2018 General Rate Case. Operational Services (OS) Volume 3 Corporate Real Estate
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1 Application No.: A.1-0- Exhibit No.: SCE-0, Vol. Witnesses: N. Desrocher A D. Bauder (U -E) 01 General Rate Case nd Errata Operational Services (OS) Volume Corporate Real Estate Before the Public Utilities Commission of the State of California Rosemead, California September 1, 01
2 Certain facility-related surveys (soil, asbestos, lead, environmental, biological, etc.) must be performed, to mitigate negative impacts on workforce or customer safety and the surrounding environment.. Scope and Forecast Figure IV- Field Substation Facility Management Maintenance FERC Account Recorded 0-01/Forecast (01 Constant $000) a) Historical Variance Analysis (1) Labor From 0 to 01, labor costs decreased steadily from $1.0 million to $0,000. The decrease in labor costs resulted from a shift to a vendor to perform facility maintenance work, the costs of which are classified as non-labor. () Non-Labor From 0 to 0, non-labor costs decreased from $. million to $. million, as SCE delayed non-critical maintenance pending issuance of the 0 GRC Decision 1. 1 This deferral of lower priority facility maintenance in 0 was an issue in the 01 GRC and the Commission determined that SCE had demonstrated that 0 may represent unsustainably low levels of maintenance in adopting our proposal to base test year expenses on 0 recorded spending. See D , p. 1.
3 Local Market Factor: Locations that have longer lead times for approvals or inspections, or locations that are known to have limited access to materials, services, or labor present greater risk. Existing Condition: Locations with natural hazards, hazardous materials, certain underground or surface area conditions (e.g., soils, slopes, presence of underground utilities, etc.) or that conflict with the project scope present greater risk. Size: The consequences of an unforeseen condition on a smaller dollar value project can have greater relative financial impact than the consequences and impact on a higher dollar value project (i.e., a smaller project may have a greater risk, due to greater impact of changes). Complexity: Projects with complex design or scope elements, complex building or IT equipment, specialty work, high security requirements, etc., present greater risk. Weather: Projects in locations with extreme heat, cold, or winds, or other weather conditions or fluctuations present greater risk. Since each project was reviewed for risk, the project contingency varies by project and ranges from 1% (low level of risk, plus high level of standardization, or high level of information known to complete the project with confidence) to 1% (high level of risk and greater number of assumptions). 0 SCE maintains that these estimates represent reasonable levels of project contingency for individual projects, based on the project type and specific potential risk of the project. % 0 There are no project contingencies added to the Blankets Capital Program projects. Instead, those estimates are based on historic spend and future business requirements.
4 Table V- Sample Design, Plan Check/Permitting Free Constructability and Risk Management Estimate Calculation CCMI Cost Factor Total Project Estimate (not including land) Constructability and Risk Management Estimate.% $,1, $, Additionally, following best practices and CCMI recommendations, 1 CRE conducts constructability reviews. The Constructability and Risk Management estimate includes a cost to perform this process. This process is used during the pre-construction phase to reduce, mitigate, and prevent errors, delays, or cost overruns at a later phase. In this review process, the project manager brings together the various project trades and professional consultants to review construction design documents for completeness; evaluate proposed materials, systems, construction and design techniques; align proposed delivery timelines; and identify improvements and known risks. e) Project Management Estimate The Project Management cost estimate encompasses labor and expenses associated with delivering the capital project. Project managers and construction managers are, responsible for direct and day-to-day project activities and oversight, such as: Preparing the project plan, budgets and forecasts. Overseeing and documenting progress and developments. Actively managing the project to adhere to scope, schedule, and budget. Managing architectural and engineering services, programming, development, and design. Developing and leading bid packages, selecting and scheduling vendors, and processing invoices. Validating construction quality, overseeing the punch list process, and commissioning, and closing contracts. Performing inspections, testing, and turnover activities. Delivering projects within approved scope, cost, and budget. 1 Refer to WP SCE-0 Vol. 0, Book B, pp. -.
5 Staff functions changed (e.g., an increase of planners to service customers, a decrease of meter service operations, and a decrease of on-site payment centers), thereby changing the office space needs and layout. In an effort to address crew safety, specifically strains and sprains, crews enhanced stretch programs at the start of shifts, thereby requiring changes to the design of the crew and assembly areas. Many service districts have increased in population and the service center must carry more on-site equipment to service this population, but the site can no longer support the increase of materials, while providing adequate site circulation, parking, etc. T&D presently deploys certain larger and longer vehicles that hold greater quantities of service materials and equipment and these larger vehicles require larger bays, larger parking areas, and larger circulation paths., Transportation Services, From 01 to 01, CRE worked with T&D and an outside architect consultant to update the service center design standards. These updated design standards were applied, in part, to evaluate (or re-evaluate as it relates to pending projects) the scope of work needed and related forecast of costs. 1. WBS Indicator of Project and Capital Forecast Table V-1 Service Center Modernization Program Prior Recorded/01-00 Forecast Capital Expenditures Capital Expenditures (Nominal $000) Project Title Project No. Prior Total Service Center Infrastructure Program COS-00-RE-BR-00,0,01, 0,0,, 1, IT Infrastructure and Equipment CIT-00-OP-NS ,,1,0 1,, 1,00 Total,1, 1,, 0, 0,1, Refer to WP SCE-0, Vol. 0, Book B, pp. -0.
6 Prepare the site (e.g., excavation and/or grading) for circulation, runoff and water management, and utilities; secure the site for construction. Install a new water well. Demolish the existing Administration Building. Construct an Administrative Building, to support office space, meeting space, break rooms, restrooms, crew lounges, etc. Construct a logistics building to support assembly and staging of T&D materials. Construct a new vehicle maintenance facility (i.e., garage), for servicing T&D vehicles. Build a wash bay for T&D vehicles. Install a truck canopy over the T&D vehicle parking area. Install a new hazardous material storage area with a canopy cover. Relocate the fuel station to the new site. Create a paved outdoor laydown area with materials storage systems for T&D crew materials (e.g., poles, reels, transformers, etc.). Install building systems, furnishings, T&D crew equipment and racks, voice/data infrastructure, security systems, etc. SCE estimates a total expenditure of $.1 million to relocate the Bishop service center to an alternate location that is an SCE-owned property. 1 Prior expenditures of $. million recorded were for design and engineering, purchase of pre-fabricated buildings, site preparation, and drilling of a water well. In 01, the expenditure forecast is $. million for permitting and the start of construction. In 01, $1. million is forecast to complete construction and furnishings, and $,000 is forecast, in 01, for land restoration and project close-out. 1 Refer to WP SCE-0, Vol. 0, Book B, pp. -.
7 g) Kernville Service Center Table V-1 Kernville Service Center Modernization Prior Recorded/01-00 Forecast Capital Expenditures Capital Expenditures (Nominal $000) Project Title Project No. Prior Total Kernville Service Center COS-00-RE-BR-00,,1 1,0, IT Infrastructure and Equipment CIT-00-OP-NS , 1,00 Total,,1 1,01 - -,,1 (1) Project Need and Description Given the: (1) age of the existing Kernville service center ( years old), () poor building conditions (FCI score of 1%, Poor Condition), () site and building operational constraints, and () its residential area location, it is prudent to relocate the Kernville service center to a more appropriately zoned industrial site within the SCE service district. SCE proposes to relocate the Kernville service center, currently located in a residential area, to a commercial/industrial zone located in Lake Isabella. () Alternatives Considered The following alternatives were considered for this project: Do nothing: This alternative is not an appropriate option, due to the high FCI and low API score (ranked 1 th ) as well as the zoning of the area. Renovate the existing site and/or building(s): The site does not meet business needs, due to its small size, and the city will not allow modifications to the buildings. Expand to adjacent land/site: It is not likely that the City of Kernville would approve re-zoning adjacent parcels from existing residential to commercial use needed for SCE s operations. () Scope and Forecast,01 For this project, SCE will: Acquire a parcel of land of to acres.,, Refer to WP SCE-0, Vol. 0, Book B, pp. -.
8 permitting, and $.0 million, in 01, for site preparation and the start of construction. In 01, SCE forecasts $. million for the remainder of construction. In 01, SCE forecasts $.1 million for furnishings, demolition of previous site, land restoration, and project close-out. i) Ridgecrest Service Center Table V- Ridgecrest Service Center Modernization Prior Recorded/01-00 Forecast Capital Expenditures Capital Expenditures (Nominal $000) Project Title Project No. Prior Total Ridgecrest Service Center COS-00-RE-BR-00,1,,,00 IT Infrastructure and Equipment CIT-00-OP-NS ,0 Total,,1,0 - -, (1) Project Need and Description Given the: (1) age of the existing Ridgecrest service center ( years old), () poor building conditions (FCI score of %, Poor Condition), () small site size (.1 acres), improving the site and expanding into the adjacent lot is a prudent alternative for the Ridgecrest service center. () Alternatives Considered The following alternatives were considered for this project: Do nothing: This alternative is not an option, due to the high FCI and low API score (ranked nd). Renovate the existing site and/or building(s): The existing site size cannot accommodate current and future operational requirements. Relocate: The customer base is not forecast to grow to levels that would warrant construction of an entirely new service center. () Scope and Forecast For this project, SCE will: Acquire an adjacent parcel of land, to provide more space for effective operations. 0
9 Design and develop an efficient site plan, to include safe vehicular access, circulation, and parking for crew vehicles, employees, and customers. Obtain required studies (e.g., engineering and environmental), permits, and approvals. Prepare the site (e.g., excavation and/or grading) for circulation, run-off and water management, and utilities; secure the site for construction. Construct an Administrative Building, to support office space, meeting space, break rooms, restrooms, crew lounges, etc. Construct a logistics building to support assembly and staging of T&D materials. Construct a new vehicle maintenance facility (i.e., garage) for servicing T&D vehicles. Build a wash bay for T&D vehicles. Install a new hazardous material storage area with a canopy cover. Install a new fuel deck canopy cover. Relocate the fuel station to the new site. Create a paved outdoor laydown area with materials storage systems for T&D crew materials (e.g., poles, reels, transformers). Install building systems, furnishings, T&D crew equipment and racks, voice/data infrastructure, security systems, etc. Terminate the existing Goleta building and land lease. SCE estimates $.00 million to develop the Santa Barbara service center in the Carpentaria vicinity. 1 There are no prior recorded expenditures for this project. In 01, expenditures are estimated to be $.0 million for initial planning. In 01, the expenditure estimate is $1. million for the purchase of the new site, architectural and engineering design and permitting. In 01, SCE forecasts $. million for site improvements and the start of construction. In 00, SCE 1 Refer to WP SCE-0, Vol. 0, Book B, pp. -.
10 forecasts $1.1 million for completion of construction, installation of furnishings and equipment, and project close-out. m) Shaver Lake Service Center Table V- Shaver Lake Service Center Modernization Prior Recorded/01-00 Forecast Capital Expenditures Capital Expenditures (Nominal $000) Project Title Project No. Prior Total Shaver Lake Service Center COS-00-RE-BR-00,,0,1,0 IT Infrastructure and Equipment CIT-00-OP-NS Total,1,, , , (1) Project Need and Description Given the: (1) age of the existing service center (0 years old), () poor building and site conditions (FCI score of 1%, Poor Condition), () small site size (1. acres), and () unsatisfactory vehicle maintenance facilities, renovating the current location and expanding onto an adjacent site is a prudent and cost efficient option. () Alternatives Considered The following alternatives were considered for this project: Do nothing: This alternative is not an option, due to the high FCI and low API score (ranked 1th). Renovate the existing site and/or building(s): The existing site size cannot accommodate current and future operational requirements. Relocate: The customer base is not forecast to grow to levels that would warrant construction of an entirely new service center. () Scope and Forecast For this project, SCE will: Acquire an adjacent parcel of land, to provide more space for effective operations. Design and develop an efficient site plan, to include safe vehicular access, circulation, and parking for crew vehicles, employees, and customers.
11 Program includes five categories: (1) Infrastructure Upgrade Projects, () Substation Maintenance and Test Buildings, () Facility Repurposes, () Future Anticipated Projects, and () Projects less than $ million. The details of each category and associated project, where applicable, are below. a) Infrastructure Upgrades Infrastructure upgrade projects address deficiencies of existing facilities, as related to new business operational requirements, and, thus, had poor Fitness for Purpose evaluation outcomes. Table V- below shows forecast expenditures per project. Table V- Operational Support Program Infrastructure Upgrades Prior Recorded/01-00 Forecast Capital Expenditures (1) Alhambra Grid Operations Center Table V- Alhambra Grid Operations Center Prior Recorded/01-00 Forecast Capital Expenditures (a) Project Description The Alhambra campus is comprised of 1 buildings, one of which is the AG building, where the Alhambra Data Center (ADC) is located. The AG building was built in the 10s. Between 00 and 0, some improvements to building systems (e.g., electrical, mechanical, 0
12 () Pomona Innovation Village Table V- Pomona Innovation Village Prior Recorded/01-00 Forecast Capital Expenditures Capital Expenditures (Nominal $000) Project Title Project No. Prior Total Pomona Innovation Village COS-00-RE-NA-00,1,,0 IT Infrastructure and Equipment CIT-00-OP-NS , 1,, Total 1,1, , (a) Project Description In the 01 GRC, SCE requested and was authorized for expenditures for the development of a Metro East Office Building, which is Building, of the Pomona Innovation Village, in Pomona, CA (PIV). In 01, SCE began construction. (b) Need for Project The building was placed in-service in the second quarter of 01. Completion of the PIV building allows SCE to follow proper construction, installation, and permitting requirements and take occupancy. (c) Alternatives Considered This project completed work authorized in the 01 GRC. (d) Scope and Forecast Given the need to complete the facility for occupancy, SCE finalized the construction and close-out of the PIV building. In 01, SCE completed: Tenant improvement construction (e.g., interior walls and partitions) and installation of building systems (e.g., mechanical, electrical, security, and fire and life safety). Installation of furniture and office equipment. Installation of voice, data, and audio visual systems and equipment. Exterior parking, access, and landscaping. Building commissioning, turnover, and project close-out.
13 Construct workspaces, a conference room, restrooms, and eight labs, for the cyber security team. Install and secure separate, dedicated voice and data lines. Install consoles, work stations, safes, monitors, audio visual equipment, and other office equipment (e.g., printers). Construct new restrooms, to accommodate the added employee capacity to the building, per building code. SCE forecasts total expenditures of $. million, in 01, for this project. Costs include design, permitting, construction, and project close-out. () GO/GO Space Optimization Table V- GO/GO Space Optimization Prior Recorded/01-00 Forecast Capital Expenditures Capital Expenditures (Nominal $000) Project Title Project No. Prior Total GO/GO Space Optimization COS-00-RE-AD-FR , 0 1,0 IT Infrastructure and Equipment CIT-00-OP-NS-0001,, Total 1 1, , (a) Project Description SCE s strategy is to exit leased office space to improve the utilization of owned office space, as discussed in Section D. It is SCE s intent to exit its Rivergrade lease, at expiration, in 01. In preparing for these lease exits, SCE shall reconfigure the General Office Buildings and (GO and GO) buildings and relocate 1,00 IT workers. SCE reviewed its real estate portfolio and determined that GO and GO were the best fit, due to availability of a large space and building infrastructure that can be leveraged. The GO was built in, years ago. All of the air handling units are beyond their lifespan. The building is not compliant with access requirements to/from and within the building. The 01 FCI score for the GO is % (Critical Condition). The GO was built in 1, years ago. The building was upgraded, in 0, to include a refresh of offices, restrooms, during the period of 00 through 0 Refer to WP SCE-0, Vol. 0, Book C, pp. 0-1.
14 costs of similar project types. In consideration of the nature of this program, SCE forecasts expenditure for only a portion, approximately 0%, of the anticipated projects. SCE s initiation of a project will be contingent on further analysis and prioritization. Table V- Future Anticipated Projects (Nominal $000) (a) Asset Planning, In 01, CRE will need to extend and refresh the Asset Management Methodology across the CRE portfolio. Doing so will formalize that deficiencies that are visually noticeable today and that need to be prioritized and addressed. Substation Deficiencies: A formal assessment of the substation portfolio is slated to be performed in 01. Current deficiencies are identifiable through visual observations and are experienced by occupants. CRE s preliminary estimate of the FCI condition rating for the substation portfolio borders between Poor and Critical. CRE estimates the cost to fix these at $0,000 per remediation (e.g., repairs to roofs, mechanical systems, plumbing, fencing, electrical, site
15 identification, high level scope, and SCE s historical expenditures for these types of projects. 1 While not all of the projects identified above shall proceed, conservatively, SCE anticipates requiring 0% of the total funds described above, in years 01, 01, and 00, to fund a portion of this program. e) Projects Less Than $ million Table V-0 below shows the estimated expenditure for capital projects for which scope is defined and planned, which will be performed between 01 and 00, and which, each, are estimated to be less than $ million. Table V-0 Operational Support Program Projects Less Than $ million Prior Recorded/01-00 Forecast Capital Expenditures 1,0 In 01, SCE requested capital funds for the restoration (i.e., removal of specialized building improvements, such as consoles and fixtures) of leased space at the Empire Lakes Office Building located in Rancho Cucamonga. In the 01 GRC Decision, a portion of the request was approved only as an O&M cost, following guidance from The Utility Reform Network (TURN). However, SCE is obligated to follow the Code of Federal Regulations, Uniform System of Accounts Title 1 - Part 1, Electric Plant Instructions Section six, Expenditures on Leased Property, subsection 1 Refer to WP SCE-0, Vol. 0, Book C, p.. Refer to WP SCE-0, Vol. 0, Book C, pp. -.
16 A, and categorize costs as O&M or capital accordingly. Funds requested above, for lease exits, represent the capital portion of the total cost to exit. E. Blanket Capital Program The Blanket Capital Program has been established as an effective and efficient process for ongoing expenditures of similar types of work. This approach has been used in SCE s previous GRC submittals. Routine blanket requests include: (1) Capital Maintenance, () Energy Efficiency, () Ergonomic Equipment, () Ongoing Furniture Modifications, and () Various Major Structures (for unplanned emergent requests). Table V-1 below provides detail for each of the blanket projects. Table V-1 Blanket Programs Forecast Capital Expenditures Capital Expenditures (Nominal $000) Project Title Project No Total Non-Electric Capital Maintenance COS-00-RE-MA-NE0001 1,,0,10,0,,0 Substation Capital Maintenance COS-00-RE-MA-NE,00 1,00 1, 1,0 1,0,1 Energy Efficiency COS-00-RE-RC-EE0001,,,1,,1 1, Ergonomic Equipment COS-00-RE-RS-FE000 1, 1,0 1, 1,0 1,0,1 Ongoing Furniture Modifications COS-00-RE-BR-FM0000,01,,1,,1 1, Various Major Structures COS-00-RE-BR-VM ,0 1,,,, Total,1,, 1,,00 0, 1. Capital Maintenance As stated above, CRE s area of responsibility for facility planning and management has expanded. Table V-0 shows forecasts for the past areas of responsibility (i.e., non-electric) and added (i.e., electric) areas of responsibility. V- Table V- Capital Maintenance Forecast Capital Expenditures Capital Expenditures (Nominal $000) Project Title Project No Total Non-Electric Capital Maintenance COS-00-RE-MA-NE0001 1,,0,10,0,,0 Substation Capital Maintenance COS-00-RE-MA-NE,00 1,00 1, 1,0 1,0,1 Total,,0, 0,01 1, 1, a) Program Description CRE is responsible for all facility maintenance and related compliance, operability, and functionality of facilities. SCE s Capital Maintenance Program seeks to preserve the
17 1 d) Scope and Forecast The forecast for this program addresses all areas of CRE portfolio responsibility. Considering the newly added scope, CRE uses two approaches to develop the forecast for this program. Non-electric facility capital maintenance forecast is based on historical expenditures. The forecast for substation capital maintenance is a combination of historical expenditures and a zero-based budget, considering fluctuations in the maintenance activity. CRE began to manage substations in 01. In 01 and 01, substation capital maintenance was delayed wherever feasible (namely, no direct and adverse impacts on safety or compliance.) Consequently, the forecast for the work estimated in the next five years reflects the higher level needed for proper preventative maintenance to mitigate negative impacts from the prior delays, including costly repairs and replacements. Table V- below shows the recorded spend for both electric and substation capital maintenance. Table V- Capital Maintenance 0-01 Recorded Capital Expenditures Capital Expenditures (Nominal $000) Project No Total COS-00-RE-MA-NE0001,,,1 1,,1 1,1 COS-00-RE-MA-NE - - -,1,, Total,0,,1,, 1, 1 1 Between 01 and 00, SCE forecasts $1.1 million in planned capital maintenance, for all CRE assets under management, as shown in Table V- below. Prior to 01, substation capital maintenance was delayed wherever feasible (namely, no direct and adverse impacts on safety or compliance). Consequently, the recorded costs from reflects the higher level needed for proper preventative maintenance to mitigate negative impacts from the prior delays, including costly repairs and replacements, and the forecast for reflects the leveling out of those maintenance expenditures. Refer to WP SCE-0, Vol. 0, Book C, pp
18 Examples of the work funded by this program include: Storage Canopies Construction: $. million in 01 Eldorado Substation Waterline: $,000 in 01 Hazmat Structure Construction: $,000 in 01 and 01 Electric Vehicle Fleet Chargers: $,000 in 01 Palm Springs Service Center Renovation: $,000 in 01 As stated above, since 01, CRE s area of responsibility increased to include management and planning for non-electric facilities. Those facilities demonstrate identifiable deficiencies and are preliminarily estimated at a condition of Poor to Critical. These conditions indicate that more emergent work will arise at these locations. Given the need to address emergent and unforeseen needs of SCE s facilities, it is prudent to continue the Various Major Structures Program. The program will deliver modifications to deficient building structures or major building systems that have failed or require revisions to support modern business operations. c) Scope and Forecast SCE forecasts $. million in expenditures for the Various Major Structures program from The forecast is based on historical spend, plus an increase to account for the additional facilities within CRE s area of responsibility. Considering that, at this point in time, SCE forecasts few emergent projects, in 01, forecast expenditures of $0,000 are considerably lower than subsequent years. (Many of the projects that would have been considered emergent, in prior years, are planned under Operational Support Program Projects Less than $ Million and total $.0 million.) SCE forecasts expenses of $1.0 million for 01, $1. million in 01, $. million in 01, and $. million in 00. The increase in takes into account substation and other electric facility emergent work that was previously funded by other OUs and now under CRE responsibility. $. Refer to WP SCE-0, Vol. 0, Book D, p.. 1
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