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Transcript of REBUTTAL TO ORA AND TURN TESTIMONY ON ... viewFigure VI-4 Moorpark Substation 220kV System Single...

REBUTTAL TO ORA AND TURN TESTIMONY ON TRANSMISSION & DISTRIBUTION CAPITAL EXPENDITURES

Application No.:

A.04-12-014

Exhibit No.:

SCE-15, Vol. 2

Witnesses:

D. Lowerison

C. Silsbee

E. Takayesu

R. Lee

A. Thiel

B. Chiu

(U 338-E)

2006 General Rate Case

Rebuttal Testimony

SCE-15, Vol. 2 - Rebuttal to ORA and TURN Testimony on Transmission & Distribution Capital Expenditures

Before the

Public Utilities Commission of the State of California

Rosemead, California

May 2005

EXECUTIVE SUMMARY SCE is faced with the dual challenges of meeting the needs of recent increased levels of customer growth in its service territory, while at the same time replacing aging infrastructure installed in the boom period of the 1950s and 1960s.

In response to customer and electric load growth, SCE identified capital expenditures to install new meters and upgrade existing substations, particularly in the Inland Empire area of our service territory, one of the fastest growing areas within California. In response to the challenge of an aging infrastructure, SCE identified capital expenditures to replace wood poles, underground cable, older transformers, and other vital electric system equipment and structures.

ORA has proposed radical and irresponsible reductions to our proposed expenditures. In the Load Growth category, for example, ORA wrongly assumes we can defer substation upgrades needed to handle increased customer load, recommending we accommodate overloads on SCEs system simply by spraying transformers with a water hose. This proposal alone would jeopardize reliable service to some 40,000 customers.

In the category of Distribution Infrastructure Replacement, ORAs proposed spending level would cause SCE to be 40,000 poles short of the requirements of Commission General Order 165.

Our Annual Circuit Review Program annually refurbishes our worst-performing circuits. ORAs proposed funding implies the absurd refurbishing each circuit once every 800 years!

In the categories of Distribution Circuit Breakers and Transformers, ORA comes to the bizarre conclusion that equipment age has no bearing on replacement. ORAs proposed spending level implies an unrealistic service life of 100 years for circuit breakers and transformers.

ORAs proposed reductions to our Infrastructure Replacement expenditures stem from its fixation on past expenditures. But recorded expenditures were affected by SCEs financial crisis and its aftermath. Infrastructure replacement is based on engineering assessments and the increasing age and deterioration of the equipment, not on how much we spent last year or the year before. ORAs proposed reductions to our capital expenditures would jeopardize employee safety and customer reliability.

1I.INTRODUCTION

All

II.CUSTOMER GROWTH4D. Lowerison

A.ORAs 2005 And 2006 Cost-Per-Meter Analysis Is Flawed5

B.TURNs 2004 2008 Cost-Per-Meter for Customer Growth Under Estimates The Necessary Costs to Serve New Customer Connections8

C.SCEs Line and Service Extension Tariffs Reflect Efficient Cost Sharing Between Existing and New Customers for New Service Connections12

1.SCEs Sub-Transmission System Costs Should Be Included In SCEs Distribution Rates Because Of The Radial Nature Of SCEs Sub-Transmission System12

2.SCEs Rule 15 Periodic Review Is The Proper Vehicle To Revise The Residential Line And Service Extension Allowance13C. Silsbee

3.SCEs Data Collection And Retention Is Sufficient To Support Analysis of Cost-Causing Principles Relating To Line And Service Extension Tariffs15D. Lowerison

4.SCEs Distribution Project Information System Is In The Process Of Being Upgraded That Will Provide More Data For Future Policy Analyses17

5.SCEs New Service Connection Allowance Applies to All Customers With New Bona Fide Load18

6.TURN Provides no Policy Justification for Freezing SCEs Allowance20

III.LOAD GROWTH22E. Takayesu

A.Introduction23

B.ORAs Conclusions about SCEs Rated Capacity and Operation Are Wrong24

C.ORA Appears to Misunderstand SCEs Testimony on Load Growth Projections and Temperature Adjustment27

D.Risk of Project Deferrals30

E.ORAs Proposed Reductions By Project31

1.Ellis 220/6632

2.Vista 220/6632

3.Hinson 220/6633

4.Rush 66/1634

5.Kernville 66/1234

6.Summit 66/12kV35

7.Santa Susana 66/1235

8.San Bernardino 220/6635

9.Arrowhead Reconfiguration Project35

10.Distribution Substation Program (DSP (BI 353)35

IV.DISTRIBUTION INFRASTRUCTURE REPLACEMENT35R. Lee

A.Overview of SCEs Request and ORAs Proposed Reductions35

B.ORAs Proposed $42.1 Million Reduction In 2005 And $66.9 Million in 2006 To SCEs Proposed Spending On Distribution Wood Pole Replacement Is Based On A Flawed Analysis And Would Cause SCE To Be Out Of Compliance With The Commissions General Orders35

C.ORAs Proposed Reduction Of $10 Million In 2005 And $35 Million In 2006 To SCEs Forecast For Underground Cable Replacement Is Based On A Flawed Analysis35

D.ORAs Proposed Reduction Of $7.9 Million In 2005 And $23.8 Million In 2006 To SCEs Forecast For Underground Switch Replacements Is Based On A Flawed Analysis35

E.ORAs Proposed $564,000 Reduction In 2005 And $587,000 In 2006 To SCEs Forecast For Automatic Recloser Replacements Is Based On A Flawed Analysis35

F.ORAs Proposed $1 Million Reduction In Both 2005 And 2006 To SCEs Forecast For Capacitor Bank Replacements Is Based On A Flawed Analysis35

G.ORAs Proposal To Not Fund Replacement Of Underground Structures In 2005 And 2006 Is Based On A Flawed Analysis35

H.ORAs Proposed Reduction Of $2.3 Million In 2005 And $12.2 Million In 2006 To SCEs ACR Circuit Refurbishment Is Based On A Flawed Analyses35

I.ORAs Proposed Reduction Of $12.4 Million In 2005 And $18.4 Million In 2006 For Distribution Pole Repairs Is Based On A Flawed Analysis And A Disregard Of SCEs Need To Comply With CPUC General Orders35

J.ORAs Recommended Reduction in Funding for Bark Beetle Pole Replacement is Appropriate35

K.ORAs Proposed Reduction of $7 Million in 2005 and $7.2 Million in 2006 for Subtransmission Pole Replacement and Repair is Based on Flawed Analyses and a Disregard for SCEs Need to Comply with Regulatory Requirements35

L.TURNs Criticisms of SCEs Analysis Supporting Preemptive Replacement Are Flawed35

1.TURNs Comment Regarding Taxes35C. Silsbee

2.TURNs Comment Regarding Ratemaking35

3.TURNs Comment Regarding Service Lives of Switches35R. Lee

V.DISTRIBUTION AUTOMATION35A. Thiel

A.Introduction35

B.Contrary To ORAs Assertions, The Material Costs For Automation Are In Line With Unit Price Used In SCEs Cost Calculation For Each Type Of Automation Equipment35

C.ORA Has Incorrectly Compared ACMI Reduction For SCEs Circuit Breaker Replacement Program To The Distribution Automation Program35

D.ORA Uses Inconsistent Recorded Data To Arrive At Its Forecast For Remote Control Software And Circuit Automation35

E.ORAs Reliable Distribution Accountability Mechanism Proposal Takes Credit For SCEs Proposed Distribution Automation Program, Which ORAs Capital Expenditure Would Largely Disallow35

VI.SUBSTATION CAPITAL REPLACEMENTS AND OTHER CAPITAL REQUIREMENTS35B. Chiu

A.ORAs Analysis of SCEs Expenditures Failed To Distinguish Between Proactive And Reactive Programs35

B.ORAs Reliance On Recorded Expenditure Data Is Not A Valid Indicator Of Future Expenditure Needs35

C.Substation Infrastructure Replacement Program35

1.Circuit Breaker Replacement Program35

a)Bulk Power Circuit Breaker Replacement Program35

b)Distribution Circuit Breaker Replacement Program35

c)Incorrect Application of Escalation Rate by ORA35

d)ORAs Recommendations not Support by Reliability Impacts Analysis35

2.Power Transformer Replacement Program35

a)Transformer Replacement Program A Bank35

b)Transformer Replacement Program B Bank35

3.Protection and Control Replacement Program35

a)Distribution Protection and Control Replacement Program35

b)A/AA Control Room Upgrade35

D.Routine Capital Replacements35

1.Substation Equipment Reactive Replacement Blankets35

a)Reactive Replacement Not Previously Identified in Blanket35

(1)Butyl CT Replacement35

(2)Cable Trench Cover Replacement35

(3)Disconnect Switch Replacement35

b)Reactive Replacement Blankets Recommendation35

2.Rule 20B Circuit Breaker Replacement35

E.Other Capital Requirements35

1.Tools, Spare Parts and Equipment35

2.Non-Operational Facility Blanket35

3.Fee Simple and Right of Way35

35Figure V-1 SCE And ORA Distribution Automation Forecast Comparison

Figure VI-2 Comparison of Average Man-Hours Spent On Repairs At Different Ages For Circuit Breaker Model Types 242GA35

Figure VI-3 SCEs Power Transformers Cumulative End-of-Life Projection Based On Actual Age Demographics And Historical Failure Data35

Figure VI-4 Moorpark Substation 220kV System Single Line Diagram35

Figure VI-5 Mesa Substation 220kV System Single Line Diagram35

Figure VI-6 Age Demographic of Circuit Breakers Removed From Service35

3Table I-1 2005-2006 Transmission & Distribution Capital Expenditures SCE Estimated Compared To ORA

Table II-2 SCE Compared To ORA5

Table II-3 SCE Compared To TURN8

Table II-4 SCEs Original And Revised Customer Growth Forecast11

Table