Minnesota Public Utilities Commission Staff Briefing Papers

Minnesota Public Utilities Commission Staff Briefing Papers Meeting Date: March 7, 2006 Agenda Item # *10 Company: Docket Nos. Minnesota Power Northwestern Wisconsin Electric Company Interstate Power and Light Company Otter Tail Power Company Northern States Power Company d/b/a Xcel Energy E-015/M-05-554 E-016/M-05-615 E-001/M-05-513 E-017/M-05-533 E-002/M-05-551 In the Matter of Reviewing the Adequacy of the Above Listed Company's Annual Filings Concerning Safety, Reliability, Service Quality, and Proposed Annual Reliability Standards Pursuant to Minnesota Rules Chapter 7826. Issue(s): Staff: Review of Annual Safety Reports (Minnesota Rule 7826.0400) Review of Annual Reliability Reports (Minnesota Rule 7826.0500 Review of Annual Service Quality Reports (Minnesota Rule 7826.1300) Alvin Bierbaum (651)201-2232 Relevant Documents [See next page] The attached materials are workpapers of the Commission Staff. They are intended for use by the Public Utilities Commission and are based upon information already in the record unless noted otherwise. This document can be made available in alternative formats (i.e., large print or audio tape) by calling (651) 201-2202 (voice) or 1-800-627-3529 (TTY relay service.) March I.2GOS

Relevant Documents E-002/M-05-551 (Xcel) Xcel Annual Sendee Quality Report April 1 ; 2005 (!.) DOC Comments June 1 ; 2005 (*4) Xcel Reply Comments June 10. 2005 (=5) E-017/M-05-533 (Otter Tail Power) OTP Annual Service Quality Report April L 2005 ( i) DOC Comments '.. June L 2005 (#4) OTP Reply'Comments June 13, 2005 ( 5) E-001/M-05-513 (Interstate Power) IPL Annual Service Quality Reports April 1. 2005 (=1) 1PL Amendment April 25, 2005 ( 4) DOC Comments June 1, 2005 ( 5) IPL Letter June 9, 2005 ( 6) E-015/M-05-554 (Minnesota Power) MP Annual Sendee Quality Report April 1 : 2005 ( 1) DOC Comments June L 2005 ( 4) E-016/M-05-615 (Northwestern Wisconsin Electric) NWEC Annual Service Quality Report April 18, 2005 Ofl) NWEC Supplement May 23, 2005 (^4) DOC Comments June 1, 2005 (35)

Statement of the Issues Since 2003, The regulated electric utilities in Minnesota are required to submit annual Safety. Reliability, and Service Reports (SRSQ). -Are the reports submitted for the year 2004 adequate, under Minnesota Rules Chapter 7826? -Are.the proposed CAIDI. SAIDI. and SAIFI standards reasonable and proper? -Is there other information that should be filed? Background Beginning in 2003. Minnesota Rules were promulgated requiring annual filings of Safety. Reliability, and Service Standards by all regulated utilities. These filing are reviewed by the Department of Commerce (DOC) with recommendations whether or not the Commission accept the filings and whether or not the reliability goals set for 2005 are appropriate. Dakota Electric Association is a Cooperative Electric Association and therefore state that they are exempt from reliability data reporting under the rules. However, they have chosen to submit a SRSQ report for informational purposes. Party Positions Each utility has submitted their annual report, and the DOC has reviewed and commented on those reports. (The DOC did not submit comments on the Dakota Electric report, since it was for informational purposes.) Staff believes the DOC did a thorough analysis and agrees with the DOC recommendations. Staff Analysis Below., Commission Staff is raising some additional issues that the Commission may wish to consider requesting the covered utilities to response to in future SRSQ reports. Given that the next round of SRSQ Reports are due on April 1. 2006, it would be impractical to require utilities to file the information in those reports. The Commission could request supplements to the reports by some reasonable date or ask that the information be filed in the reports due April 1. 2007. The analysis and resulting suggestions are not intended to apply to Northwestern Wisconsin Electric, given its small number of customers in Minnesota.

RELIABILITY REPORTING ISSUES Otter Tail Power Company Otter Tail Power has six work centers located in Minnesota involving 730 feeders. (In their SRSQ report, they identify the 6 worst performing circuits-one per work center). OTP uses SAIDI and SAIFJ data to determine total customer outage minutes to identify their worst performing circuits by work center. Most utilities have some sort of computerized Outage Management System (OMS) with varying bells and whistles. Otter Tail Power, in an recent M.IPSYCON presentation, noted that their original outage management system was outdated, so they recently replaced it with a series of pole mounted voltage recorders hooked to a cell phone system. Line voltage data is sent to a central receiving station via eel] phone (installation completed July. 2004). The recorders are located near feeder breakers located adjacent to the serving substation.. The down side to this system is the fact that outage data is only reported when the main feeder breaker opens due to clear a fault. Outages that occur downstream on the feeder, where additional fuses or reclosers are used to isolate the faulted line section from the feeder> are not reported. Outage causes and restoration times are normally provided by lineman who troubleshoot the problem. Due to the limited number of monitoring sites, it is conceivable that a significant number of the outages that occur on Otter Tail's system are not reported. It appears that Otter Tail has been making significant efforts to improve their OMS, but a more sophisticated system appears warranted. The SAIFI data (number of interruptions per customer per year) supplied by Otter Tail appears extremely high, around!0 times higher than the other reporting companies. Most other customers in Minnesota experience on the average of less than 1 outage per year, while Otter Tail's data suggests that their customers experience on the average of 10 outages per year. Because Otter Tail serves mostly small towns and rural areas, and therefore tends to have more miles of line per customer than other investor-owned utilities, it is not unexpected that Otter Tail would have higher outage numbers; however, that does not appear to be sufficient to explain the full difference. Some of the difference may be due to the lack of a storm normalization program in 2004. It would seem that the OMS system does not report fully on down-stream outages, which may mean the already high reported outage numbers are understated. These issues warrant further exploration and investigation. It appears that outages due to bulk power system, planned outages, and outages due to personnel errors or public damage are included. Our rules provide for storm normalization of data. Otter Tail is in the process of revising their storm normalization procedures similar to that developed in the IEEE standard 1326 2.5 beta method.

Minnesota Power Minnesota Power reports that they have only 1 work center and have not noted how many feeder circuits are involved in the analysis. They have chosen to identify the 4 worst performing circuits having a combination of a high SAIDI index and a 10 minute increase of outage minutes as calculated by SAIDI. Minnesota Power OMS incorporates a GIS Mapping system which shows customer location detail relative to each feeder along with feeder detail attachments to each substation and a automatic meter reading program (installed in 2004). When an outage occurs, the customers affected are manually counted by a staff reliability engineer, who also tracks when service is restored. The Company has plans to invest in computer software in 2005 which will automats the customer outage count and calculate the reliability indexes required. The Company's report is not clear concerning details about how outage and restoration reports are filed. They report that they intend to make further OMS upgrades in 2006. It appears that they include bulk power, planned outages, outages due to personnel errors or public damage in their outage calculations. They use a storm normalization calculation that states that at least 12% (16.000) of the customers must be out of power and the company SAIDI must be increased by 10% by the event. Interstate Power and Light Company Interstate Power has two work centers, with 1 reported "worse performing circuit"' identified for each work center. They use a scoring system based on the duration and frequency of outages to individual customers. Customers are assigned a point value which are summed for each customer for each feeder: they identify around 70 feeders on their system. Interstate Power does not provide any specific information about their OMS. It appears that the outage/restoration data is done more or less manually. They have developed a circuit ranking system that lists the duration of each outage and the number of outages that a customer has experienced to establish worst performing feeder circuits. Interstate Power has chosen to not include bulk power or planned outages and outages due to public damage or employee errors as pan of their outage calculation, which appears to improve their published reliability indexes. In 2004, they have started using storm normalization procedure as defined in the IEEE standard noted above.

Xcel Energv to. Xcel Energy has identified only four work centers. 2 in the metro area and 2 located NW and SB. They identify 276 substations, with around 1130 feeders on their system. They have chosen to identify one or two "worst performing circuit" per work center. The poorest performers are identified as having SAIFI level 3 times the norm and SAID I levels 4 times the norm. Xcel Energy reported that they had 1127 three phase feeders served by 276 substations. Our rules dictate that the worse performing circuit must determined for each work center. What we did not realize is the fact that most Twin City work centers serve numerous substations and that many substations serve geographical areas than overlap in more than one work center. Xcel has 7 regional work centers in the Twin Cities serving the bulk of the substations and feeders. They also have 230 small communities outside of the Metro area. Currently they are identifying only six of their worst performing circuits. On a per customer of per substation basis. Xcel is reporting on far fewer circuits than any other reporting utility. Around January 1, 2005. Xcel upgraded their OMS. Outages are now detected by enhancements to their remote meter reading system. They have also installed software packages that manage the data by having a mapping system that assigns all customers to a transformers, feeder taps, feeders, and substations. This allows their system operations people to rapidly dispatch line personnel to deal with the problem. Linemen are required to report the cause of the outage in their report and the time when the system was restored. The computer system operates independent of the system operators in reporting outages and when the lights come back on. Their system also has provisions to inform customers of expected outage times. Another advantage of Xcel 1 s system is that the system restoration is reported as it occurs (step restoration) rather than waiting to report restoration when the entire circuit/feeder is repaired. In other words, step restoration provides information more consistent or closer to actual system performance. This system replaces the older system that prompted anonymous employees to make allegations about management "massaging the outage data" to improve the companyreliability indexes. Xcel Energy does include bulk power and planned outages and outages due to public damage and employee errors in their outage calculations. They are using a storm normalization program similar to the IEEE standard noted. Recommendations OMS Systems: The reporting utilities, other than Interstate Power, seem to be making efforts to improve or update their OMS systems. It appears that the OMS for Otter Tail Power's system needs further refinement to account for more outages occurring on downstream breakers/feeders and fine tuning to identify why their SAIFI index is so much higher than that of the other utilities. Commission staff would like to see more details on each OMS being used. Interstate should include all outages in their calculations. Identification of Circuits and Outage Causes: Commission Staff would like to have each utility develop a spreadsheet to provide better, more accessible information on circuits and

outages. Such a spread sheet could have feeder circuit identification by substation (for each work center location) on the vertical axis and a breakdown of the total outages, the number of customers affected, and outage hours (horizontal axis). On the same horizontal axis, list outages caused by problems on the bulk power system, with a breakdown between unplanned and planned outages, with the corresponding SAIFI, SAIDI. and CAIDI indices, with storm normalized data. The utilities are encouraged to work with staff to develop the most practical format for producing this information. Identifying the Worst Performing Circuits for Xcel: Staff recommends that Xcel increase the number of "worse performing circuits' 5 on which they report to 40 (10 per work center). This requirement generally amounts to having to identify a worst performing circuit for approximately every" 30 feeders. It appears that ratio comes fairly close to what is being reported by Interstate Power. Minnesota Power, and Otter Tail Power Company. Staff believes that requiring Xcel to identify a larger number of poor performing circuits in consistent with the intent of the rules and should result in a larger number of system improvements for their entire system. As our Rules note, the utility must explain the reason for the circuit's poor performance and must describe what operational changes are being made to improve its performance. TREE TRIMMING ISSUES Discussion As a result of significant storm-related outages, and in response to subsequent customer complaints and Commission inquiries, in 1998, Xcel (then NSP) stated that it would, among other things, spend an additional S3 million on its tree trimming program, with total expenditures of more than SI 8 million for 1999. As part of its settlement in the sen-ice quality investigation. E.G-002/CI-02-2034, Xcel committed to improve system reliability, including increased tree trimming and cable replacements. They committed to spend from $15 to S20 million over the amounts that were currently reflected in rates for these activities by January 1. 2005. Xcel has made improvements to their tree trimming program to better monitor their Vegetation. Management contractors, better utilize vegetation maps, and providing customer education about where to plant trees etc. However, because Xcel's most recent SRSQ report and reports required in other dockets still show a significant number of outages due to the lack of tree trimming. Staff requested Xcel to update us on their tree trimming expenditures for the past years and to update us as to whether the have caught up or have all of their circuits on a five year trim cycle. Xcel's response notes that they are currently maintaining around 68% of their circuits on a 4-r year cycle. On the down side. 7 % of the circuits have not been maintained in a 5 to S year cycle, with 26% not having any vegetation management for over 8 years. Xce! notes that they had 59 circuits in the greater than 8 year cycle did not have any tree trimming problems.

In looking at the other utility outage reports, it appears that they have similar problems with vegetation management, but they appear to be having fewer outages caused by the lack of tree trimming. Recommendations Xcel: Staff recommends that Xcel commits to allocating more resources in 2006 and 2007 to catch up on their tree trimming program. Xcel should report to the Commission on its annual tree trimming budgets for the past year and compare it to actual expenditures. If they are spending under budget, an explanation should be provided. Xcel should report on tree trimming cycle or interval they plan to follow for both transmission lines and distribution lines, along with a listing of circuits that have not been trimmed/maintained in 5 years or longer. Staff recommends that if 5 % or more of the circuits have not been maintained within the 5 year cycle, Xcel should budget for and schedule extra tree trimming crews to bring the schedule back in order within the following year. Other Utilities: The Commission may wish to have the other reporting utilities provide information on their tree trimming/vegetation management budgets, on tree trimming cycle or interval they plan to follow for both transmission lines and distribution lines, along with a listing of circuits that have not been trimmed/maintained in 5 years or longer. If more than 5% of the circuits have not been maintained in the 5 year period, have the utility report on how it plans to bring the schedule back in order. Phasing out 2.4/4.16 KV Lower Voltage Substations Discussion This issue came to Staffs attention when working on a specific sendee quality complaint of customers of Otter Tail Power. That matter appears to be resolved, but highlighted that the issue may be more widespread. Staff understands that 18% of Xcel's substation are lower voltage; these systems were common back in the 1920s and 30s, but would not have been used in any recent installations. Many of these substations serve a dedicated load such as a pipeline pumping station where there would be no concerns, as long as service is adequate.. Staff concerns revolve around electric service to smaller communities which have had recent significant load growth, which could result in certain feeders/circuits being inadequate to handle motor starting loads etc. Commission Staff recognizes that there must be a balance between the prudent use of older equipment and knowing when to upgrade to provide adequate voltage when new loads are added. Recommendation Commission Staff recommends that each utility report on the number of low voltage substations on their systems, report on their initiatives to upgrade their local substation voltages as appropriate to reduce low voltage and circuit overloading problems.

Alternatives Xcel E-002/M-05-551 I. April 1. 2005 Sendee Quality Report A. Accept Xcel's April 1, 2005 filing, as supplemented on June 10, 2005. Set the reliability standards for 2005 at the levels proposed by Xcel and summarized on page 11 of the DOC's June 1. 2005 comments. B. Take some other action. II. OTP Future Reporting Issues-for 2007 Report or supplement to the 2006 Repon A. Require Xcel to report on the 10 worst performing circuits for each of its 4 work centers in its 2007 Report. B. Require Xcel to report on its annual tree trimming budget for the past year and compare it to actual expenditures. If they are spending under budget, an explanation should be provided. Xcel should report on tree trimming cycle or interval they plan to follow for both transmission lines and distribution lines, along with a listing of circuits that have not been trimmed/maintained in 5 years or longer. If 5 % or more of the circuits have not been maintained within the 5 year cycle. Xcel must explain how it will budget for and schedule extra tree trimming crews to bring the schedule back in order within the following year. C. Require Xcel to report on the number of low- voltage substations on their systems and report on their initiatives to upgrade their local substation voltages as appropriate to reduce low voltage and circuit overloading problems. D. Work with staff to develop a spreadsheet to report on identification of circuits and outage causes. E-017/M-05-533 I. April 1. 2005 Sen-ice Quality Report A. Accept OTP''s April 1, 2005 filing. Set the reliability standards for 2005 at the levels proposed by OTP and summarized on page 13 of the DOC's June 1. 200;? comments. Require OTP to report in its next filing on its experience with its new interruption monitoring system on its ability to assess the causes of goal excedences. B. Take some other action. II. Future Reporting Issues-for 2007 Report or supplement to the 2006 Report A. Require OTP to report on its annual tree trimming budget for the past year and compare it to actual expenditures. If they are spending under budget, an explanation should be provided. OTP should report on tree trimming cycle or interval they plan to follow for both transmission lines and distribution lines, along with a listing of circuits that have not been trimmed/maintained in 5 years or longer. If 5 % or more of the circuits have not been maintained within the 5 O year cycle. OTP must explain how it will budget for and schedule extra tree trimming crews to bring the schedule back in order within the following vear. * <

Paze :0 B. Require OTP to report on the number of low voltage substations on their systems and report on their initiatives to upgrade their local substation voltages as appropriate to reduce low voltage and circuit overloading problems. C. Work with staff to develop a spreadsheet to report on identification of circuits and outage causes. Interstate E-OOJ/M-05-513 I. April 1. 2005 Service Quality Report A. Accept JPL's April 1. 2005 filing. Set the reliability standards for 2005 at the levels proposed by IPL and summarized on page 10 of the DOC'S June 1. 2005 comments. B. Take some other action. II. Future Reporting Issues-for 2007 Report or supplement to the 2006 Report A. Require IPL to report on its annual tree trimming budget for the past year and compare it to actual expenditures. If they are spending under budget, an explanation should be provided. IPL should report on tree trimming cycle or interval they plan to follow for both transmission lines and distribution lines, along with a listing of circuits that have not been trimmed-maintained in 5 years or longer. If 5 % or more of the circuits have not been maintained within the 5 year cycle. IPL must explain how it will budget for and schedule extra tree trimming crews to bring the schedule back in order within the following year. B. Require IPL to report on the number of low voltage substations on their systems and report on their initiatives to upgrade their local substation voltages as appropriate to reduce low voltage and circuit overloading problems. C. Work with staff to develop a spreadsheet to report on identification of circuits and outage causes. D. Require IPL to include outage data due to bulk power outages, planned outages, outages due to public damage, and outages due to employee errors in calculating the SAIFL SAIDI, and CAIDI reliability indexes.

Minnesota Power E-015/M-05-554 I. April L 2005 Service Quality Report A. Accept MP ; s April 1. 2005 filing. Set the reliability standards for 2005 at the levels proposed by MP and summarized on page 10 of the DOC's June 1, 2005 comments. B. Take some other action. II. Future Reporting Issues-for 2007 Report or supplement to the 2006 Report A. Require MP to report on its annual tree trimming budget for the past year and compare it to actual expenditures. If they are spending under budget, an explanation should be provided. MP should report on tree trimming cycle or interval they plan to follow for both transmission lines and distribution lines. along with a listing of circuits that have not been trimmed/maintained in 5 years or longer. If 5 % or more of the circuits have not been maintained within the 5 year cycle, MP must explain how it will budget for and schedule extra tree trimming crews to bring the schedule back in order within the following year. B. Require MP to report on the number of low voltage substations on their systems and report on their initiatives to upgrade their local substation voltages as appropriate to reduce low voltage and circuit overloading problems. C. Work with staff to develop a spreadsheet to report on identification of circuits and outage causes. MVEC E-016/M-05-614 I. April 18, 2005 Sen-ice Quality Report A. Accept N~WEC's April 18, 2005 filing, as supplemented on May 23. 2005. Set the reliability standards for 2005 at the levels proposed by IPL and summarized on page 6 of the DOC's June 1, 2005 comments. B. Take some other action.