 1 1 Expense % to the Total Capital Underground Expenditure.% 1.% 0.% 0.0% 0.1% Table I- Warranty Inspection Expense Forecast Forecast (Constant 01 $000) Total Capital Expenditure for Residential Tract and Backbone,1 1,0,0 Warranty Inspection Expense Percent 0.1% 0.1% 0.1% Warranty Inspection Expense Forecast 1 1 The combined total of civil and warranty inspection makes up the total forecast as shown in Table I-. Given the changes in work practices, SCE utilized the recorded 01 labor to non-labor ratio to forecast labor and non-labor expenses in

28 b) Facility Inventory Mapping, Portion of FERC Account. Table I- Facility Inventory Mapping Expenses Portion of FERC Account. Recorded and Adjusted 00-01/Forecast (Total Company Constant 01 $000) Recorded Forecast Labor $, $, $ $0 $ $ $ $ Non-Labor $ $ $ $ $1 $1 $1 $1 Total $,1 $, $1,1 $ $ $ $ $ Ratio of Labor to Total 0% 0% 1% 0% % % % % Basis of Forecast: 01 Recorded Basis of Labor/Non-Labor Split: 01 Recorded The Facility Inventory Mapping (FIM) group is responsible for developing and maintaining maps that graphically depict the location and description of SCE s overhead and underground distribution facilities throughout SCE s service territory. Planning, inspection, maintenance, operations, and construction personnel use the maps as field references. After construction, FIM drafting technicians may update the maps with the crews changes made in the field. These maps are critical for efficiency and safety. The maps also depict land base features such as property lines, rights of ways, and political boundaries and are the source of calculation for SCE s franchise payments, statistical, and ad valorem taxes. SCE allocates the costs associated with maintaining the facility inventory maps to both capital expenditures and O&M expenses, as the maps support both capital and O&M activities. This section discusses the O&M expense forecast for facility inventory mapping activities. (1) Cost Forecast As shown in Table I-, facility inventory mapping O&M expenses have shown a downward trend from The non-labor expense reduction between 00 and 00 is due to the completion of an effort to digitize underground maps. Through 00, SCE recorded all FIM-related costs as O&M expense. After the 0 change in accounting practices, SCE allocated only 1 percent of FIM-related costs to O&M, thus reducing the costs recorded to this activity. Further reductions in recorded costs for 0 1

29 and 01 were the result of reduced headcount and lower overtime rates, which resulted from process improvements and efficiency gains. In D.-1-0, the CPUC stated that if costs have shown a trend in a certain direction over three or more years, the last year recorded is an appropriate base estimate. Hence, SCE utilized 01-recorded costs as the basis for 01 forecast. c) Field Accounting Expenses, Portion of FERC Account. Table I- Field Accounting Expenses Portion of FERC Account. Recorded and Adjusted 00-01/Forecast (Total Company Constant 01 $000) Recorded Forecast Labor $1, $1, $1, $1, $1, $1, $1, $1, Non-Labor $1 $ $ $ $ $ $ $ Total $1, $1,0 $1, $1, $1, $1, $1, $1, Ratio of Labor to Total % % % % % % % % Basis of Forecast: 01 Recorded Basis of Labor/Non-Labor Split: 01 Recorded The Field Accounting Organization (FAO) provides accounting support and governance to distribution field operations. FAO activities include closing capital work orders, material ordering and inventory control, authorizing payments for construction material and equipment, and processing time and expenses for field employees. As such, FAO personnel primarily support capital work order processing, but also spend a portion of their time in support of O&M activities, such as timesheet entries on behalf of field crews and other miscellaneous administrative activities. This account includes only the portion of FAO costs charged to O&M expenses, which is approximately percent of total FAO costs. (1) Cost Forecast Labor expenses increased from 00 to 0 due to an increase in field accounting personnel hired, to address increasing capital work. In 0, SCE implemented emobile, which facilitated field crews to perform some of the timekeeping, thus reducing work performed by 1

30 FAO personnel. Since the costs have remained relatively constant in 0 and 01, SCE utilized 01-recorded expenses as the basis for the 01 O&M forecast. SCE based the labor and non-labor allocation on 01-recorded expenses. d) Stand-by Time, Portion of FERC Account. Table I-1 Stand-by Time Expenses Portion of FERC Account. Recorded and Adjusted 00-01/Forecast (Total Company Constant 01 $000) Recorded Forecast Labor $1 $ $ $ $ $ $ $ Non-Labor $1 $ $ $1 $ $ $ $ Total $ $ $0 $0 $0 $0 $0 $0 Ratio of Labor to Total % 1% % % % % % % Basis of Forecast: 01 Recorded Basis of Labor/Non-Labor Split: 01 Recorded 1 1 Stand-by time refers to time recorded by distribution field crews held at the end of the workday in anticipation of potential after-hours emergency activity. This occurs when SCE anticipates increased resource requirements due to an approaching storm or when Grid Operations notifies the service center that troublemen are responding to emergencies that may require distribution field crews in order to make repairs or restore service. In these circumstances, crews stand-by in the service center until work is assigned or it is determined that their response will not be required. (1) Cost Forecasts SCE field crews charge labor expenses in this account. Non-labor expenses include stand-by time charged by contract crews and other allocated overheads. As shown in emobile is an SCE developed application for Distribution and Transmission (T&D) field personnel. emobile contains all maintenance, inspection, and capital work. It is designed to allow multiple field users the ability to: (1) create, () execute, () retrieve and review notifications and work orders. emobile also allows access to all T&D manuals, forms, multiple field maps, and asset information, while in a disconnected mode. Implemented in 0, emobile improves our ability to manage work from initiation to completion. It also allow the field users to update their timesheets when they are in the field instead of the old process of having the CMC/CMA's entering their timesheets for them, thus reducing timesheet support provided by FAO. 1

31 Table I-1, 0-01 expenses showed a decreasing trend as management implemented processes that optimized the number and duration of crews being held on stand-by. In D.-1-0, the CPUC stated that if costs have shown a trend in a certain direction over three or more years, the last year recorded costs are an appropriate base estimate. Hence, SCE utilized 01-recorded expenses as the basis for the forecast. SCE allocated the forecast expenses to labor and non-labor based on the recorded ratios for 01. e) Distribution Line Rents, Portion of FERC Account. Table I-1 Distribution Line Rents Portion of FERC Account. Recorded and Adjusted 00-01/Forecast (Total Company Constant 01 $000) Recorded Forecast Labor $1 $ $ $ $ $0 $0 $0 Non-Labor $0 $0 $0 $0 $0 $0 $0 $0 Other $ $0 $1,01 $1,0 $1, $1, $1,1 $1, Total $ $0 $1,0 $1, $1,0 $1, $1,1 $1, Ratio of Labor to Total 0% 1% 1% 0% 1% 0% 0% 0% Basis of Forecast: 01 Recorded Basis of Labor/Non-Labor Split: 01 Recorded Distribution line rents include payments to the U.S. government and other agencies for using and occupying public and tribal lands for distribution line rights-of-way, rental costs for railroad crossings and substation land leases. (1) Cost Forecast Distribution line rent expenses include, in large part, the fees paid by SCE for government land use and thus are dependent on fee structures imposed by various agencies. Distribution line rents have been increasing since 0, mostly driven by updated fee structures by governmental agencies, such as the Bureau of Land Management and the U.S. Forest Service. Given the increasing trend, as shown in Table I-1, SCE utilized 01-recorded expenses of $1.0 million for 1

32 distribution line rents. Because standard escalation rates do not apply, SCE escalated 01-recorded costs by 1. percent, which is the standard published escalation rate as per the Bureau of Land Management. For the 01 test year forecast, SCE used the three-year average of forecast expenses to levelize the spending over the rate case period. f) Shop Services and Instrumentation Division (SSID) Operating Expenses, Portion of FERC Account. Table I-1 SSID Operating Expenses Portion of FERC Account. Recorded and Adjusted 00-01/Forecast (Total Company Constant 01 $000) Recorded Forecast Labor 1 1 $1 $1 $1 Non-Labor 1, 1 1 $00 $00 $00 Total $,01 $ $ $ $1 $1 $1 $1 Ratio of Labor to Total % % % % % % % % Basis of Forecast: Four Year Average (00-01) Basis of Labor/Non-Labor Split: Four Year Average (00-01) 1 SSID provides a variety of maintenance, test, and repair services to SCE s distribution, transmission and generation operations. These services include repair, refurbishment, inspection, testing, calibration, failure analysis, and root-cause evaluation of electrical and mechanical equipment. SSID personnel perform acceptance testing, chemical analysis, calibration, and inspection of new transformers, meters, switches, relays and circuit breakers. SSID also operates an oil tank farm to supply and process the mineral oil used for transformers and other electrical apparatus. In D.-1-0, the CPUC stated that if costs have shown a trend in a certain direction over three or more years, the last year recorded is an appropriate base estimate. US Department of Interior Bureau of Land Management : REALTY AND_RESOURCE_PROTECTION_/cost_ recovery.par.1.file.dat/row_final_rule_fr_notice.pdf. See workpaper entitled Distribution Line Rents which is a portion of FERC Account.. 1

33 This forecast includes the distribution-related labor and non-labor expenses incurred for the operation and maintenance of the SSID shops, labs and offices. Specifically, the costs include maintenance of facilities, machinery, lab, and test equipment; calibration of SSID measurement and test equipment; site environmental and safety activities; air quality permits; and costs for services received from support organizations including Information Technology, Environmental Health and Safety, Supply Management, and Human Resources. (1) Cost Forecast In 00, SCE incurred increased expenses primarily driven by the following factors: (a) processing used oil at the tank farm, (b) fabrication of control valves to manage storm drain water in the flood control channel, and (c) usage of additional resources for increased maintenance of aging equipment and machinery. Expenses declined from 00 to 00 primarily due to the completion of the oil tank farm activities. From 00 to 01, the expenses in this category have shown some fluctuation. Therefore, in accordance with D. -1-0, SCE utilized an average of recorded expenses as the basis for the 01 forecast. SCE did not include 00-recorded expenses, as the work performed in 00 does not reflect the work SSID will be performing going forward. SCE allocated forecast expenses between labor and non-labor based on the four-year average recorded ratios between 00 and 01. 1

34 g) Wireless Technology Services, Portion of FERC Account. Table I-1 Wireless Technology Services Portion of FERC Account. Recorded and Adjusted 00-01/Forecast (Total Company Constant 01 $000) Recorded Forecast Recorded/Adjusted Labor $0 $0 $ $ $ $ $ $ Non-Labor $0 $1 $10 $ $ $ $ $ Total $0 $1 $1 $1 $ $ $ $ Ratio of Labor to Total 0% 0% % % % Basis of Forecast: 01 Recorded Basis of Labor/Non-Labor Split:01 Recorded When a city or a county denies requests from wireless carriers (like AT&T and Verizon) to install a pedestal for wireless/broadband services on an existing right of way, SCE is required to allow these wireless providers to install their panels on distribution poles. Based on a wireless provider s request to install a panel, SCE works with the wireless provider to determine the location and wattage requirements. The wireless carrier is responsible for installing the panel on the pole. SCE s scope of work includes performing site inspections, installing the cable for the panel and meter, and providing project management support. To confirm that the wireless service providers remains in compliance with the terms of the agreement, SCE performs routine inspections of the equipment to confirm that wattage requirements have not been violated and that the safety of SCE s assets have not been compromised through modification of the existing panel. (1) Cost Forecast SCE utilizes primarily contractors to perform these inspections. Contractor costs record to non-labor expense. The labor expense includes the SCE cost of coordinating the contractors and inspections performed by SCE personnel. Table I-1 shows the recorded and forecast expenses for this activity. Expense increased from 0 to 0 due to the increased number of SCE has restrictions on the maximum wattage requirements for panels. SCE s current standards allow a maximum of -ampere fuse for the panels. 1

35 inspections performed in 0 to validate unclosed work orders. Based on the historical trend, SCE utilized 01-recorded costs as the basis for the 01 forecast. h) Summary of O&M Expenses for FERC Account. Figure I- Summary of O&M Expenses for FERC Account. Forecast (Total Company Constant 01 $000) 0

36 Figure I- (Continued) Summary of O&M Expenses for FERC Account. Forecast (Total Company Constant 01 $000) C. Capital 1. Customer Meter Connections To connect new residential, commercial/industrial, and agricultural customers to the SCE system, and to provide street lighting systems to new developments, SCE performs the following ten types of customer growth-related services: a. Residential service connections b. Residential line extensions c. Residential tract development d. Residential backbone development e. Commercial/Industrial service connections f. Commercial/Industrial line extensions g. Commercial/Industrial tract development h. Agricultural service connections i. Agricultural line extensions 1