2018 General Rate Case Rebuttal Testimony

Transcription

1 Application No.: A Exhibit No.: SCE-18, Vol. 05 Witnesses: A. Edeson (U 338-E) 2018 General Rate Case Rebuttal Testimony Transmission & Distribution (T&D) Volume 05 - Distribution Construction & Maintenance Before the Public Utilities Commission of the State of California Rosemead, California June 16, 2017

2 SCE-18: Transmission & Distribution (T&D) Volume 05 - Distribution Construction & Maintenance Table Of Contents Section Page Witness I. DISTRIBUTION CONSTRUCTION AND MAINTENANCE REBUTTAL...1 A. Edeson A. Distribution Storm O&M ORA s Testimony SCE s Rebuttal to ORA...3 a) ORA s Average of for Distribution Storm O&M is Inconsistent with ORA s Treatment of Other Storm Costs...3 B. Service Guarantees #2 and # ORA s Testimony SCE s Rebuttal to ORA...5 a) SCE s Alternative Proposal Remains Uncontested and Represents a Legitimate Cost of Business that Benefits All Customers...5 C. Street Lighting Operations and Maintenance ORA s Testimony SCE s Rebuttal to ORA...7 a) ORA s Forecast Proposal Incorrectly Excludes One of Four Categories of O&M Required to Conduct the Streetlight Program...7 Appendix A ORA-SCE-076-TLG-Q.01.f1 Attachment A Street Light O&M Analysis & Forecast -i-

3 I. DISTRIBUTION CONSTRUCTION AND MAINTENANCE REBUTTAL Distribution construction and maintenance includes activities performed on the distribution system including: patrolling, locating, and repairing trouble on the distribution system; maintaining and replacing underground structures; inspecting, maintaining, and replacing street lighting; and responding to and restoring service to customers during emergencies. SCE forecasts $336.2 million in capital expenditures for and $ million in expenses for distribution construction and maintenance activities. SCE s capital expenditures are summarized in Table I-1 and expenses are summarized in Table I-2. ORA contests SCE s O&M forecasts for Streetlight Operations and Maintenance, Service Guarantees #2 and #3, and Distribution Storm O&M. SCE received no other objections to the capital or O&M forecast activities included in SCE-02, Volume 5. Table I-1 Summary of Distribution Construction and Maintenance Capital Expenditures 100% CPUC Jurisdictional Nominal $000 SCE Forecast ORA Forecast Activity Total Total Variance Underground Structure Replacements and Shoring $ 83,101 $ 33,498 $ 72,730 $ 106,229 $ 76,014 $ 33,498 $ 72,730 $ 106,229 $ - Distribution Storm $ 35,143 $ 35,874 $ 36,777 $ 72,651 $ 66,394 $ 35,874 $ 36,777 $ 72,651 $ - Distribution Claims $ 28,308 $ 28,897 $ 29,625 $ 58,522 $ 37,318 $ 28,897 $ 29,625 $ 58,522 $ - Miscellaneous Equipment $ 4,011 $ 4,068 $ 4,145 $ 8,213 $ 3,876 $ 4,068 $ 4,145 $ 8,213 $ - Prefabrication $ 10,690 $ 10,105 $ 10,359 $ 20,464 $ 11,141 $ 10,105 $ 10,359 $ 20,464 $ - Street Light Replacements $ 26,228 $ 20,067 $ 50,063 $ 70,131 $ 28,245 $ 20,067 $ 50,063 $ 70,131 $ - Total Capital - Distribution Construction & Maintenance $ 187,482 $ 132,509 $ 203,700 $ 336,209 $ 222,987 $ 132,509 $ 203,700 $ 336,209 $ - 1

4 Table I-2 Summary of Distribution Construction and Maintenance O&M Expenses Constant 2015 $ Forecast GRC Account Description SCE ORA ORA Variance TURN Patrolling For, Locating, and Repairing Trouble on the Distribution System $ 32,237 $ 32,237 $ - TURN Variance Streetlight Operations and Maintenance $ 6,936 $ 4,543 $ (2,393) Setting, Removing, and Relocating Customer Meters $ 10,270 $ 10,270 $ Service Guarantees #2 and #3 $ 577 $ - $ (577) Distribution Business Line Construction Support $ 2,749 $ 2,749 $ - Underground Structure Field Investigation and Repairs $ 2,245 $ 2,245 $ - Stand-By Time $ 282 $ 282 $ - Information Technology/Corporate Real Estate Chargebacks $ 3,817 $ 3,817 $ - Total $ 9,093 $ 9,093 $ Outage Data Management and Circuit Mapping $ 1,989 $ 1,989 $ Distribution Storm O&M $ 9,388 $ 7,814 $ (1,574) Total SCE-02, Volume 5 $ 70,491 $ 65,947 $ (4,544) n/a n/a A. Distribution Storm O&M Distribution Storm O&M includes costs incurred to manage SCE s storm command center, identify electrical facilities or structures that have been affected, assess required repairs or replacements, perform switching to isolate problem areas, and repair damaged equipment. Recorded and forecast costs for this activity are shown in Table I-3. 2

5 Table I-3 Distribution Storm O&M Constant 2015 $000 Recorded GRC Account Description Distribution Storm O&M $ 18,533 $ 6,238 $ 6,465 $ 8,221 $ 7, Forecast GRC Account Description SCE ORA ORA Variance TURN TURN Variance Distribution Storm O&M $ 9,388 $ 7,814 $ (1,574) n/a n/a ORA s Testimony ORA agrees with SCE s proposed forecasting methodology of a five-year historical average but proposes to utilize the years instead of ORA argues that 2011 recorded costs were high but over the last five years have fluctuated within a more narrow range. 1 ORA also proposes a one-way balancing account to track and record expenses related to storms and weather disturbances recorded in Account , arguing that recorded costs were less than authorized costs in years 2012 and SCE s Rebuttal to ORA a) ORA s Average of for Distribution Storm O&M is Inconsistent with ORA s Treatment of Other Storm Costs Distribution Storm O&M is just one type of storm-related costs that SCE incurs. SCE also incurs costs related to Transmission and Substation Storm O&M, Distribution Storm Capital, and Transmission and Substation Storm Capital. 3 Storms affect SCE s entire system and the different accounts capture whether the remediation costs incurred were expense 1 See Exhibit ORA-07, pp See Exhibit ORA-07, p Transmission/Substation Storm Expense and Capital is found in SCE-02, Volume 7. For both of these costs, and Distribution Capital Storm presented in this volume, ORA has accepted the use of a five-year average over the years as the forecasting methodology. 3

6 or capital, and whether the damage occurred on the Distribution System, in a Substation or on the Transmission system. The Commission has consistently recognized that storm costs are driven by weather, and therefore inherently unpredictable, and has consistently adopted forecasts based on averaging historical costs. ORA s proposal to substitute calendar year 2016 for 2011 for only Distribution Storm O&M is inconsistent with its positions on SCE s other Storm-related costs, for which ORA has accepted the use of a five-year average based on As shown in Table I-4 below, ORA has only proposed using the period for forecasting Storm-related costs in this one case, presumably because it is only in this case where using that period results in a lower forecast. Table I-4 Historical Storm Costs Constant 2015 ($000) As can be seen in Table I-3 and Table I-4 above, the total costs incurred to respond to storm events varies considerably from year to year. ORA has not justified why only one category of storm response costs should have a different forecast methodology and ORA s proposal should be rejected. The use of a one-way balancing account is also inappropriate for Distribution Storm O&M because it is inconsistent with cost-of-service ratemaking principles. ORA offers no compelling reasons why SCE s shareholders should be required to bear the cost of restoring service outages caused by storms. SCE s response to ORA s one-way balancing account proposal is presented in SCE-25, Results of Operations, Volume ORA presents its forecasts for Transmission/Substation Storm Expense in Exhibit ORA-06, Transmission/Substation and Distribution Storm Capital in Exhibit ORA Exhibit SCE-25 RO-Requested Revenue Requirements, Ratemaking, Forecasts of Sales, Other Operating Revenue, Cost Escalation, Post-Test Year Ratemaking. 4

7 B. Service Guarantees #2 and #3 SCE s Service Guarantee Program includes four separate service guarantee standards: (1) Timely and Accurate First Bill, (2) Service Restoration (within 24 hours), (3) Planned Outage Notification, and (4) Missed Appointments. SCE pays customers a $30 credit for each occurrence when these standards are not met. These credits are currently shareholder-funded. Two service guarantees, Missed Appointments and Timely and Accurate First Bill, are addressed by the Customer Service testimony and are described in SCE The remaining two standards relate to the Transmission and Distribution Operating Unit and are discussed here. Recorded and forecast costs for this activity are shown in Table I-5. Table I-5 Service Guarantees #2 and #3 Constant 2015 ($000) Recorded GRC Account Description Service Guarantees #2 and #3 $ 513 $ 489 $ 339 $ 549 $ Forecast GRC Account Description SCE ORA ORA Variance TURN TURN Variance Service Guarantees #2 and #3 $ 577 $ - $ (577) n/a n/a ORA s Testimony ORA argues to maintain the historical practice of having shareholders be responsible for the costs of credits paid out for missing service guarantees and proposes zero dollars for the test year forecast SCE s Rebuttal to ORA a) SCE s Alternative Proposal Remains Uncontested and Represents a Legitimate Cost of Business that Benefits All Customers ORA is correct that SCE is proposing a change in the treatment of Service Guarantees, and clearly set forth in its direct testimony why the Commission should re-examine 6 See SCE-03 Customer Service pp. 49 & See Exhibit ORA-07, pp

8 this policy. ORA states that SCE has not articulated a persuasive argument for reversing this long standing policy but nowhere in its testimony does ORA actually address SCE s proposal. SCE demonstrated that the costs of reducing or eliminating Service Guarantees payments by adding additional crews to stand by at each urban district would be grossly disproportionate to the benefits customers receive, and the flexibility the Company gets by rescheduling outages or slightly delaying service restoration are actually overall benefits to all customers. The inconveniences imposed by rescheduling an outage or a delay in service restoration are compensated for by the credits, and represent a legitimate cost of service that should be included in the 2018 revenue requirement. ORA s testimony is merely a recitation of previous decisions, and an assertion about SCE s testimony not being persuasive. Whatever level of credits is adopted, SCE will have the same incentive to minimize the level of payments made. 8 The Commission has also previously accepted the idea that there should be some baseline level of credits included in the cost of service. 9 A baseline level has since been established and SCE stands by its original testimony, which proposes a modest level of customer funding for these credits. C. Street Lighting Operations and Maintenance Street lights are raised fixtures typically mounted on concrete, wood, composite, or steel poles to illuminate highways, roads, parkways, and sidewalks. SCE owns and maintains over 680,000 lights in our service territory. Most street lights on our system are concrete electroliers with High Pressure Sodium Vapor (HPSV) luminaires; however, SCE is proposing installation of Light Emitting Diode (LED) technology under Tariff LS1-E. Street Lighting Program operations and maintenance costs fall into three primary categories: (a) Street Light Inspection and Patrols, (b) Maintenance, and (c) Administration and Billing. SCE conducts patrols in accordance with GO 165, using a contractor for the ongoing inspections. Maintenance expenses primarily consist of replacing broken lamps, a broken photo cell, or fixing other failed 8 The Commission recognized this, see D , p Ibid. This is also discussed in A , SCE-02, volume 5, pp

9 1 2 equipment. Administration and Billing expenses also include inventory updates for moved, replaced, or repaired street light assets. 10 Table I-6 Streetlight Operations and Maintenance Constant 2015 $000 Recorded GRC Account Description Streetlight Operations and Maintenance $ 8,379 $ 8,849 $ 9,044 $ 8,222 $ 6, Forecast GRC Account Description SCE ORA ORA Variance TURN TURN Variance Streetlight Operations and Maintenance $ 6,936 $ 4,543 $ (2,393) n/a n/a ORA s Testimony ORA takes issue with SCE s TY forecast for Streetlight Operations and Maintenance and states SCE s TY forecast of $6.936 million, based on its 2015 recorded adjusted expenses is overstated because SCE s forecast does not adequately account for future activities that will reduce its maintenance expenses further in the TY that are recorded in account ORA s proposed forecast of $4.543 million is taken from SCE s streetlight model provided in SCE s response to data request ORA-SCE-076-TLG, Q.1-f-1, 12 which accounts for future activities such as installation/conversion of LED streetlights and anticipated sales of streetlights. 2. SCE s Rebuttal to ORA a) ORA s Forecast Proposal Incorrectly Excludes One of Four Categories of O&M Required to Conduct the Streetlight Program ORA s arguments are based on a misreading of SCE s streetlight model. SCE s proposed forecast does account for the future activities that ORA states are not accounted for and were presented to ORA in SCE s streetlight model provided in response to data request 10 Streetlight Sales are presented in SCE-27 CALSLA Rebuttal. 11 See Exhibit ORA-07, page 13, line See response to ORA-SCE-076-TLG-Q.01.f.1 on Appendix A, pp. A-1 A-4. 7

10 ORA-SCE-076-TLG, Q.1-f-1. ORA s proposed estimate of $4.543 million for Streetlight Operations and Maintenance inappropriately omits the 2015 recorded costs of $2.395 million for work performed by crews in the Distribution Construction and Maintenance organization (DCM), one of the categories that make up the total O&M expenses required to conduct the streetlight program. 13 As stated in SCE s response to data request ORA-SCE-076-TLG, Q.1-f-1, the baseline O&M costs in 2015 of $4.543 million only includes the costs for Streetlight Administration and Billing, Streetlight Maintenance, and Streetlight Operations / Patrols but excludes repair work performed by DCM. SCE s data request response states Cell D55 represents the baseline in 2015 of $4.543M (recorded costs of $6.936M for less $2.395M associated with DCM). 14 If the costs associated with DCM are appropriately added to ORA s forecast, the total is the same as SCE s request. Additionally, on page 138 of our workpapers, provided to ORA on September 1, 2016, SCE shows each of the activities separately, demonstrating that 2015 recorded costs for Streetlight Maintenance Design Construct Maintain (DCM) were $2.395 million. ORA s proposal innapropriately (and with no explanation) omits one of the four categories of streetlight-related expenses. SCE s test year forecast for Streetlighting O&M should be adopted. 13 As discussed in direct testimony, if a streetlight repairman encounters a problem he is unable to repair, the work will be handed off to a qualified electrical crew from DCM. 14 See Attachment Street Light O&M Analysis & Forecast. 8

11 Appendix A ORA SCE-076-TLG-Q.01.f.1

12 Southern California Edison 2018 GRC A DATA REQUEST SET ORA-SCE-076-TLG To: ORA Prepared by: Brian Chen Title: Principal Manager Dated: 12/09/2016 Received Date: 12/09/2016 Question 01.f.1: Originated by: Tamera Godfrey Exhibit Reference: SCE-02, Vol. 5 SCE Witness: A. Edeson Subject: Transmission & Distribution - Distribution Construction & Maintenance Operation and Maintenance (O&M) Expenses 1. Referring to SCE testimony page 1, Table I-1 shows the forecasts of $ million for its Distribution Construction & Maintenance O&M expenses for Test Year SCE s forecast includes expenses recorded in FERC Sub-Accounts of $ million, of $6.936 million, of $ million, of $0.577 million, of $9.093 million, of $1.989 million and of $9.388 million. f) Referring to SCE testimony page 43, starting at line 7, SCE states Lamps, photocells, and other street light components sometimes fail in service. SCE states further on line 12 through line 6 on page 44 that it uses a contractor to complete street light patrols. The contractor patrols for light burn-outs during the night to easily determine if the lights are functioning. Use of a field tool allows the contractor to upload the GPS location for street lights that are flickering or out. The information gathered during these patrols is used by SCE support staff to direct street light repairmen to street lights that require repairs. On average, SCE responds to over 100,000 customer-related and patrol-identified issues each year. SCE is not forecasting any reduction in the cost to perform annual street light patrols or inspections as a result of street light sales. 1) Provide all documentation that explains in detail if the more energy efficient LED lights that will require less maintenance because it has an expected useful life that exceeds that of HPSV street lighting technology, will have the same type of Lamps, photocells, and other street light components that SCE s current non-led street lights have and therefore will require the same level of funding for street light maintenance in the Test Year as recorded for Response to Question 01.f.1: A-1

13 SCE created a detailed model in an effort to assess the various impacts of LED lights on the street light O&M forecast and minimize cost impacts to customers. This model forecast decreased maintenance costs associated with LED lights but those decreased costs were mostly offset by additional increased billing and administrative expenses to support conversions from HPSV to LED (see testimony page 46 paragraph beginning at line 11). The additional costs associated with supporting the conversion to LED includes updating the billing system to reflect the new LED tariff as well as updating the mapping and inventory system. The model O&M Analysis & Forecast model (see attachment titled Street Light O&M Analysis & Forecast.xlsx ) considers the effect of street light sales, non AB719 conversions, AB719 conversions, and new service connections on the following portions of GRC Account Grid Operations Street Light Operations and Maintenance: (1) Street Light Administration and Billing, (2) Street Light Maintenance, and (3) Street Light Operations / Patrols. The worksheet tab Forecast Luminaire Inven Mix summarizes the analysis results and uses the 2015 O&M as the baseline, but excludes the $2.395M associated with Street Light Maintenance Design Construct Maintain (DCM) because this activity would not be impacted by LED luminaires. DCM performs maintenance on the electrical systems that serve the street lights, such as transformers, overhead conductor, and underground cable feeding the street lighting system. The LED replacement program is for luminaires and will not include any other equipment or structures serving the streetlighting system. Rows 3 through 11 forecast the changes in lamp counts due to new service connections. Rows 13 through 17 forecast inventory changes due to sales. Rows 19 through 34 forecast the change inventory mix as LEDs are introduced into the system through new service connections, AB719 conversions, and other factors. Rows 36 through 58 forecast the changes in lamp counts and technology mix on O&M. Cell D55 represents the baseline in 2015 of $4.543M (recorded costs of $6.936M for less $2.395M associated with DCM). Operations and Patrol costs (Row 51) were forecast to remain unchanged as described on testimony page 44 paragraph beginning on line 5. Administration and Billing costs (Row 52) were forecast to decline over time due to the decreasing total number of lamps on the system. Additional Admin and Billing Expense from AB719 (Row 53) appears in the period 2018 through 2020 due to anticipated AB719 conversions (see attachment titled Street Light OM Administrative Impacts.xlsx for additional details). Maintenance costs (Row 54) were forecast to decline due to increasing numbers of LEDs replacing HPSV lamps and the total number of lamps overall was forecast to decrease. The forecast total O&M costs associated with the above-referenced activities (Row 55) for the period 2016 through 2018 was $13.981M, which corresponds to a yearly average of $4.660M. This value was slightly above the baseline 2015 cost of $4.543M. Therefore, for simplicity in forecast analysis, SCE elected to use a last year recorded methodology and will manage the slight increase in costs in that period to minimize cost impacts to customers. Street Light O&M Analysis & Forecast.xlsx A-2

14 Street Light Quantity and O&M Forecast Category Forecast Lamps Based on Only New Service Connections Growth Historic Inventory Existing Street Light Lamps (1) 683,813 Growth in LS 1 Street Lights due to New Service Connections New Gross Meter Installations (2) 29,895 33,532 41,702 43,438 42,801 Electroliers per Meter (2) Number of New Electroliers and Lamps Installed 5,680 6,371 7,923 8,253 8,132 Cumulative Number of New Electoroliers and Lights Installed 5,680 12,051 19,974 28,227 36,359 Forecast Inventory of Lamps Based on Only New Service Connections 683, , , , , ,172 Forecast Inventory Changes Due to Sales Street Light Sales Expected Sales of Lamps Inventory (3) 19,527 39,240 51,561 Cumulative Number of Lamps Sold 19,527 58, , ,328 Forecast Inventory of Lamps Adjusted for Sales & Growth 683, , , , , ,844 Forecast Transition to LED Technology LEDs from New Service Connections Growth Number of New Service Connection with LED Lamps 6,371 7,923 8,253 8,132 Cumulative New Service Connection with LED Lamps 6,371 14,294 22,547 30,679 Forecast Inventory of non LED Lamps after Sales & Growth 683, , , , , ,165 LEDs from Various Activities: Steel Pole (Electroliers) Replacements 5,881 3,200 2,200 2,200 2,200 2,200 Failure Rate per year on Existing non LED Lamps 2% 2% 2% 2% 2% Luminaires Replacements from Failed Fixtures 31,293 13,654 13,673 13,139 10,212 7,044 LED Conversion from City Requested Transition (AB719) 3,352 4, , , ,138 Lamps converted to LED from Steel Pole Replacements Prog 1,650 1,650 1,650 1,650 Lamps converted to LED from Failed Fixtures 1,365 1,367 1,314 1, LED Conversions from All Activities 4,717 7, , , ,492 Cumulative Number of LED Conversions from All Activities 1,103 5,820 13, , , ,414 Forecast Inventory of LED Lamps from Sales, Growth, & Activities 1,103 5,820 19, , , ,093 Forecast Inventory of non LED Lamps after Sales, Growth, & Activities 682, , , , , ,751 O&M Projections Historic O&M Cost Lamps (All Technologies) Street Light Operations & Patrols (4) $000 $ 10 Street Light Administration & Billing (4) $000 $ 984 Admin & Billing / Lamps $/lamp $ 1.44 Additional Admin and Billing Expense from AB719 $/lamp $ Historic O&M Cost Lamps (Non LED Lamps) Street Light Maintenance (4) $000 $ 3,549 Maintenance / Lamps $/lamp $ 5.20 Forecast Inventory of Lamps Forecast Number of Lamps Adjusted for Sales & Growth 683, , , , , ,844 Forecast Inventory of non LED Technology Lamps 682, , , , , ,751 Forecast Inventory of LED Lamps 1,103 5,820 19, , , ,093 % Change in non LED Lamps Inventory from previous year 0% 4% 22% 31% 30% O&M Forecast $000 Operations and Patrols $ 10 $ 10 $ 10 $ 10 $ 10 $ 10 Adminstration & Billing $ 984 $ 992 $ 973 $ 928 $ 866 $ 878 Additional Admin and Billing Expense from AB719 $ $ $ $ 1,434 $ 1,434 $ 1,434 Maintenance $ 3,549 $ 3,554 $ 3,415 $ 2,654 $ 1,831 $ 1,278 Total O&M Forecast $000 $ 4,543 $ 4,556 $ 4,398 $ 5,027 $ 4,141 $ 3,599 O&M Budget Change from 2015 $ 13 $ (145) $ 484 $ (402) $ (944) O&M Forecast Change from Previous Year $ 13 $ (158) $ 628 $ (886) $ (542) O&M Forecast % Yearly Change 0% 3% 14% 18% 13% Street Light Balance Projections Beginning Balance 683, , , , , ,712 Less Sales Tied to Customer Service Sale Forecast 19,527 39,240 51,561 Plus Non Customer Service St Lights Tied to Customer Driven Forecast 5,680 6,371 7,923 8,253 8,132 End Balance 683, , , , , , , , , , , ,844 Footnotes Assumptions: A. Forecast Lamps Based on Only New Service Connections Growth A.1 Streetlamp count only consider those that are owned and maintained by SCE which includes: DWL A, LS 1, LS 1 MID, and OL 1 A.2 New Electorliers Installed = New Gross Meter Installations x Electroliers per Meter A-3

15 A.3 Nearly all current streelight Lamps are HPSV or non LED technology A.4 All electroliers have 1 lamp A.5 When pole is replaced, it will house 1 lamp B. Forecast Inventory Changes Due to Sales B.1 Sale of street lights based on a risk adjusted model over a wide array of cities considering various stage of sales B.2 Sale of street lights are non LEDs luminaires C. Forecast Transition to LED Technology C.1 1,103 is the count of existing LED street lights by the end of See "Street Light Count Summary" non standard working paper (excel) C.2 Capital Expenditures for Street Lights (ie DCM) are not included in the O&M Forecast C.3 Beginning in 2017, all New Service Related street light lamps will be LED C.4 Beginning in 2017, 75% of Steel Pole Replacements will include an LED fixture and bulb C.5 Beginning in 2016 onward, 10% of failed luminaire replacements will include an LED fixture and bulb funded C.6 Failure rate of ~2% a year on existing non LED lamps D. O&M Projections D O&M Cost historic data extrapolated to apply as an estimate for the future D.2 Additional Admin and Billing expense from AB719 derived from increased labor expected to cover conversion numbers D.3 Additional AB719 Admin/Biling expense for is null due to the small conversion #s which can be accomodated by the current admin/billing staff References (1) Lamp Count from Billing Reference as of 2/19/16 (2) SCE 02, Volume 2 Customer Driven Programs, Street Light Installations, Table II 25 (3) "Lamps by City Sold" Worksheet (attached. See tabs) (4) FERC Account 585 Street Lighting and Signals System Expenses, Activity (5) "Street Light Count Summary" Worksheet File (not attached) (6) Additional Admin from AB719 rate derived from "Street Light O&M Admin Impact" worksheet (not attached) A-4

16 ATTACHMENT STREET LIGHT O&M ANALYSIS & FORECAST

17 Southern California Edison 2018 GRC A DATA REQUEST SET ORA-SCE-076-TLG To: ORA Prepared by: Brian Chen Title: Principal Manager Dated: 12/09/2016 Received Date: 12/09/2016 Question 01.f.1: Originated by: Tamera Godfrey Exhibit Reference: SCE-02, Vol. 5 SCE Witness: A. Edeson Subject: Transmission & Distribution - Distribution Construction & Maintenance Operation and Maintenance (O&M) Expenses 1. Referring to SCE testimony page 1, Table I-1 shows the forecasts of $ million for its Distribution Construction & Maintenance O&M expenses for Test Year SCE s forecast includes expenses recorded in FERC Sub-Accounts of $ million, of $6.936 million, of $ million, of $0.577 million, of $9.093 million, of $1.989 million and of $9.388 million. f) Referring to SCE testimony page 43, starting at line 7, SCE states Lamps, photocells, and other street light components sometimes fail in service. SCE states further on line 12 through line 6 on page 44 that it uses a contractor to complete street light patrols. The contractor patrols for light burn-outs during the night to easily determine if the lights are functioning. Use of a field tool allows the contractor to upload the GPS location for street lights that are flickering or out. The information gathered during these patrols is used by SCE support staff to direct street light repairmen to street lights that require repairs. On average, SCE responds to over 100,000 customer-related and patrol-identified issues each year. SCE is not forecasting any reduction in the cost to perform annual street light patrols or inspections as a result of street light sales. 1) Provide all documentation that explains in detail if the more energy efficient LED lights that will require less maintenance because it has an expected useful life that exceeds that of HPSV street lighting technology, will have the same type of Lamps, photocells, and other street light components that SCE s current non-led street lights have and therefore will require the same level of funding for street light maintenance in the Test Year as recorded for Response to Question 01.f.1: Attachment 1

18 SCE created a detailed model in an effort to assess the various impacts of LED lights on the street light O&M forecast and minimize cost impacts to customers. This model forecast decreased maintenance costs associated with LED lights but those decreased costs were mostly offset by additional increased billing and administrative expenses to support conversions from HPSV to LED (see testimony page 46 paragraph beginning at line 11). The additional costs associated with supporting the conversion to LED includes updating the billing system to reflect the new LED tariff as well as updating the mapping and inventory system. The model O&M Analysis & Forecast model (see attachment titled Street Light O&M Analysis & Forecast.xlsx ) considers the effect of street light sales, non AB719 conversions, AB719 conversions, and new service connections on the following portions of GRC Account Grid Operations Street Light Operations and Maintenance: (1) Street Light Administration and Billing, (2) Street Light Maintenance, and (3) Street Light Operations / Patrols. The worksheet tab Forecast Luminaire Inven Mix summarizes the analysis results and uses the 2015 O&M as the baseline, but excludes the $2.395M associated with Street Light Maintenance Design Construct Maintain (DCM) because this activity would not be impacted by LED luminaires. DCM performs maintenance on the electrical systems that serve the street lights, such as transformers, overhead conductor, and underground cable feeding the street lighting system. The LED replacement program is for luminaires and will not include any other equipment or structures serving the streetlighting system. Rows 3 through 11 forecast the changes in lamp counts due to new service connections. Rows 13 through 17 forecast inventory changes due to sales. Rows 19 through 34 forecast the change inventory mix as LEDs are introduced into the system through new service connections, AB719 conversions, and other factors. Rows 36 through 58 forecast the changes in lamp counts and technology mix on O&M. Cell D55 represents the baseline in 2015 of $4.543M (recorded costs of $6.936M for less $2.395M associated with DCM). Operations and Patrol costs (Row 51) were forecast to remain unchanged as described on testimony page 44 paragraph beginning on line 5. Administration and Billing costs (Row 52) were forecast to decline over time due to the decreasing total number of lamps on the system. Additional Admin and Billing Expense from AB719 (Row 53) appears in the period 2018 through 2020 due to anticipated AB719 conversions (see attachment titled Street Light OM Administrative Impacts.xlsx for additional details). Maintenance costs (Row 54) were forecast to decline due to increasing numbers of LEDs replacing HPSV lamps and the total number of lamps overall was forecast to decrease. The forecast total O&M costs associated with the above-referenced activities (Row 55) for the period 2016 through 2018 was $13.981M, which corresponds to a yearly average of $4.660M. This value was slightly above the baseline 2015 cost of $4.543M. Therefore, for simplicity in forecast analysis, SCE elected to use a last year recorded methodology and will manage the slight increase in costs in that period to minimize cost impacts to customers. Street Light O&M Analysis & Forecast.xlsx Attachment 2